Digging the dirt on subcontractor agreements

Subcontractors are an individual or business hired by a general contractor to perform all or part of the general contractor’s work. A Subcontractor Agreement is a legally binding written agreement between the two parties that outlines duties and expectations.

How a Subcontractor Agreement Works

A Subcontractor Agreement is a common arrangement that outlines matters such as the responsibilities of both parties, wages, related fees and governing rules of the agreement. The primary purpose of the agreement is to legally protect both parties from the risk of such events are breach of contract, non-payment and substandard work.

Basic Components of a Subcontractor Agreement

Though each individual agreement varies, all Subcontractor Agreements are composed of a few typical components: project schedule, payment agreement and how disputes will be handled, usually involving arbitration.

Detailed Components

The project schedule outlines the complete start and end date of a project. The payment agreement details how much money the subcontractor is entitled to for completion of their portion of the work. The dispute and arbitration clauses outline the course of action in the case of a disagreement between contractor and subcontractor. Communication clauses specify how often written or verbal progress reports are required by the contractor or subcontractor.

Problems with Subcontractors agreement

Some argue that the days of exploitation in the construction industry died in the eighties. However, recent events do not match this theory. In the last few years, some of the industry’s largest and most prominent main contractors have been fined millions of pounds for rigging bids and artificially inflating prices.

One of the most common non-standard terms added to contracts by main contractors are termination clauses for the most minor contract breaches. These can be used by main contractors to coerce specialist firms. Other clauses make specialists responsible for all work and property on-site, even after they have left the premises. This is stipulated by main contractors to unjustly minimise their risk of offloading responsibility onto subcontracting firms.

Solutions

as does the risk of losing out on further work: subcontractors fear that if they speak out, they will be seen as upstarts and not be awarded other contracts. CCS fills this gap by campaigning for them. Comprised of disciplines drawn from across the industry, its members all share one thing in common- they are at potential risk of contractual abuse.

Companies such as CCS, are doing everything they possibly can, to stop unfair contractual terms, and help subcontractors with contractual disputes with both main contractors and other large companies with their subcontractor training courses.