There is a misconception about contractor agreement and the subcontractor agreement which people think this is the same. In fact, in terms of meaning, both of them are so different. So, before you issue the agreement, it is important to understand the difference between the two especially if your business needs their service to complete a certain task.
If we look forward to the definition, a contractor is basically not an employee. They stand as the independent entity which performs a specific task for a company. Meanwhile, the subcontractor is another term under the contractor (let say it is a department) which handles the smaller task in specific details. In this case, this subcontractor will complete the task required by the contractor or for instance, they work together to complete the work from a company but the contractor will take the whole responsibility.
What Is Subcontractor Agreement?
The subcontractor agreement is basically a legal agreement between the subcontractor and the contractor. The specification and the languages are clear that the subcontractor will do certain tasks.
Therefore, if you are a contractor who wants to make the agreement professional and legal, having a written agreement written professionally is the best thing this also includes the payments. In this case, the subcontractors’ taxes will not be the contractors’ responsibility
Things To Do Before Issuing A Subcontractor Agreement
There are certain things to do before issuing the agreement. The first is making sure that the company allows the contractor to work with the subcontractor. This is included in the Master Agreement after both parties enter the contractual agreement. If the company doesn’t allow it, this means they want the original contractor to complete the task which when it is broken, the client has a legal option to sue the contractor based on the Master Agreement.
In terms of language, it should have a unique and clear language that both parties understand.
Who Needs The Subcontractor Agreement
The subcontractor agreement is not always limited to the contractors, but also some fields including:
- Construction contractors
- Commercial Property Owners
- E-commerce Operators
- Entrepreneurs and Sole Properties
- Independent Contractors Hiring Other Subcontractors
- Home Owners
- Individuals Seeking To Hire Subcontractors
- Limited Liability Corporations
- And Small Business Owners
What Are The Necessary Things Should Be Included?
- The scope of The Project – It defines the work and responsibilities Or Obligation should be done.
- Timing – This relates to the timely completion which defines the clear expectation of a contractor when all the works are done.
- Payment – The payment and billing clause relate with the payment that will be received whether it is hourly, weekly until monthly. This also includes the maximum hours, payment milestones, expected time invoice, fixed price and etc.
Besides some other things which should be in the agreement including the insurance all things related to the accidental damages. Any kind of agreement should be written in detail and it should be clear to avoid certain dispute in the future. After all, this will be the contractor responsibility to the company so be mindful.