Lecture 8 - Subcontract Agreements

Question 1

subcontracts should never be signed before the______ _____ is signed

Answer 1

prime contract

Question 2

With subcontractors, the contractor needs to know with whom it is dealing as to

Answer 2

(1) reputation,
(2) financial resources
(3) experience and qualifications
(4) union versus non-union status

Question 3

a______ ______ could be more expensive if it is unable or unwilling to do the work.

Answer 3

low bidder

Question 4

a ____ ______ is still fully liable for the subcontractors work

Answer 4

prime contractor

Question 5

What should a subcontract contain? (Red Flag provisions)

Answer 5

(1) a description of the project, and identification of the
(2) owner
(3) designer
(4) owner’s field representative
(5) contractor
(6) subcontractor

Question 6

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.

Answer 6

plan pages

Question 7

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.).

Answer 7

payment procedures

Question 8

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

Answer 8

“no-pay-until-paid”

Question 9

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

Answer 9

“no-pay-until-paid”

Question 10

Most state laws provide for payment to the subcontractor within _____ to ____ days after the contractor has received payment from the owner.

Answer 10

seven to ten days

Question 11

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

Answer 11

prime contractor

Question 12

T/F: changes can result in adjustment to the schedule

Answer 12

True

Question 13

Explain the Texas Case

Answer 13

the subcontractor was understaffed so the prime contractor took over the work to avoid delays.

Question 14

Explain the Idaho Case

Answer 14

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

Question 15

liquidated damages are owed by the ________ for liquidated damages charged to the prime contractor caused by the subcontractor.

Answer 15

subcontractor

Question 16

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.

Answer 16

“flow of contract”

Question 17

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.

Answer 17

Subcontractor changes clause

Question 18

T/F: Insurance is not required with subcontractors but required with bonds

Answer 18

False; they are with subcontractors but not necessarily with bonds

Question 19

T/F: The prime contractor wants coverage, but does not want overlaps

Answer 19

True

Question 20

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.

Answer 20

Bond premiums

Question 21

compensation for harm or loss

Answer 21

idemnification

Question 22

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

Answer 22

48 hour provision

Question 23

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

Answer 23

72 hour provision

Question 24

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

Answer 24

True

Question 25

recruiting tool: the union hopes the workers will appreciate the pay and benefits increase and see the benefit of joining the union.

Answer 25

Union labor only provision