Subcontractors are incredibly important in construction. They often handle either very specific jobs, such as electrical work, or help fill in gaps in labor.
When hiring subcontractors it is important to have a detailed contract in place to remove any confusion and reduce misunderstandings.
The subcontract agreement should outline the exact duties and work of the subcontractor. Make this as detailed as possible and try to avoid ambiguous references. The more exact this is, the less likely there will be issues pertaining to the responsibilities of the subcontractor.
Include the important terms of the agreement. Include the start and end dates, if possible. At the very least, note the approximate end date of the agreement or give a specific trigger that will end the agreement.
Pay and expenses
Make sure the agreement outlines payment amounts, timing, terms and conditions. Be specific with this part of the contract. Make it clear what would disqualify the subcontractor from payment. Include specific terms for changes orders that can result in increase or decrease in payment amounts and other adjustments. The subcontract agreement should clearly state the basis for making payments and who will be the ultimate decision-maker as to how much is paid and when. You should also make it clear who is responsible for expenses. This may include providing tools and other supplies as well.
Clearly indicate whether periodic lien waivers are a condition of payment. Lien waivers can be a requirement for partial and final payments.
Schedule and Liquidated Damages
Be sure to include detailed schedule information, including milestones, if possible. If the subcontractor will be responsible for liquidated damages if the schedule is not met, include that clearly in the subcontract agreement.
The whole idea of a contract is to make sure every party understands the expectations. Having a solid agreement can make it much easier to avoid issues down the road because everyone starts out on the same page. Ideally, a subcontract agreement will cover all areas in which there is potential for misunderstandings.
Consult with an experienced construction lawyer before entering into a subcontract agreement.