Subcontract Agreements

By Kenneth S. Grossbart of Abdulaziz, Grossbart & Rudman

Let us start off with once again reminding everyone how important a written construction contract is, regardless of the amount of the contract, or who the contract is with. The written contract is the best tool in order to prove what was agreed upon, especially if a dispute does arise.

On construction projects, whether they are public or private works, the owner (or public entity) contracts with a contractor. This direct contractor may then contract with other contractors (known as subcontractors) to do portions of the work on the project.

The direct contractor can enter into a Subcontract Agreement with the subcontractor for the project. In some instances the direct contractor will contract with the same subcontractor on many jobs. In this case a Master Subcontract may be used as an agreement between the direct contractor and subcontract in order to avoid renegotiating all of the terms and conditions. A Master Subcontract does not have specifics about each individual job but the specifics for each job are then agreed upon in a Work Authorization.

The Subcontract Agreement or Work Authorization will cover all of the pertinent information for said project to include, but not limited to:

  • The parties to the contract and their addresses;
  • The owner or public entity;
  • The jobsite address and description;
  • The contract price;
  • The scope of work to be performed;
  • The time and scheduling of work; and
  • The time for payment.

There are various clauses that make up the rest of the Subcontract and the terms and conditions of the contract. In the use of a Master Subcontract, these would normally be included in the Master Subcontract but not the Work Authorization.

Regardless of the type of job that you will be working on, utilizing a verbal contract can be dangerous because in the event of a dispute it becomes a ‘he said – she said’ situation. If your contract is in writing then you have proof to back up that you did everything as required per your contract. We recommend that you speak with a knowledgeable and experienced construction attorney to make sure that you have the proper contract that works for you, your business and the jobs that you will be working on. At the least, contracts can be purchased from a professional and knowledgeable source such as trade associations or builders’ exchanges.

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