What is a sub-contractor agreement?
The basics: A sub-contractor agreement (or sub-contract) should be used where a supplier of services (or goods) is engaging a third party to provide part or all of the work or services on a particular project. Often the subcontractor has specialist expertise or resources that are needed to complete the project.
Understand the full contract structure: Where a sub-contractor is being used, there are generally at least three parties that will be involved in the project:
- The Client - this is the party that will be purchasing the goods / services, and the end-customer that is receiving those goods / services;
- The Main Contractor - this is the party that will be engaged by the client to provide the goods / services. There will be a contract in place between the client and the main contractor that is often referred to as the "main contract";
- The Sub-Contractor - this party is being engaged by the main contractor to provide part (or all) of the goods / services being purchased by the client. There will be no contract between the client and the sub-contractor - the relationship will be between the main contractor and the sub-contractor.
Back-to-back arrangement: This sub-contract template assumes that the services being provided by the sub-contractor are being provided "back-to-back" with the services that the main contractor has agreed to provide to the client under the main contract. This means the same obligations (and rights) that are available to the main contractor under the main contract are flowed down to the sub-contractor under the sub-contractor agreement. The purpose of a back-to-back agreement is to ensure consistency in the terms and conditions of the project across all parties involved. This type of agreement can help to reduce the risk of disputes and misunderstandings between the client, main contractor, and sub-contractor. If the services are not being supplied on a back-to-back basis, please see one of our service contract templates or freelance contract template instead.
How can this sub-contract template be used in practice?
Practical example: If you are the supplier of IT services, you may be engaged by a client to provide a range of IT-related services, including providing software and hardware, providing support and maintenance services and assisting with the installation of software. You may want to engage a sub-contractor to provide a certain element of those services, perhaps because the sub-contractor has resources and expertise in that area that your business doesn't. For example, the IT service provider may engage a sub-contractor to provide the support services to the client, rather than providing the support services directly itself. A sub-contractor agreement would be put in place between the IT service provider and the third party providing the support services.
Commercial projects: This sub-contract template can be used where a sub-contractor is being engaged on commercial projects, to provide goods and/or services. This template should not be used where the sub-contractor is being engaged to carry out construction works, as a construction law specific contract should be used in that case.
What does Docue's sub-contractor agreement template include?
Key provisions: Docue's dynamic sub-contract template includes the option to include (amongst others) the following clauses:
- Scope of work - so it is clear exactly what the sub-contractor is expected to provide under the agreement;
- Flow down of main contract - so that the terms of the main contract are incorporated (so far as they relate to the scope of work) and the sub-contractor becomes bound by them;
- Charges - the charges due to the sub-contractor for their work and the payment terms that relate to those charges;
- Warranties - the option to include warranties (contractual promises) from the sub-contractor in relation to the goods / services;
- Limitation of liability - the option to include liability caps that limit a party's potential financial exposure under the sub-contract in the event of a claim for breach of contract. For more information about liability clauses, read this blog; and
- Termination - so it is clear when the contract can be brought to an end early.
Why use Docue's sub-contract template?
Created by lawyers: Docue’s sub-contract template is lawyer-made and maintained, and has lawyer-crafted guidelines to steer you through every stage of drafting an agreement which is right for your business.
Easy to use: Docue allows your business to create, customise, sign, store, and manage your agreements all in one place. Simply click through the intelligent tick box options and text box answers and you’ll have a comprehensive, tailored, and ready-to-use sub-contractor agreement template in no time.
Full contract process: Once you have created a contract that is tailored to your business needs, you can send the contract to each of the parties for e-signing. After the contract is signed, you can store the agreement in Docue’s storage vault, Docue Drive, to ensure you always have quick and easy access to your contracts in one place. You can ensure you never miss a contract renewal again by enabling Docue’s handy reminders to notify yourself of the next upcoming deadline.
Tags: sub-contract, sub-contract template, sub-contractor agreement, sub-contractor contract, back-to-back agreement
