What Is a Subcontractor Agreement?
A Subcontractor Agreement, also known as a Subcontractor Contract, is a legal document that defines the terms and conditions of a business agreement between a contractor and a subcontractor. The difference between a subcontractor and an independent contractor is that the latter enters into a Contractor Agreement or a Service Agreement directly with the client who needs to complete a project. The independent contractor is responsible for the project completion but may opt to hire employees or subcontractors by means of an employment contract to help get the job done. The contractor should first ensure that the client allows for subcontracted work. If you need to write this legal document, you can download our customizable Subcontractor Agreement templates below, which includes all the important clauses to protect both parties.
How to Write a Subcontractor Agreement?
Subcontractor Agreements contain several sections and should be written in a clear and concise language in order to avoid ambiguities or misunderstandings in the future. Also, the proper use of terminology is vital, as it guarantees legal protection for the parties involved. The basic clauses that this contract shall include are the following:
- Scope of the Project. It defines the work required, as well as the location of the project and the subcontractor obligations if the client requests changes or is dissatisfied.
- Timing for Completion. It specifies the duration of work and a fixed deadline. In order to assess the subcontractor’s work, this date should fall well before the deadline the contractor has agreed to with the client.
- Payment and Billing. This clause states the amounts to be paid to the subcontractor, maximum work hours, added time, invoices, and payment method.
- Non-Disclosure. This section states the information that the subcontractor should keep confidential. Moreover, the contractor must not share any information with the subcontractor that might create a conflict with the client, according to the contractor agreement.
- Non-Compete Clause. Subcontractors must promise that they will not compete with, or try to attract clients away from the contractor.
- Work for Hire. All work belongs to the contractor and the subcontractor will gain no further income in the future in relation to this project once completed.
- Assignment. This clause gives provisions for restrictions and permissions to hire more people to do the work.
- Indemnity Clause. This section covers the protection of the contractor and the responsibility of the subcontractor in case of work errors or failure to bring the project to completion.
- Warranties. All promises made by both parties regarding work quality, compliance with specifications, professional work behavior, among others, must be included in this clause.
A Subcontractor Agreement is a document that covers the expectations and obligations of the hiring contractor and the hired subcontractor. Make sure you agree to all terms and conditions before you sign it because the contract becomes legally binding for the parties.