A subcontract agreement is a legal contract between two parties in which one is the prime contractor and the other is the subcontractor. This agreement includes the expectation from the subcontractor about the services he will deliver along with the mutually agreed rates and payments for the subcontractor in return for his work.
Brief Description of Subcontract Agreement:
When you want something done, you hire a contractor. It is very common to hire contractors for construction purposes, raw material supply purposes and many others. Usually when this first contractor is hired, he is known as the prime contractor and he is the one who is responsible for all the work, progress and results on the project. Usually when a contractor understands that a project is too big for him and he can’t finish it alone, he hires another contractor or many contractors to handle small parts of the project. For example, a construction contractor hires another contractor for providing building material on the site where another contractor is hired to provide manpower to the project. These other contractors that are hired by the prime contractor are known as the subcontractors.
The key owner of the entire project doesn’t deal with the subcontractors nor does he pay them but he only meets and pays to the prime contractor and then it’s the responsibility of the prime contractor to handle the work of subcontractors and pay them well for their services. This may seem confusing but contractors know that hiring subcontractors can increase the progress of the project and this way it is easy to handle the responsibility and focus on different parts of the project. While hiring the subcontractors, the services that are required from them, the quality of services and the payments for the services are discussed and both parties mutually agreed to terms and conditions.
Here is preview of a Free Sample Subcontract Agreement Template created using MS Word,
Later, these terms and conditions are included in the legal contract that is signed by the prime and subcontractor so that both parties know what they are required to provide and what the expectations of the other party are. This legal document is known as the subcontract agreement and it is very common these days. Most of the contractors just talk to the subcontractor and include the services and their payments on a simple document and include signatures on it where on the other hand, in case of a high profile or a very important project, the prime contractor hires attorneys and lawyers to proceed with the legal documents in their supervision so that nothing will be missed in this process.
Key Elements to Add in the Subcontract Agreement:
- Name of the prime contractor
- Name of the subcontractor(s)
- Type of project to execute
- Details and specification of the project
- Detailed list of services expected from the subcontractor
- Terms and conditions of the agreement
- Mutually agreed clauses of the agreement
- Payment details and schedules
- Termination of the agreement details
- Results of violation of the agreement
- Validity and limitations of the agreement
- Signature of both parties with witnesses
Here is download link for this Subcontract Agreement Template,