Subcontractor Agreements - The Importance of Subcontractor Agreements

Published: 10th December 2009
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A Subcontractor Agreement or Subcontract Agreement allows a contractor to hire a third party to finish a portion of the work.This sub-contractor agreement is commonly abused once a Contractor has already signed a contract with someone else.

A subcontractor (or "sub") is the individual or business organization that agrees to undertake a portion or all of the duties of the first party's original contract. The subcontractor is hired by a general contractor to execute limited work as a share of the broad job. The sub contract agreement for the most part provides for a narrowed down portion of a contracted job.

Subcontractor Agreements are a very everyday kind of construction contract. It is critical for both companies to have a effectively written legal agreement which drafts the breadth of work, determines fees and payment, and offers remedy for non-payment or unfinished work.

Contractors hire sub contractors as a way to cut job costs and/or to manage project risks. This way the client receives greater service than could have been supplied by the GC, with smaller risk. Many subcontractors are highly accomplished specialists, and frequently will perform with only a single contracting company. Subcontract Agreements allow general contractors wider subcontractor management tools.

Laying Out A Subcontractor Agreement

Before participating in a Subcontractor Agreement, all parties will be required to make some decisions and take some specific actions. There are some quality guidelines to help general contractors get the best from employing a subcontractor.

First, you have to determine the scope of the work you will want to have the subcontractor complete. For instance, if the job requires drywalling with tile over it, you will need two separate subcontractors. At the very least, each task requires its own separate agreement. You can always have the same sub execute both jobs, but you will need a separate subcontractor contract to specify each job.

Create a detailed job description. Include draftings as needed and a full list of the work to be finished.
Get as as many bids as you cangather. You can call subs you already know and work with, or advertise, or both. Make sure you give each prospective subcontractor a copy of the detailed job description plus drawings you created. In this way they can give you their best bid.

Getting The Right Sub Contractor

Pick your subcontractor on quality, not just price. If you choose a subcontracting company that does subpar work, you won't be getting such a great deal after all. Follow up on references. Call the subcontractor's clients and ask not only about their overall satisfaction, but about specifics like did the sub finish up on time, did he clean up, was he polite, etc. Always ask to see a copy of the sub's valid insurance certificate. Construction carries considerable risk. The sub must be decently covered. Get a copy from the sub's insurer. Does the job require licensing? Virtually every states require licenses for plumbers, electricians and so forth.

construction agreement
Subcontractor Agreements
Subcontractor Agreements - The Importance of Subcontractor Agreements

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