and educate yourself. You can also consult with an attorney or experienced professional to gain a better understanding of contracts.
CT: What are some of the troublesome contract clauses for subcontractors?
CC: As I mentioned, many subcontractors don’t realize that most of the prime contract provisions also apply to them. Read the prime contract and understand what you are agreeing to when signing a subcontract, including indemnification and insurance coverage requirements, claims procedures, protection of work and other provisions that could affect you. Make sure that out-of-state general contractors are using the right form, not an out-of-state subcontract.
Know whom you are agreeing to indemnify in the subcontract. You should never agree to indemnify the architect, engineer, or similar design professionals on a project, because if there are problems with the plans that get drawn, which can happen, then you’ll have no legal recourse. It’s okay to include language that indemnifies the City and County of San Francisco, their employees, officers and representatives, but do not include any design professionals.
Make sure that you have adequate insurance coverage to meet the client requirements. Understand the progress and final payment schedule and requirements. Understand the claims procedure outlined in the prime contract– it might call for arbitration or mediation, and stipulate that you only have 10 days to submit a claim. As a subcontractor, you need to know how to correctly follow these procedures should it become necessary.
Another good example of a provision that can sometimes get a subcontractor into trouble is the “protection of work” clause. This provision is in place to protect the prime contractor and client while a subcontractor is completing his or her portion of the work on a project, so it requires that the subcontractor fix anything that goes wrong with that portion of the work until the project is completed.
However, if you have been brought in as a subcontractor at the start of a multi-year project and the scope of your work is completed in first three months, then depending on the type of trade you are in and the risk of your work getting damaged after you are no longer on-site, it could be costly and problematic for you to agree to protect the work for the entire duration of the project. If the potential risk to your completed work is high, this
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