Lecture 8 - Subcontract Agreements Flashcards
subcontracts should never be signed before the______ _____ is signed
prime contract
With subcontractors, the contractor needs to know with whom it is dealing as to
(1) reputation,
(2) financial resources
(3) experience and qualifications
(4) union versus non-union status
a______ ______ could be more expensive if it is unable or unwilling to do the work.
low bidder
a ____ ______ is still fully liable for the subcontractors work
prime contractor
What should a subcontract contain? (Red Flag provisions)
(1) a description of the project, and identification of the
(2) owner
(3) designer
(4) owner’s field representative
(5) contractor
(6) subcontractor
If the work is a section of work specified in the prim contract, the subcontract may refer to the _______ _____ and the applicable sections of the specifications.
plan pages
The subcontract should clearly state the basis of measurement of the subcontractor’s work, the ________ _______, and the rules (such as work hours, cleanup expected, etc.).
payment procedures
Most subcontracts have “________” and retention provisions permitting the contractor to hold some of the subcontractor’s money (actually the owner is holding it) to secure the quality and timeliness of the subcontractor’s work
“no-pay-until-paid”
It must be written into the purchase order and the subcontract because it is not provided for the in the contract and therefore cannot be flow-down language
“no-pay-until-paid”
Most state laws provide for payment to the subcontractor within _____ to ____ days after the contractor has received payment from the owner.
seven to ten days
The subcontractor must work within the overall contract schedule. It is controlled by the ________ and it must be reasonable. A rough schedule should be provided to the subcontractors when subcontract bids are requested
prime contractor
T/F: changes can result in adjustment to the schedule
True
Explain the Texas Case
the subcontractor was understaffed so the prime contractor took over the work to avoid delays.
Explain the Idaho Case
the prime contractor tried to force the subcontractor to work during inclement weather and the subcontractor refused. When the subcontract was terminated by the prime contractor, the subcontractor sued. The subcontractor won, with punitive damages because the prime contractor falsified records
liquidated damages are owed by the ________ for liquidated damages charged to the prime contractor caused by the subcontractor.
subcontractor
This provision adds damages owed by the subcontractor to the prime contractor for delays (in additional to liquidated damages) if the prime contractor’s cost of performance increased as a result of the subcontractor caused delays.
“flow of contract”
The prime contractor may have the right to make changes unilaterally, delay of suspend work, or terminate work in the same manner as the owner can do to the prime contractor.
Subcontractor changes clause
T/F: Insurance is not required with subcontractors but required with bonds
False; they are with subcontractors but not necessarily with bonds
T/F: The prime contractor wants coverage, but does not want overlaps
True
increase the amount of the
subcontractor’s bid and thereby increase the prime contractor’s bid, possibly to where it is no longer the low bidder.
Bond premiums
compensation for harm or loss
idemnification
gives the prime contractor the right to remedy the subcontractor’s work if it is not done by the subcontractor within 48 hours of receiving notification from the prime contractor
48 hour provision
gives the prime contractor the right to terminate the subcontract if the subcontractor does not rectify the problem with 72 hours of receiving notification from the prime contractor
72 hour provision
T/F: If a prime contractor is bound to a labor agreement, then it must include a union labor only provision in the subcontract. This requires the subcontractor to pay union scale wages to the workers and union scale benefits to the union
True
