Contractors should always have a signed written agreement with any subcontractor they bring onto a job. But what should that agreement cover? MMG Insurance recommends the following:
WHO
- Identify all parties involved in the contractor/sub-contractor agreement.
- Specify who obtains permits.
- State which party is to provide required safety equipment and training.
WHAT
- Define the scope of work to be performed, and include dates for specific services, if applicable.
- List what materials the subcontractor is responsible for providing.
- Outline how Change Orders will be handled (in writing, impact on price, etc.)
WHEN
- Specify when the agreement becomes effective.
- State the completion date.
WHERE
- List where the services will be performed.
HOW
- Include how much the subcontractor will be paid.
- Specify how the subcontractor will be paid.
OTHER CONSIDERATIONS
- Include an indemnification clause approved by legal counsel. The clause language should require the subcontractor to defend and indemnify the primary contractor for losses arising out of the subcontractor’s negligence.
- Always obtain proof of Worker’s Compensation, Disability, and Liability coverage from all subcontractors.
All contracts should be reviewed by legal counsel to ensure the language is accurate and sufficiently addresses services offered.