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5 Tips For Subcontractor Agreements

Getting in the habit for using a simple subcontractor agreement will dramitcally avoid costly future disruptions in your business.  Whether it be misunderstanding with general contractors or subcontractors, this agreement will help you manage relationships as well as insurance requirements.


 

Use these 5 tips in completing your simple subcontractor agreement and this document will pay big dividends for your business down the line.
Some common section headers include:

1. Be specific.  Take the time to outline expectations and use dates and dollar figures for penalites/awards.   

2. Use Initials.  Have the other party as well as yourself initial important parts of the contract.  There are some violations that are like murder and other other violations like parking tickets.  Make sure both parties understand the importance of specific parts of the contract.

 

3. Be Reasonable.  If you are a small subcontractor/general contractor you cannot have the same penalties/requirements as working for a large contractor.  Know who you are dealing with and make appropriate bonuses/penalties.

4. Insurance Requirement Demands- You are not going to be able to demand same insurance requirements as Walmart.  The most important parts of insurance demands are Workers Compensation and General Liability.  Generally speaking 500/500/500 for workers compensation and $1,000,000 per Occurrence/$2,000,000 aggregate are acceptable for businesses under $2,000,000 in revenue

5. Time Frames – Give yourself room for error.  Don’t try to come up with dates and finish dates as if they were only possible if everything went perfect.  Doing this will cause bad blood between all parties concerned when dates are not lived up to.

 

 

Taking the time on the front end of your job to hammer out details will help everyone involved in the contract.  You will avoid costly audits and help maintain quality relationships using a simple subcontractor agreement for years to come.

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