Subcontractor Agreement

Subcontractor Agreements define the relationship between you and another business entity that you have engaged for the purpose of completing a project or for accomplishing a clearly defined sub-portion of a project. You may be working directly for the customer who originally defined the project and is the ultimate source of funding, or you yourself may be a subcontractor. It doesn’t matter, as you still must clearly establish what your subcontractor must do for you.

A subcontractor is someone who is responsible for keeping their own records and paying their own taxes, and is not your employee. Additionally, you, the contractor, are not responsible for paying the individuals that the subcontractor engages.

The subcontractor agreement defines what you expect of your subcontractor and what his or her responsibilities are. It also specifies the payment that your subcontractor can expect to receive for his or her efforts, with time frames specified for completion of all or parts of the subcontracted work. It is also very important that the agreement binds your subcontractor to the same constraints that you yourself are made subject to by the agreement you signed as a contractor or subcontractor, as the case may be.

A typical Subcontractor Agreement will begin with first your business heading, and, directly below that, that of your subcontractor. The agreement is dated, and there is a brief, general description of the overall project.

If the agreement is for professional services such as bookkeeping or accounting, the agreement can be quite simple. All that really needs to be stated is the due date, and either the total amount to be paid on completion of the contract, or an hourly rate.

For complex projects that require the use of raw materials or parts, such as construction, there must be a more detailed discussion of the work that is expected of the subcontractor. This will be followed by specifics of the benchmarks that the subcontractor must reach, and the time deadlines for each. The amounts that the subcontractor is to be paid for achieving each benchmark are nailed down, as are any possible penalties for missing those goals.

It is also very important to specify who will be responsible for furnishing any tools or instruments that will be necessary to do the job. If any raw materials or parts are required, whose responsibility it is to pay for them and to guarantee them also must be clearly defined.

If there are any requirements for confidentiality or nondisclosure required, these, too, must be spelled out. Finally, at the end of the agreement, there are places for both the contractor and the subcontractor to print and sign their names.