In a previous article, we gave a basic overview of five clauses that subcontractors and contractors should be ready to come to some agreement on when drafting up their legal contract. These clauses included site conditions and indemnification, among others. We cannot stress enough the importance of a Jacksonville contractor lawyer, one who can expertly review and draft legal documents for suitability for all parties involved.
There are quite a few clauses that can be drafted into a contract so we feel this subject warrants another visit. In this article, we’ll go over three more clauses that subcontractors and contractors should negotiate before moving forward with a project.
Subcontractors should give special attention to the flow-through clause to ensure they are not taking on obligations that are really obligations between the owner and contractor. This clause should have some restrictions and not bind the subcontractor to all of the contractor’s responsibilities and obligations. Options for the subcontractor include removing the clause altogether or requesting the same rights as the contractor or limiting subcontractor obligations in relation to things like plans, specifications, insurance, payment, warranties, and so forth.
The Pay-If-Paid and the Pay-When-Paid clauses are of great importance. With a Pay-If-Paid clause, a subcontractor’s ability to get paid is affected because the subcontractor’s payment is contingent upon the general contractor being paid by the owner. Although both clauses seem similar, the Pay-When-Paid clause provides that the subcontractor’s ability to get paid occurs after the contractor is paid; however, contractors are still required to pay subcontractors within a certain time period after receiving the payment from the owner. The Pay-If-Paid places more risk on the subcontractor then does the Pay-When-Paid clause.
Owners or contractors may request changes that can affect the timing and pricing of the project. These changes (and extra work) need to be negotiated and contractors should reaffirm fees associated with changes. To lessen the probability of dispute, changes orders should be in writing and clearly outline the approval and denial process for granting the changes orders.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.