What is the best way to put in place a subcontractor agreement? Watch this to DRASTICALLY reduce your business risk.
Have you ever wanted to know what is the best way to put in place a subcontractor agreement? Well, so have I actually. Stick around and I’ll tell ya.
Hi everyone, Simon here from the Contract Company. Contracts, that’s what we do all day, every day. And sometimes overnight. Lucky us, and it’s true. We are pretty lucky.
Righto, so you wanna put in place a subcontractor agreement and you wanna know the best way to do it? It’s simple but it’s complicated.
The Best Way to Put in Place a Subcontractor Agreement
The simple answer is what you should do is take the contract that you have signed with the prime contractor and mirror that with your subcontractor.
So, say you’re in the middle and you’re providing services to someone up here and you wanna engage a subbie to assist you.
What you wanna do is take that head contract and mirror the terms. As in change the terms in the contract so that that reflects the new entity.
And so in that case where you would be the contractor in this contract, if you’re the middle person, you actually become the client. The contractor, who’s the subcontractor becomes the contractor in the client.
So, the parties that were here, the prime and you, get substituted so that you become the prime and the contractor which is you in that agreement, becomes the subbie in this arrangement.
And that way, what’s the benefit of doing that you may ask yourself, and I hope that was clear as mud.
Cause it probably was, that the benefit then is whatever contract you’ve signed with the head entity, the risk profile for you is exactly the same with the subbie that’s providing services to you.
Reducing Your Risk as a Contractor
So one of the big risks with subcontractor agreements is that if you sign an agreement with these people and then you sign a different agreement with your subbie, then to the extent those two contracts are different.
You as the person in the middle get caught in the sandwich and you wear that risk. So the only way to get rid of that risk is this. Make sure that the contract between you and the head entity is exactly the same as between you and your subcontracted entity.
Now, does that make sense? Clear as mud.
This often happens with Commonwealth departments. Not so much with the department itself but they often go out to market and put in place panels. And they usually engage with large entities at the contractor level.
So, Commonwealth, large entity here, and those large entities often wanna get subbies to assist them in providing service to the Commonwealth.
And so they often flow down. the contractual terms that they signed with the Commonwealth, they will flow down the exact same contract terms to the subbies.
And so they should, ’cause that’s the best way to reduce their risk. So that is the best way to put in place a sub-contractual agreement. This reduces your risk if you are the contractor or the party in the middle.
If you have any questions feel free to give us a call,. Or send us an email simon@contractcompany.com.au or give us a call, 1800-355-455. Thanks very much.
