Too often subcontractors sign forms without fully comprehending the very serious legal implications of many of the subcontract clauses that give the prime contractor unnecessary legal and practical advantages.
Subcontractors must read each subcontract carefully and completely to discover the legal pitfalls of such clauses.
Some prime contractors’ proprietary subcontractor forms have been intentionally drafted to achieve legal and practical advantages over subcontractors. Indeed, these forms have become increasingly lengthier and more complicated, and are devised by attorneys to protect the interests of the prime contractors at the expense of subcontractors.
Through ASA educational programs and materials, many subcontractors have become aware of the practical problems and legal pitfalls of subcontract clauses and are negotiating changes in the clauses that are unduly harsh on subcontractors. Subcontractors are not only faced with harsh provisions imposed on them by the terms of the subcontract, but they often are faced with additional harsh terms imposed on them in the terms of the prime contract.
As a practical matter, it is very important for the subcontractor to obtain a commitment at the bid date that a neutral form will be used. One way a subcontractor can do this is to condition its bid on a neutral document, such as the ConsensusDocs Form 750, Agreement Between Constructor and Subcontractor. ASA provides a Subcontractor Bid Proposal as part of its ASA Subcontract Documents Suite to help members do just that.
Another approach is to use an addendum to attach to a prime contractor’s proprietary subcontract form. One such tool is the ASA Subcontract Addendum, also part of the ASA Subcontract Documents Suite. The instructions included in the Suite describe how to use both of these approaches. Remember, the goal of both the prime contractors and subcontractors is to build buildings, not fight about the form. When one form becomes irrationally loaded to the legal and detriment of one party, it frequently leads to trouble for all the parties.
For more on this topic, please visit our page: Professional Standards of Practice for Construction Subcontractors.
Or come visit on of our Chapter Meetings in your area to talk to fellow subcontractors.
