A subcontractor is an individual or (in many cases) a business who undertakes to perform part or all of the obligations of another's contract.
Put simply, the role of a subcontractor is to execute the job they are hired by the contractor for. It is often a specialized job such as electrical or HVAC and it is the subcontractor's responsibility to execute the work as instructed.
A subcontractor (or sub-contractor) is a company or person whom a general contractor, prime contractor or main contractor hires to perform a specific task as part of an overall project and normally pays for services provided to the project. While subcontracting often occurs in building works and in civil engineering, the range of opportunities for subcontractor is much wider and it is possible[original research?] that the greatest number of subcontractors now operate in the information technology and information sectors of the economy.
Main contractors hire subcontractors either to reduce costs or to mitigate project risks. In employing subcontractors, the general contractor hopes to receive the same or better service than the general contractor could have provided by itself, at lower overall risk.
Many subcontractors do work for the same companies rather than different ones.[clarification needed] This allows subcontractors to further specialize their skills.
A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.
Nominated subcontractor
Certain contracts permit the architect or supervising officer to reserve the right of the final selection and approval of subcontractors. The main contractor is permitted to make a profit from the use of nominated subcontractors on site, but must provide "attendance" (usually the provision of water, power, restrooms, and other services to enable the nominated subcontractor to do his job). In effect the appointment of nominated subcontractors establishes a direct contractual relationship between the client and the subcontractor.
Named subcontractors
Effectively the same as a domestic subcontractor — a subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.
Tax lawEdit
Under UK tax law, certain activities that might appear to be subcontracting are actually treated differently. This is a subtlety of corporate taxation that may easily be missed or misunderstood, and may be relevant to research and development tax relief. Examples of activities that involve outsourced work that do not count as subcontracting for tax purposes include:
Collaborative research – research carried out across two companies that benefits both companies.
Some contractors appoint subcontractors to work under a "pay when paid" clause, sometimes called a "pay if paid" clause, where the general contractor will work with subcontractors and the subcontractors are only paid if and when the general contractor is paid for the work.[3] As example clause from a construction context reads:
Subcontractor agrees that all progress payments and final payment to Subcontractor are contingent upon and subject to Owner's acceptance of Subcontractor's work and upon contractor's receipt of payment from Owner. Subcontractor agrees to accept the risk of non-payment if Contractor is not paid progress payments and/or final payment from Owner, for any reason. Subcontractor further agrees that Owner's payment to Contractor of all progress payments and final payment for any work performed by Subcontractor, other Subcontractors and Contractor shall be an express condition precedent to any obligation of Contractor to make any progress payment, retainages, or final payment to Subcontractor, and Subcontractor hereby waives all right to commence litigation or arbitration until payment is made to Contractor.[4]
However, in the case of Avon Brothers, Inc. v. Tom Martin Construction Company, Inc., the New Jersey Superior Court, Appellate Division ruled in 2000 that a pay when paid clause represents an unconditional promise to pay, merely permitting payment to be postponed for a reasonable time, and not a condition precedent which would completely excuse the contractor's obligation to pay even though not paid themselves.[5] Under Florida construction law, a pay when paid clause is unenforceable unless it unambiguously transfers the risk of non-payment to the subcontractor.[4]
^EUR-Lex, Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, recital 32, accessed 24 July 2023
^Adam Leitman Bailey and Dov Treiman, Pay When Paid, Limits and Limitations, New York Law Journal, published 9 October 2018, accessed 26 November 2020
^ abDistrict Court of Appeal of the State of Florida, Fifth District, International Engineering Services, Inc. v Scherer Construction and Engineering of Central Florida, LLC, case 5D10-2764, filed 21 October 2011, accessed 30 August 2021
^Meisik and Meislik, Avon Brothers, Inc. v. Tom Martin Construction Company, Inc. Case Law Summaries, opinion dated 30 August 2000, accessed 30 August 2021
External linksEdit
American Subcontractors Association
August 31, 2023
subcontractor, class, mathematical, functions, subcontraction, this, article, multiple, issues, please, help, improve, discuss, these, issues, talk, page, learn, when, remove, these, template, messages, this, article, needs, additional, citations, verification. For the class of mathematical functions see Subcontraction map This article has multiple issues Please help improve it or discuss these issues on the talk page Learn how and when to remove these template messages This article needs additional citations for verification Please help improve this article by adding citations to reliable sources Unsourced material may be challenged and removed Find sources Subcontractor news newspapers books scholar JSTOR June 2015 Learn how and when to remove this template message The examples and perspective in this article deal primarily with the United Kingdom and do not represent a worldwide view of the subject You may improve this article discuss the issue on the talk page or create a new article as appropriate March 2013 Learn how and when to remove this template message Learn how and when to remove this template message A subcontractor is an individual or in many cases a business who undertakes to perform part or all of the obligations of another s contract Put simply the role of a subcontractor is to execute the job they are hired by the contractor for It is often a specialized job such as electrical or HVAC and it is the subcontractor s responsibility to execute the work as instructed A subcontractor or sub contractor is a company or person whom a general contractor prime contractor or main contractor hires to perform a specific task as part of an overall project and normally pays for services provided to the project While subcontracting often occurs in building works and in civil engineering the range of opportunities for subcontractor is much wider and it is possible original research that the greatest number of subcontractors now operate in the information technology and information sectors of the economy Main contractors hire subcontractors either to reduce costs or to mitigate project risks In employing subcontractors the general contractor hopes to receive the same or better service than the general contractor could have provided by itself at lower overall risk Many subcontractors do work for the same companies rather than different ones clarification needed This allows subcontractors to further specialize their skills The European Union has recognised the need to make provision for sub contracting in its rules on public procurement as arrangements for sub contracting can support the EU s drive to involve more small and medium sized undertakings in the provision of goods and services for the public sector 1 Contents 1 Types 2 Tax law 3 Payment clauses 4 See also 5 References 6 External linksTypes EditIn United Kingdom building industry contract law particularly when using JCT standard form contracts three subcontractor types are identified Domestic subcontractor A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract Essentially this contractor is employed by the main contractor Nominated subcontractor Certain contracts permit the architect or supervising officer to reserve the right of the final selection and approval of subcontractors The main contractor is permitted to make a profit from the use of nominated subcontractors on site but must provide attendance usually the provision of water power restrooms and other services to enable the nominated subcontractor to do his job In effect the appointment of nominated subcontractors establishes a direct contractual relationship between the client and the subcontractor Named subcontractors Effectively the same as a domestic subcontractor a subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract Essentially this contractor is employed by the main contractor Tax law EditUnder UK tax law certain activities that might appear to be subcontracting are actually treated differently This is a subtlety of corporate taxation that may easily be missed or misunderstood and may be relevant to research and development tax relief Examples of activities that involve outsourced work that do not count as subcontracting for tax purposes include Collaborative research research carried out across two companies that benefits both companies Externally provided workers Self employed consultants 2 Payment clauses EditSome contractors appoint subcontractors to work under a pay when paid clause sometimes called a pay if paid clause where the general contractor will work with subcontractors and the subcontractors are only paid if and when the general contractor is paid for the work 3 As example clause from a construction context reads Subcontractor agrees that all progress payments and final payment to Subcontractor are contingent upon and subject to Owner s acceptance of Subcontractor s work and upon contractor s receipt of payment from Owner Subcontractor agrees to accept the risk of non payment if Contractor is not paid progress payments and or final payment from Owner for any reason Subcontractor further agrees that Owner s payment to Contractor of all progress payments and final payment for any work performed by Subcontractor other Subcontractors and Contractor shall be an express condition precedent to any obligation of Contractor to make any progress payment retainages or final payment to Subcontractor and Subcontractor hereby waives all right to commence litigation or arbitration until payment is made to Contractor 4 However in the case of Avon Brothers Inc v Tom Martin Construction Company Inc the New Jersey Superior Court Appellate Division ruled in 2000 that a pay when paid clause represents an unconditional promise to pay merely permitting payment to be postponed for a reasonable time and not a condition precedent which would completely excuse the contractor s obligation to pay even though not paid themselves 5 Under Florida construction law a pay when paid clause is unenforceable unless it unambiguously transfers the risk of non payment to the subcontractor 4 See also Editelancing False self employment Freelance marketplace General contractor aka prime contractor Independent test organization Inside contracting Misclassification of employees as independent contractors OutsourcingReferences Edit EUR Lex Directive 2004 18 EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts public supply contracts and public service contracts recital 32 accessed 24 July 2023 Corporation Tax Act 2009 Retrieved 3 October 2021 a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Adam Leitman Bailey and Dov Treiman Pay When Paid Limits and Limitations New York Law Journal published 9 October 2018 accessed 26 November 2020 a b District Court of Appeal of the State of Florida Fifth District International Engineering Services Inc v Scherer Construction and Engineering of Central Florida LLC case 5D10 2764 filed 21 October 2011 accessed 30 August 2021 Meisik and Meislik Avon Brothers Inc v Tom Martin Construction Company Inc Case Law Summaries opinion dated 30 August 2000 accessed 30 August 2021External links EditAmerican Subcontractors Association Retrieved from https en wikipedia org w index php title Subcontractor amp oldid 1166863260, wikipedia, wiki, book, books, library,
