If you’re a general contractor, you know how important it is to hire good subcontractors for your projects. Your reputation and income depend on it. One of the most important keys to doing good work is surrounding yourself with a great team. Oftentimes, general contractors will work with the same subcontractors over and over and you may know each other and trust one another to meet your respective ends of the bargain. No matter the relationship, however, mistakes and misunderstandings can always occur and you should always make sure you are legally/contractually protected in case of any future disputes. The right contract can help secure your rights and limit your liabilities.
Here are 8 helpful clauses we recommend for your next subcontractor hire:
Specific Scope of Work Clause
No matter the contract (but particularly in a subcontractor agreement) this provision is vital. Clarify exactly what each party expects from the other to help avoid future misunderstandings.
Fees and Expenses Clause
Write it all out now! Specify what you are paying, whether it is an hourly rate or fixed price, and whether you will compensate for any fees/expenses (e.g., transportation).
You should include a provision that prohibits your subcontractor from working directly with your client.
It is important for you to incorporate an appropriate and legally
enforceable termination clause. We recommend you speak to a professional
about what notice period and termination fees are appropriate for your
Dispute Resolution Clause
This clause can help you handle future disagreements. For instance, your
dispute clause may specify what alternative dispute resolution method
(mediation, arbitration etc.), if any, is right for you.
This clause may fall within the dispute resolution clause. You should
specify the location of where any lawsuits should be filed and what laws
apply. This is especially important for parties coming from different
states. We recommend consulting with counsel or a professional to help
draft this clause.
Make sure to insert a clause stating that the subcontractor has secured
all necessary permits or licenses to perform the work. The subcontractor
may need to contact the municipality to make sure he/she is in
compliance with all state and local licensing requirements.
You should insert a clause that imposes liability on the subcontractor for his/her own negligence on the job site.
Contact the attorneys at Smiley Law for all your subcontracting questions!