What Is A Subcontractor Agreement?

If you’re a contractor and want to hire a contractor to work for you (a little contractor-ception, if you will), you’ll want to have a subcontractor agreement. Below, we’ll tell you why—and give you a simple checklist for writing your own.

March 15, 2023

Key takeaways:

  • A subcontractor agreement is a legally binding document that outlines the terms and scope of work between a contractor and a subcontractor.
  • The agreement protects both the main contractor and the subcontractor, providing clarity on payment terms, work responsibilities, and liability.
  • A well-drafted subcontractor agreement should cover important elements, such as payment terms, insurance requirements, liability provisions, and confidentiality clauses.
Why are subcontractor agreements important?

A subcontractor agreement is a legally-binding document between a contractor and a subcontractor. It outlines the terms of the agreement between the two parties and specifies the scope of work that the subcontractor will be responsible for completing. In other words, it is a contract that defines the roles, responsibilities, and expectations of both the contractor and the subcontractor.

When hiring an independent contractor, it is important to understand the difference between an independent contractor and a subcontractor. An independent contractor is an individual who provides services to a company without being an employee of that company. A subcontractor, on the other hand, is an individual or company that is hired by a contractor to perform a specific portion of a project.

For the main contractor (you!) an agreement provides assurance that the work will be completed as required and that the subcontractor will be responsible for their own equipment, insurance, and liability. For the subcontractor, it provides clarity on the scope of work, payment terms, and the timeline for completion.

A well-drafted subcontractor agreement should cover the following key elements:

Description of the work to be completed

Payment terms and schedule

Responsibilities of each party

Insurance requirements

Liability and indemnification provisions

Termination provisions

Confidentiality and non-compete clauses

It's important to note that a subcontractor agreement should be tailored to the specific requirements of each project and the parties involved.

A sample subcontractor agreement

Here is a sample subcontractor agreement that you can use as a starting point when drafting your own agreement:

Description of Work: The subcontractor shall provide [insert description of work].

Payment: The main contractor shall pay the subcontractor [insert payment amount] upon completion of the work. Payment will be made within [insert number of days] days of receipt of a valid invoice.

Responsibilities: The subcontractor shall be responsible for [insert responsibilities]. The main contractor shall be responsible for [insert responsibilities].

Insurance: The subcontractor shall maintain [insert insurance requirements].

Liability and Indemnification: The subcontractor shall be responsible for [insert liability provisions]. The main contractor shall be responsible for [insert indemnification provisions].

Termination: Either party may terminate this agreement upon [insert termination provisions].

Confidentiality and Non-Compete: The subcontractor shall keep confidential all confidential information disclosed by the main contractor and shall not compete with the main contractor for [insert time period].

A subcontractor agreement is an essential document for any independent contractor looking to  subcontractor. It helps to ensure that the project is completed as agreed upon, and helps to reduce the risk of misunderstandings and disputes between the contractor and subcontractor. When creating a subcontractor agreement, it is important to take into account all relevant legal and regulatory considerations, as well as industry standards and best practices.

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