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What is a subcontractor contract?

It is normal for businesses to hire contractors to do some of the work they need to be done. In some cases, the businesses even have to hire subcontractors. Normally, the need for subcontracting arises when businesses realize they lack the skills needed to solve some problems in-house. At such moments, subcontractors would be a better option. In fact, subcontracting has more benefits. For example, it delegates important tasks to professionals who are specialists in their fields. Many times, subcontractors also help businesses to save huge sums of money. It is good to hire these professionals after signing a simple subcontractor agreement template or subcontractor contract template with them. 

Subcontractor Contract Template
Image source: template.net

Do you have any experience in signing agreements with subcontractors? 

Do you know what a subcontracting agreement template or subcontractor contract template looks like? 

If your answers to the two questions posted above is no, then you need to look at a free subcontractor agreement template Word. Subcontracting is essential when dealing with large projects. This way, the businesses make more money than they would if they opted to do everything themselves. Subcontractors help businesses to take on more work than they would ordinarily feel equipped to do. Furthermore, subcontracting is good when dealing with a project that involves some skills you lack. It ensures you make money despite your inability to tackle the entire project yourself. 

Subcontracting is normal in specific industries, such as: 

  1. Information technology
  2. Building and construction 

Subcontracting helps to build businesses. A simple subcontractor agreement template is a great tool for procuring professional services and expertise. As stated above, some jobs require specific skills. It is a fact that neither you nor any other person in the world is competent in everything. You are better at some work than others. The services a subcontractor offers are important in situations where you have to sign off and indicate your skills at the end of a project. Without the requisite skills, you may not have the right and powers to sign off on the project. 

1. Quantitative benefits of using a subcontractor contract template

Subcontracting guarantees quantitative benefits. First, it reduces costs. For example, it saves you from spending the money you would normally pay to hire a whole team to work for you on a permanent basis. Apart from that, it also enables you to improve performance at work. The subcontractors understand that they have a small window of opportunity to impress those with whom they work. Consequently, they do everything well to enhance their reputation in the industry. 

With all these benefits, it’s good to learn how to prepare good sample subcontractor agreement or subcontractor contract template . 

When you hire a subcontractor, you hope to get a professional who will assure you of the excellent quality of the products and services you need. As you will see from the simple subcontractor agreement template, you can include clauses in the contract to guarantee this. Use language the subcontractor and anyone else who reads the contract can understand. It is important to demand for high quality for all the products and services you need. Plenty of resources are necessary for this to happen though; hence, the need for putting subcontractors to the task. 

A few subcontractors would wish to do the minimum required to finish the task and wait for their payment. It is good for you to know what to do to make them put in the effort needed to finish the job you are currently doing. Finishing the job isn’t enough if the subcontractors will do a horrible job. Subcontractors should be able to increase productivity and do whatever is required to present excellent results. Again, this explains why you need the free subcontractor agreement template Word to learn the language to use to tie them down to offer the quality of services you need. 

It is obvious that subcontractors are specialists at what they do. They have the skills, training, and equipment needed to do an excellent job. With these specialists nearby, you can focus on what you are good at and guarantee your clients topnotch work. Increased productivity makes your clients happy. It also brings in new clients to your business. The word soon spreads that you offer topnotch work and results. Clients love hiring professionals whose productivity is not in any doubt. More than that, they love working with specialists who desire to impress clients by taking their work seriously. 

Subcontracting is great for many reasons, as you would have realized by now. One of the reasons is the fact it is a great way of preventing some of the problems you are likely to encounter in the course of a project. This is only possible when you take your time to choose the most suitable subcontractor for the project you have in mind. With the right subcontractor by your side, you will have little difficulty in overcoming problems and complications that might arise. More importantly, you also get the chance to prevent the same problems and complications. Read the sample subcontractor agreement or subcontractor contract template to see how you can do all these. 

Subcontractor Contract Template Sample
Image source: biztreeapps.com

As you will see from the template, the wording of the subcontracting agreement matters greatly. You are only able to prevent problems by wording the agreement such that: 

  1. Subcontractor is discouraged from working with incompetent assistants
  2. Subcontractor is dissuaded from poor execution of work

What should be included in a subcontractor contract template?

Apart from quantitative benefits, subcontracting also has several qualitative advantages. For example, it guarantees a highly strategic way of using the available resources. What this means is the subcontractor enables you to reduce wastages. It allows you to focus on the core functions of your business. It helps you to keep your eyes on the ball and not get distracted. With a good subcontractor agreement, you assign the project to professionals who manage it well and deliver everything you wanted. The professional subcontractors coordinate every aspect of the project. They take ownership of the work thus allowing you to focus on other aspects of your business that also need your full attention. 

The other qualitative benefit you get from hiring subcontractors is increased flexibility. For this to happen, though, the subcontractor agreement has to spell what your roles will be vis-à-vis those of the subcontractor. Once more, look at the simple subcontractor agreement template. When you do that, you will see how you should word it to avoid a situation where the subcontractor is unsure of what he should be doing. Once the subcontractor knows his tasks and responsibilities well, you will have more time on your hands. This will then enable you to focus on the business’ real priorities. Therefore, you enjoy more flexibility to do more stuff for your business. 

How much do you care about your reputation? Professionals who value their reputation the nothing for granted. The subcontractor agreement template can equip and prepare you to know how to identify the right team to surround yourself with. The right team that is around you will help you take good care of the reputation you have taken years to build. You can do several things to protect your reputation. Doing this often involves training those with whom you work – whether peers or subordinates – to learn how to handle different situations they face every day. 

Subcontractors already know how to handle problems by virtue of their training. 

You are a stakeholder in the project for which you hired a subcontractor to help you complete. An experienced subcontractor understands the importance of keeping you in the loop regarding everything that is happening – whether good or bad. The subcontractors understand that failure to keep you on top of the situation that arises could affect their relationship with you going forward. In fact, that lack of communication could discourage you from hiring them next time. Good subcontractors are concerned about their future and place in the project. For this reason, they are willing to protect you and the project by keeping you informed. 

All stakeholders must be kept informed of all the happenings in a project. 

The ability to assess opportunities that present themselves before you is an added qualitative benefit that you get from subcontracting some of your work. Once more, you cannot enjoy this benefit if you opt to ignore the contents of the subcontract agreement template. A template guides you, so you know what to do. It guides you so that you are equipped to play different roles that ensure the project is completed professionally and on time. As the subcontractors assess opportunities, they will feel energized to try new things out. Consequently, they will use their creativity and imagination to identify solutions to some of the problems they encounter. 

Subcontracting some of the work means delegating it to people competent enough to know what to do. Once you subcontract any work, you no longer have to stick around supervising the professionals do the job your way. Instead, it involves ceding a bit of the ground to these experts thus allowing them to identify the appropriate solutions to each problem they encounter along the way. Subcontractors will then test new ways of doing things and share the information with you. They may not share with you information regarding how they solved a problem, especially if the solution has to do with their trade secrets. 

If you want them to share everything, you must state so unequivocally in the contract. 

Use the subcontracting agreement template or subcontractor contract template as a guideline to determine what you can or cannot expect subcontractors to share with you. The contract should have clauses that deal with issues such as confidentiality or non-disclosure policies but only if all the parties or signatories to the free subcontractor agreement template Word believe they should feature. Anything that is in the template is worth considering or featuring on the real agreement or contract. That is the best way of putting into practice everything you have learned. The business will then benefit as it enjoys a more streamlined process, which then enables you to work smoothly and professionally with the subcontractors. 

Subcontractor Contract Template Example
Image source: dotxls.org

What are the essentials of a subcontractor contract?

Having said that, some things you cannot learn from the sample subcontractor agreement template. 

For example, the template cannot teach you the tips and tricks of negotiating a solid agreement. It cannot make you a solid negotiator. For this to happen, you have to practice and learn from other experts. What the template can teach you, though, is to anticipate the scope or extent of the work the subcontractor has to do. With this knowledge, you can then embark on proper negotiations for a more favorable contract or agreement. As you will also learn from the template, you cannot sign an agreement if you have no idea how much time it will take to complete the project. Such information will also help your negotiations. 

A solid agreement always clarifies issues regarding materials and supplies required for the project. It clears the air on matters such as the identity of the party responsible for providing materials. It also mentions the time when the materials have to be on the site for the project to proceed uninterrupted. Other than issues regarding materials, the template also equips you to negotiate your payments well. In fact, you have to negotiate on everything regarding payments – including the methods and terms. Agree how much money the subcontractor will be paid, when he will be paid, and how he will be paid. 

The subcontractor agreement template can give you a hint of these issues and more. It does not do everything for you. It only opens your mind and eyes. With the open mind and eyes, you can now negotiate with the subcontractor confidently. 

The subcontractor agreement template and subcontractor contract template are powerful learning tools. Through it, you will learn what to focus on while drafting an actual agreement. You will learn how to identify each party. You will have no problem defining the scope of the kind of work the subcontractor will do. What is more, you will excel at listing the rights as well as duties of each person that signs the agreement. As you will learn from the template, clauses – especially regarding indemnity and warranty – must appear on the actual contract or agreement. Therefore, get the template, study and learn from it to make you better at negotiating with subcontractors.

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Subcontractor Contract Template

This Contract is between Sample Client (the "Client") and John Doe (the "").

The Contract is dated [the date both parties sign].

1. WORK AND PAYMENT.

1.1 Project. The Client is hiring the to do the following: The Contractor will assist the Client with specialized services.

1.2 Schedule. The will begin work on August 22, 2020 and the work is ongoing. This Contract can be ended by either Client or at any time, pursuant to the terms of Section 6, Term and Termination.

1.3 Payment. The Client will pay the a rate of $70.00 (USD) per hour. Of this, the Client will pay the $450.00 (USD) before work begins.

1.4 Expenses. The Client will reimburse the 's expenses. Expenses do not need to be pre-approved by the Client.

1.5 Invoices. The will invoice the Client weekly. The Client agrees to pay the amount owed within 15 days of receiving the invoice. Payment after that date will incur a late fee of 5.0% per month on the outstanding amount.

1.6 Support. The will not provide support for any deliverable once the Client accepts it, unless otherwise agreed in writing.

2. OWNERSHIP AND LICENSES.

2.1 Client Owns All Work Product. As part of this job, the is creating “work product” for the Client. To avoid confusion, work product is the finished product, as well as drafts, notes, materials, mockups, hardware, designs, inventions, patents, code, and anything else that the works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to practice—as part of this project, whether before the date of this Contract or after. The hereby gives the Client this work product once the Client pays for it in full. This means the is giving the Client all of its rights, titles, and interests in and to the work product (including intellectual property rights), and the Client will be the sole owner of it. The Client can use the work product however it wants or it can decide not to use the work product at all. The Client, for example, can modify, destroy, or sell it, as it sees fit.

2.2 's Use Of Work Product. Once the gives the work product to the Client, the does not have any rights to it, except those that the Client explicitly gives the here. The Client gives the Contractor permission to use the work product as part of the Contractor's portfolio and websites, in galleries, and in other media, so long as it is to showcase the Contractor's work and not for any other purpose. The Contractor is not allowed to sell or otherwise use the work product to make money or for any other commercial use. The Client is not allowed to take back this license, even after the Contract ends.

2.3 's Help Securing Ownership. In the future, the Client may need the 's help to show that the Client owns the work product or to complete the transfer. The agrees to help with that. For example, the may have to sign a patent application. The Client will pay any required expenses for this. If the Client can’t find the , the agrees that the Client can act on the 's behalf to accomplish the same thing. The following language gives the Client that right: if the Client can’t find the after spending reasonable effort trying to do so, the hereby irrevocably designates and appoints the Client as the 's agent and attorney-in-fact, which appointment is coupled with an interest, to act for the and on the 's behalf to execute, verify, and file the required documents and to take any other legal action to accomplish the purposes of paragraph 2.1 (Client Owns All Work Product).

2.4 's IP That Is Not Work Product. During the course of this project, the might use intellectual property that the owns or has licensed from a third party, but that does not qualify as “work product.” This is called “background IP.” Possible examples of background IP are pre-existing code, type fonts, properly-licensed stock photos, and web application tools. The is not giving the Client this background IP. But, as part of the Contract, the is giving the Client a right to use and license (with the right to sublicense) the background IP to develop, market, sell, and support the Client’s products and services. The Client may use this background IP worldwide and free of charge, but it cannot transfer its rights to the background IP (except as allowed in Section 11.1 (Assignment)). The Client cannot sell or license the background IP separately from its products or services. The cannot take back this grant, and this grant does not end when the Contract is over.

2.5 's Right To Use Client IP. The may need to use the Client’s intellectual property to do its job. For example, if the Client is hiring the to build a website, the may have to use the Client’s logo. The Client agrees to let the use the Client’s intellectual property and other intellectual property that the Client controls to the extent reasonably necessary to do the 's job. Beyond that, the Client is not giving the any intellectual property rights, unless specifically stated otherwise in this Contract.

3. COMPETITIVE ENGAGEMENTS. The won’t work for a competitor of the Client until this Contract ends. To avoid confusion, a competitor is any third party that develops, manufactures, promotes, sells, licenses, distributes, or provides products or services that are substantially similar to the Client’s products or services. A competitor is also a third party that plans to do any of those things. The one exception to this restriction is if the asks for permission beforehand and the Client agrees to it in writing. If the uses employees or subcontractors, the must make sure they follow the obligations in this paragraph, as well.

4. NON-SOLICITATION. Until this Contract ends, the won’t: (a) encourage Client employees or service providers to stop working for the Client; (b) encourage Client customers or clients to stop doing business with the Client; or (c) hire anyone who worked for the Client over the 12-month period before the Contract ended. The one exception is if the puts out a general ad and someone who happened to work for the Client responds. In that case, the may hire that candidate. The promises that it won’t do anything in this paragraph on behalf of itself or a third party.

5. REPRESENTATIONS.

5.1 Overview. This section contains important promises between the parties.

5.2 Authority To Sign. Each party promises to the other party that it has the authority to enter into this Contract and to perform all of its obligations under this Contract.

5.3 Has Right To Give Client Work Product. The promises that it owns the work product, that the is able to give the work product to the Client, and that no other party will claim that it owns the work product. If the uses employees or subcontractors, the also promises that these employees and subcontractors have signed contracts with the giving the any rights that the employees or subcontractors have related to the 's background IP and work product.

5.4 Will Comply With Laws. The promises that the manner it does this job, its work product, and any background IP it uses comply with applicable U.S. and foreign laws and regulations.

5.5 Work Product Does Not Infringe. The promises that its work product does not and will not infringe on someone else’s intellectual property rights, that the has the right to let the Client use the background IP, and that this Contract does not and will not violate any contract that the has entered into or will enter into with someone else.

5.6 Client Will Review Work. The Client promises to review the work product, to be reasonably available to the if the has questions regarding this project, and to provide timely feedback and decisions.

5.7 Client-Supplied Material Does Not Infringe. If the Client provides the with material to incorporate into the work product, the Client promises that this material does not infringe on someone else’s intellectual property rights.

6. TERM AND TERMINATION. This Contract is ongoing, until ended by the Client or the . Either party may end this Contract for any reason by sending an email or letter to the other party, informing the recipient that the sender is ending the Contract and that the Contract will end in 7 days. The Contract officially ends once that time has passed. The party that is ending the Contract must provide notice by taking the steps explained in Section 11.4. The must immediately stop working as soon as it receives this notice, unless the notice says otherwise. The Client will pay the for the work done up until when the Contract ends and will reimburse the for any agreed-upon, non-cancellable expenses. The following sections don’t end even after the Contract ends: 2 (Ownership and Licenses); 3 (Competitive Engagements); 4 (Non-Solicitation); 5 (Representations); 8 (Confidential Information); 9 (Limitation of Liability); 10 (Indemnity); and 11 (General).

7. INDEPENDENT CONTRACTOR. The Client is hiring the as an independent contractor. The following statements accurately reflect their relationship:

- The will use its own equipment, tools, and material to do the work.- The Client will not control how the job is performed on a day-to-day basis. Rather, the is responsible for determining when, where, and how it will carry out the work.- The Client will not provide the with any training.- The Client and the do not have a partnership or employer-employee relationship.- The cannot enter into contracts, make promises, or act on behalf of the Client.- The is not entitled to the Client’s benefits (e.g., group insurance, retirement benefits, retirement plans, vacation days).- The is responsible for its own taxes.- The Client will not withhold social security and Medicare taxes or make payments for disability insurance, unemployment insurance, or workers compensation for the or any of the 's employees or subcontractors.

8. CONFIDENTIAL INFORMATION.

8.1 Overview. This Contract imposes special restrictions on how the Client and the must handle confidential information. These obligations are explained in this section.

8.2 The Client’s Confidential Information. While working for the Client, the may come across, or be given, Client information that is confidential. This is information like customer lists, business strategies, research & development notes, statistics about a website, and other information that is private. The promises to treat this information as if it is the 's own confidential information. The may use this information to do its job under this Contract, but not for anything else. For example, if the Client lets the use a customer list to send out a newsletter, the cannot use those email addresses for any other purpose. The one exception to this is if the Client gives the written permission to use the information for another purpose, the may use the information for that purpose, as well. When this Contract ends, the must give back or destroy all confidential information, and confirm that it has done so. The promises that it will not share confidential information with a third party, unless the Client gives the written permission first. The must continue to follow these obligations, even after the Contract ends. The 's responsibilities only stop if the can show any of the following: (i) that the information was already public when the came across it; (ii) the information became public after the came across it, but not because of anything the did or didn’t do; (iii) the already knew the information when the came across it and the didn’t have any obligation to keep it secret; (iv) a third party provided the with the information without requiring that the keep it a secret; or (v) the created the information on its own, without using anything belonging to the Client.

8.3 Third-Party Confidential Information. It’s possible the Client and the each have access to confidential information that belongs to third parties. The Client and the each promise that it will not share with the other party confidential information that belongs to third parties, unless it is allowed to do so. If the Client or the is allowed to share confidential information with the other party and does so, the sharing party promises to tell the other party in writing of any special restrictions regarding that information.

9. LIMITATION OF LIABILITY. Neither party is liable for breach-of-contract damages that the breaching party could not reasonably have foreseen when it entered this Contract.

10. INDEMNITY.

10.1 Overview. This section transfers certain risks between the parties if a third party sues or goes after the Client or the or both. For example, if the Client gets sued for something that the did, then the may promise to come to the Client’s defense or to reimburse the Client for any losses.

10.2 Client Indemnity. In this Contract, the agrees to indemnify the Client (and its affiliates and its and their directors, officers, employees, and agents) from and against all liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of: (i) the work the has done under this Contract; (ii) a breach by the of its obligations under this Contract; or (iii) a breach by the of the promises it is making in Section 5 (Representations).

10.3 Indemnity. In this Contract, the Client agrees to indemnify the (and its affiliates and its and their directors, officers, employees, and agents) from and against liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of a breach by the Client of its obligations under this Contract.

11. GENERAL.

11.1 Assignment. This Contract applies only to the Client and the . The cannot assign its rights or delegate its obligations under this Contract to a third-party (other than by will or intestate), without first receiving the Client’s written permission. In contrast, the Client may assign its rights and delegate its obligations under this Contract without the 's permission. This is necessary in case, for example, another Client buys out the Client or if the Client decides to sell the work product that results from this Contract.

11.2 Arbitration. As the exclusive means of initiating adversarial proceedings to resolve any dispute arising under this Contract, a party may demand that the dispute be resolved by arbitration administered by the American Arbitration Association in accordance with its commercial arbitration rules.

11.3 Modification; Waiver. To change anything in this Contract, the Client and the must agree to that change in writing and sign a document showing their contract. Neither party can waive its rights under this Contract or release the other party from its obligations under this Contract, unless the waiving party acknowledges it is doing so in writing and signs a document that says so.

11.4 Notices.

(a) Over the course of this Contract, one party may need to send a notice to the other party. For the notice to be valid, it must be in writing and delivered in one of the following ways: personal delivery, email, or certified or registered mail (postage prepaid, return receipt requested). The notice must be delivered to the party’s address listed at the end of this Contract or to another address that the party has provided in writing as an appropriate address to receive notice.

(b) The timing of when a notice is received can be very important. To avoid confusion, a valid notice is considered received as follows: (i) if delivered personally, it is considered received immediately; (ii) if delivered by email, it is considered received upon acknowledgement of receipt; (iii) if delivered by registered or certified mail (postage prepaid, return receipt requested), it is considered received upon receipt as indicated by the date on the signed receipt. If a party refuses to accept notice or if notice cannot be delivered because of a change in address for which no notice was given, then it is considered received when the notice is rejected or unable to be delivered. If the notice is received after 5:00pm on a business day at the location specified in the address for that party, or on a day that is not a business day, then the notice is considered received at 9:00am on the next business day.

11.5 Severability. This section deals with what happens if a portion of the Contract is found to be unenforceable. If that’s the case, the unenforceable portion will be changed to the minimum extent necessary to make it enforceable, unless that change is not permitted by law, in which case the portion will be disregarded. If any portion of the Contract is changed or disregarded because it is unenforceable, the rest of the Contract is still enforceable.

11.6 Signatures. The Client and the must sign this document using Bonsai’s e-signing system. These electronic signatures count as originals for all purposes.

11.7 Governing Law. The laws of the state of Kentucky govern the rights and obligations of the Client and the under this Contract, without regard to conflict of law principles of that state.

11.8 Entire Contract. This Contract represents the parties’ final and complete understanding of this job and the subject matter discussed in this Contract. This Contract supersedes all other contracts (both written and oral) between the parties.

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