Subcontractor Agreement For Construction
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This subcontractor agreement template records terms and conditions for construction work performance, schedule of work, payment details, and parties' obligations.
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What is a subcontractor agreement?
A subcontractor agreement is a legally binding contract between a contractor and a subcontractor that sets out the terms under which the subcontractor will perform a portion of the work in a larger construction project.
The parties involved in a subcontractor agreement for construction are a general contractor and subcontractor. Either party could be a self-employed individual, contractor, or business that has a license to perform certain construction works.
This subcontractor agreement sample could be used for various types of construction work, including plumbing, flooring installation, roofing, painting, general construction, etc. The present subcontractor agreement form is different from a building construction agreement that is between a general contractor and a client.
How to create a construction subcontractor agreement from scratch?
Drafting a construction subcontractor agreement requires a deep understanding of how construction works are being performed in general, as well as applicable industry standards, including insurance and business licensing. Below, we summarized for you all key elements you have to include in the text of your subcontractor agreement sample.
Details of the Parties
All subcontractor agreements must define the parties involved in the construction projects, including:
- full names and addresses of a client, contractor, and subcontractor;
- contract details;
- details of the business/construction license of a contractor and a subcontractor.
Project Description
Another important pillar of every subcontractor agreement template construction is the description of a project itself. In particular, the text of the final contract must record:
- name of a construction project;
- type of construction work (e.g., remodeling, renovation, etc.);
- location of the property;
- detailed description of the work to be done by a subcontractor.
The description of works to be performed by a subcontractor usually differs from a scope of work assigned to the main contractor. Usually, in construction businesses, a general contractor gets the whole contract and distributes its parts or certain assignments to subcontractors involved.
Supply of Materials
Every construction subcontractor agreement shall define who should be responsible for the provision of all required materials for the performance of the construction works. Depending on the arrangement, only one or both parties should be responsible for the delivery of such materials.
Besides that, the text of a contract must include an additional addendum specifying the agreed quality and quantity of supplied materials.
Finally, the text of the subcontractor agreement template should also define the person responsible for paying for such materials. The two most popular options are:
- the price of materials is included in the price of work; or
- subcontractor shall pay for materials on top.
Payment Terms
Every sample subcontractor agreement must include:
- type of payment schedule (e.g., lump sum, multiple payments);
- retainage, which is a booking fee of a specific subcontractor; and
- late fees (e.g., a fixed fee for each day of the delay).
The contractor is responsible for making payment on time. Failure to make the payment by the due date is considered a serious breach of a contract and allows a subcontractor to end the contract immediately.
Compliance and Business Licensing
A subcontractor contract agreement template is a legally complex document, as it requires compliance with applicable state and federal regulations. Depending on the type of construction work performed and the location, a subcontractor should have:
- full liability insurance for injury or death of a person involved in construction works;
- valid license and building permits (depending on the state where a subcontractor shall perform the work);
- compliance policies with federal safety regulation policies and environmental laws.
How to customize a subcontractor agreement at FasterDraft?
To get a fully customized legal document, follow the instructions given below:
- Click the “Create Document” button.
- Answer simple questions in the form.
- Select a template’s format—subcontractor agreement PDF or Word.
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Table of content
Frequently Asked Questions (FAQ)
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1. What should a subcontractor agreement include?
A simple subcontractor agreement sample must define the following important elements:
- detailed description of the parties involved—a subcontractor, contractor, and client;
- description of the construction project;
- description of works performed by a subcontractor;
- duration of construction works;
- rules for termination of a subcontractor agreement;
- protection of confidential information (e.g., sketches or drawings of a future building, etc.);
- insurance requirements for both parties; and
- payment terms.
It is important to remember that neither federal nor state laws define a specific number of clauses your subcontractor agreement sample should have. The final list of clauses depends on the type of construction works performed. For instance, some contracts may require inclusion of an environmental compliance clause when performing work in certain locations across the U.S.
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2. What are the prerequisites before signing a subcontractor agreement for construction?
There is a list of important legal considerations and events that should take place before signing this agreement:
- First, the original building or construction agreement should be already signed between a contractor and a client.
- Second, both a contractor and a subcontractor should have all the necessary construction licenses and permits for works.
- Third, a contractor and a subcontractor must agree upon the quality, quantity, and delivery schedule of all required materials and labor (if applicable).
Once all the conditions listed above are met, the parties may proceed to signing a subcontractor agreement for construction.
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