A subcontracting agreement is a legally binding agreement between a contractor and a subcontractor. Subcontracting contracts are often used for construction projects. They cover the scope of the work to be done, the price that will be charged and the length of time the work will need to be completed.
Steps
Step 1. Schedule a meeting between the contractor and the subcontractors
Before writing a contract, schedule a meeting between the parties to discuss how they both want to work together. This will save time in the long run, as there will be fewer contract revisions if the parties agree on the clauses earlier.
Step 2. Consider hiring a lawyer
If the project involves particularly expensive or important work, consider hiring a lawyer or at least consult one to draft the contract.
Step 3. Identify the parts
First, be sure to indicate who the contractor is and who the subcontractor is. Include each party's mailing address and any other necessary contact information.
Step 4. Indicate the location of the construction site
If the project is for construction, indicate the location of the construction site with a mailing address or any other description of the property that clearly tells the reader of the contract where the work is to take place. Decide even if the subcontractor will work offsite.
Step 5. Indicate the work to be done
Defining the scope of the project is one of the most important steps in writing a subcontract agreement. Disputes often arise as to what each party assumes is part of the work to be completed. For this reason, this section should make it clear which job each one is responsible for.
- Take some time to list all the tasks agreed upon during the first meeting, share this description with the other party, and discuss anything that creates a disagreement.
- Don't sign a contract that describes a job you don't intend to do.
- Review this section, if necessary, after sharing it with the other parties, until everyone agrees on the text.
Step 6. Identify who will pay for the materials or equipment needed to complete the job
This will depend on the specific agreement that the subcontractor and contractor will reach. In the event that both the contractor and the subcontractor provide materials, state which materials each party will provide. Include a statement stating who will provide the materials not expected at the time the contract was entered into.
Step 7. Indicate how much the work will cost and when it will be paid
Agree on the price that will be paid to the subcontractor after the work is done.
- Typically construction contracts require payments to be made over time as the work progresses. For example, you can choose to pay 25% of the contract amount when 25% of the work is completed, or have specific references that entitle you to pay a portion of the fee.
- Clearly state who will decide when the job is completed so that one party cannot unilaterally make this decision to the detriment of the other party.
Step 8. Specify what will happen if the subcontractor does not complete the job on time
- Many subcontracting agreements contain clauses whereby the subcontractor is expected to receive reduced compensation if the work is not completed on time.
- Late fees are useful for making sure the job is completed on time.
- Be sure to include an exception for the case where the delay in completion is not the fault of the subcontractor - for example, if a natural disaster makes the job impossible.
Step 9. Check the completed document
All parties should review the completed document and make changes until it reflects their understanding of the contract.
Step 10. Sign the agreement
The agreement must be signed by both parties. Company directors and sole proprietors are usually authorized to sign.
