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An Introduction to Subcontractor Agreements

An Introduction to Subcontractor Agreements

Have you heard about subcontractor agreements? Find out how contractors pool their skills together with subcontractor agreements.

4th November 2020
Reading Time: 3 minutes

What are subcontractor agreements?

A subcontractor agreement is a contract that sets out the terms of an agreement between one independent contractor and another. The subcontractor is the second contractor. Subcontractor agreements allow for one contractor to enlist the help of another contractor for a certain part of the task.

For example, lets say that a person wishing to build a house hires a contractor for its construction. This contractor can then use a subcontractor agreement to get into an agreement with another contractor for a certain part of the task. For this example, lets say that the task involved is building the bathroom. This subcontractor agreement outlines certain terms regarding the bathroom. Like when it needs to be finished by, the measurements of the bathroom, and other details specific to the client’s wishes.

What things should be in the agreement?

Generally there are several main things that all well drafted subcontractor agreements have. Several of these include:

  • outlining the obligations of the subcontractor
  • specifying the payment details
  • listing what tasks needs to be done
  • how the agreement gets terminated
  • methods for resolving disputes

If looking for a subcontractor agreement, feel free to download our easy to use customizable document that can be filled out and ready to go in 15 minutes.

Disputes

It may seem a bit uncomfortable to outline what should happen when disputes occur especially on the first interaction with your subcontractor. In the legal world however, it is always better to have a clear method for the worst case scenario. Planning ahead at the beginning can save both parties thousands of dollars and months of court time. Disputes may arise for a number of reasons. There could be a defect in the work, a delay in performance, or various other issues. By having a dispute resolution clause in the agreement it may prove beneficial in resolving disputes. Such a clause can set out certain requirements like having to participate in arbitration or mediation to resolve disputes. If you would like to read up more on dispute clauses click here.

Creating a subcontractor agreement with our downloadable template is easy. You should seek legal advice however to make sure that the agreement is right for both you and your subcontractor. Feel free to reach out to our network of expert lawyers that specialize in the area.

Rights of a subcontractor

A subcontractor is not an employee, they represent their own business. This means that if you are a subcontractor, you are not limited to providing your services to the one contractor. Additionally, subcontractors choose the way they fulfill their tasks and can even subcontract to another subcontractor. Lets go back to our previous example with the subcontract agreement for the bathroom. The subcontractor not only is able to fulfill the task how they see fit (within the limits of the agreement) they can also if the agreement doesn’t prohibit it, subcontract the task to another contractor. They could subcontract the whole task or a portion of it, such as the plumbing for the toilet and sink.

Conclusion

Subcontractor agreements are a nifty way contractors can pool their skills in to complete a task quicker and better. A well drafted agreement, among other things, should clearly set out the obligations of the contractor, payment details, how disputes are resolved, and how the agreement is terminated. It is important to remember that subcontractors are not employees for the other contractor. They represent their own business and because of this they have freedom to choose how their task is to be fulfilled. If seeking to get into a subcontractor agreement our easy to use customizable document has you covered. To be on the safe side make sure to seek independent legal advice to review your subcontractor agreements.

Author
Berk Eker

Berk is a Legal Tech Intern at Lawpath, working as part of the Content Team. He is currently in his penultimate year of a Bachelor of Laws and Bachelor of Science at the University of Wollongong. He is interested in the growing relationship between the advancements in technology with the legal world.