Subcontractor Agreement
A Sub-Contractor Agreement is a legal document that you can use to set out the terms and conditions between a contractor and sub-contractor for the provision of services.
Last updated December 20, 2024
Suitable for Australia
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Frequently asked questions
Use this Sub-Contractor Agreement if:
- You would like to engage a sub-contractor; or
- You would like to offer sub-contracting services to another entity.
What does the Sub-Contractor Agreement cover?
- Term of the Agreement;
- Fees and payment details;
- Indemnification;
- Obligations of sub-contractor;
- Service ordering;
- Reporting;
- Performance;
- Termination;
- Warranties and disclaimers;
- Maintenance and support; and
- Dispute resolution.
Other names for Subcontractor Agreement include:
- Independent Contractor Agreement; and
- Sub-Contractor Contract.
What’s the difference between a Subcontractor Agreement and a contractor agreement?
A Sub-Contractor Agreement, is a legal document that you can use to set out the terms and conditions between a contractor and sub-contractor for the provision of services. A Sub-contractor Agreement clearly sets out the terms and conditions of the relationship.
A Contractor Agreement (Individual) allows you to hire a contractor that is an individual (ie. not a registered company). The Independent Contractor Agreement also sets out the important legal terms, such as clauses on IP, confidentiality, warranties and Indemnities and more. Utilising independent contractors is a very effective avenue for business' and companies that want to tap into specialised individuals that might not otherwise be available or affordable.
Is a Subcontractor Agreement legally binding?
A subcontractor agreement is legally binding between the two parties when ‘consideration’ is given by at least one of those parties (such as a payment of money or service delivery), and both parties intend for the contract to be legally binding, often determined by the parties signature.
What are the requirements of a Sub-Contractor?
Subcontractors are self-employed individuals or companies that work on a part of a contract between a primary contractor and a client. To legally operate as a subcontractor in Australia you will need to register for a Tax File Number (TFN), Australian Business Number (ABN) and in certain circumstances you will need to register for Goods and Services Tax (GST).
What are the best negotiation tips when subcontracting?
It is important for a subcontractor (Sub) to understand their contractual rights and have them in writing to ensure both parties have an “even playing field”. A Sub has a right to negotiate any contract before signing, and both parties must agree to any changes and record them in the contract they sign.
Negotiating does not come naturally to most people but with careful preparation and basic understanding of what makes a workable contract, you will be better placed to negotiate a contract that works for you.
Prepare
Good preparation is essential for successful negotiation. It will give you more confidence to negotiate and improve your chances of getting an outcome that works for you. Learn about the hirer’s business before you begin negotiations. Their website, if they have one, is a good place to start. What does the hirer produce? Who is their market? What are their strengths and weaknesses? But most of all, make sure you have a clear idea of what you want from the contract.
Be professional
Be mindful of the way you present yourself and your business during negotiations and be respectful towards the hirer. Being business-like in your approach helps to build and maintain good business relationships. It will also help you and the hirer address potential problems before they arise.
Understand your rights
Independent contracting arrangements are governed by commercial and contract law, not by employment law. This means that you and the hirer are free to choose the terms of your contract within the limits of the law. However, a court may be able to set aside a contract if it is considered to be ‘harsh’ or ‘unfair’. See Sections 5 and 7 of this guide for more information.
Get advice
Get advice before you sign a contract if you are unsure about the meaning of any terms or what you’re agreeing to. If necessary, get advice from your business adviser, union, professional association or lawyer before negotiating or signing. A lawyer can also review your contract to make sure it is legally enforceable.
Other documents you may need:
- Employment Agreement (Professional Services)
- Non-Disclosure Agreement (One Way)
- Contractor Agreement (Individual)
- What is a Head Contract?
View Sample Subcontractor Agreement
The Legal Risk Score of a Subcontractor Agreement Template is Low
Our legal team have marked this document as low risk considering:
- The document stipulates that if the client decides not to proceed with the services before they are provided, the subcontractor will not receive any payment, which places financial risk on the subcontractor based on client decisions beyond their control.
- The subcontractor bears the risk that if the deliverables are not accepted by the client as meeting the required standards, the fees payable can be re-evaluated, potentially reducing compensation despite efforts made.
- The warranty provided by the subcontractor is limited and any claims for defective services are tightly controlled, potentially leaving little room for recourse if services do not meet the client's expectations or requirements.
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