Why Are Subcontractor Agreements Important

Where do you see companies with insurance certificates making mistakes? In general, there are two concerns about information about insurance certificates. The first is that the limits indicated meet or exceed the coverage requirements set out in the subcontracting agreement. These limit values should be set, among other things, based on the scale and extent of the work done, the industry and the size/heritage of the company. So it`s a good idea to have the agreement reviewed by both a lawyer and an insurance agent. Keywords AFSA General Counsel Contract Contracts Subcontractor Why Is This Important? You don`t want to be responsible for other people with whom you have no communication or relationship or to answer for your employment problems. A subcontracting agreement should always determine the scope of the work. The volume of work is what a subcontractor hires to do. A wide range of tasks is difficult to manage and can be difficult for subcontractors to do. Because the work is not well defined, it is easier to say that the subcontractors did not do the right job for the project. It is therefore essential to have a clearly defined volume of work. If so, follow the hourly rate, etc. You promised that subcontractor. Be sure to include these promises in your final agreement.

Again, these are just some of the key clauses and considerations you need to think about when developing your subcontracting agreement. The most important thing to remember is that you don`t want to compromise any of the promises you made to your own customer by briefly selling to a subcontractor. Think ahead, prepare ahead. “The importance of risk transfer is often overlooked by many sectors. It is incredible the number of times that companies – especially in the construction sector – do not accept subcontracting agreements. We often hear that a company has been using the same subcontractor for many years and trusts them. However, the appropriate risk transfer mechanisms have not been put in place in writing,” says Nate Bell, CIC, a commercial insurance lawyer with Zito Insurance Agency, Inc. The main issue with respect to the volume of work is the tension between the preference of the community and the great inconvenience of the general contractor and the specificity requirement of the subcontractor. A non-specific volume of work may force the subcontractor to bear unforeseen expenses. In addition, workloads are particularly problematic because they only become visible when the subcontractor is largely part of its work, when it is not completed (at least from the subcontractor`s point of view). To examine this issue, the subcontractor should immediately confirm that the volume of work on the offer corresponds to the work contained in the offer (quite simply when the subcontractor has also submitted the design), ensure that the subcontractor accurately determines the exclusions from the initial offer, and make all the catch-all arrangements inserted by the general contractor. The telling indication is that the subcontractor agrees to perform additional work that is required by the subcontractor`s work, as defined by the general contractor.

A small provision, or even a simple clause, that can result in high costs. The subcontract should designate the subcontractor as an independent contractor.