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Why do I need a subcontractor agreement?

This means that contractors could be exposing themselves to a great deal of risk and liability. Simply put, a Subcontractor agreement is a risk control strategy which shifts risk from one party to another. With such an agreement, the contractor is protecting themselves from risk derived from the work of their Subs.

What does it mean if you are a subcontractor?

A subcontractor is a business or a person that undertakes work for a company as part of a larger project. In undertaking a contract from a contractor, subcontractors carry out work that the contractor can't perform, but remains responsible for. A subcontractor provides his or her services under a contract for service.

What is a standard subcontractor agreement?

What is a Subcontractor Agreement? A subcontractor agreement is a legal document that a general contractor uses on a construction project to hire a subcontractor. This contract is a legally binding agreement that defines the terms of a smaller job within the main project to be completed by an entity that is not the GC.

What is subcontractor example?

Examples of Subcontractors Subcontractors are individuals with special skills. In construction projects, contractors will hire subcontractors who specialize in different aspects of the project, such as plumbing, electricity, painting, etc.

What is the difference between a contractor and a sub contractor?

Typically, a contractor works under a contractual agreement to provide services, labor or materials to complete a project. Subcontractors are businesses or individuals that carry out work for a contractor as part of the larger contracted project.

subcontractor information sheet template

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How do you draft a subcontractor agreement?

How to Write a Subcontractor Contract Define the needs of the project. ... Finalize the provisions of the agreement, such as the due dates. ... Clarify the terms for payment. ... Write a draft of the contract and send it to the subcontractor for her review.

What should a subcontractor agreement include?

8 things a subcontractor agreement should include Business information. Include names, businesses names, and contact information for both the subcontractor and the hiring contractor. ... Scope of work. ... Payment terms. ... Change orders. ... Licensing and insurance coverage. ... Dispute resolution. ... Termination clause. ... Flow-down provisions.

What is a subcontractor ledger?

Subcontract Ledger (SL) module works with other accounting modules to monitor the progress of subcontracts. The subcontracts can be created in the SL module, or in the PM module and then interfaced with the SL module using the PM Interface form.

What percentage should a subcontractor get?

As a very rough rule of thumb, the profit for the subcontractor should lie somewhere between 3-5% of the total job, but there is no fixed rule. Where there is some room in your agreement for negotiation is what you consider the margin for profit and what you might classify as 'contingency.

What should I look for in a subcontractor agreement?

Things You Must Know Scope of Work. A subcontractor agreement should always specify the scope of work. ... Supply Chain. Another crucial element to note in a subcontractor agreement is the supply chain and other operational risks. ... Defense & Indemnification. ... Insurance, Bonds, & Liens. ... Warranty. ... Arbitration. ... Conditional Payment.

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