Best Practices of Subcontractor Agreement

Subcontractor agreement is an agreement which states terms and conditions of relationship between a contractor and subcontractor. This agreement will also describe type of work for which subcontractor is being hired to perform. Some generic legal forms filled in with details of each subcontractor are used by some contractors. Some contractors may prefer to work with an attorney to draft agreement specific to given situations. These agreements clearly define rights and expectations of both parties. Terms and conditions for these agreements can be estimated by having a look on Subcontractor Agreement Template.

Purpose of hiring a subcontractor is to perform a specific task as a part of overall project. Building works and civil engineering are the fields where need of subcontractor is most demanding. Subcontractor agreement not only describe the type of work for which someone is being hired but it also states standards and specifications which must be met when work is performed within an expected time frame for completion of project. Subcontractor agreement can be used for agreed parties as supporting evidence for a claim.

Compensation specifications are also provided in this agreement. Compensation specifications may be provided on hourly basis, or on a stipend, it will depend on nature of work. Similarly, behavior standards may also be covered in contract and agreement can also include people who will be working with subcontractor.

There are three types of subcontractor, these are:

  • Domestic Subcontractor (contracts with main contractor to supply or fix materials or goods and this contractor is employed by the main contractor)
  • Nominated Subcontractor
  • Named Subcontractor (same as domestic subcontractor)

Contractors pay attention towards creating some protections for them since they are liable for work performed by subcontractors. Similarly, subcontractors also required legal protections to make it sure that they are compensated for their work. Subcontractors do work for the same companies rather than different ones to specialize their skills.

When a contractor is hired for a company, this contractor is identified as prime contractor or main contractor. Work accountability ultimately lies on prime contractor. It is not the matter that contractor has to do all tasks by himself; he can opt to hire subcontractors to perform part of the work. Hiring other people will include those people who have special skills to perform tasks better than a prime contractor including those people who may work more cheaply or quickly than prime contractor.