Resources

Boilerplate Subcontractor Contract

One of the issues you face as a manufacturer or contractor is the misdeeds of any subcontractor that you may hire.  Most STICO insureds require certificates of insurance from their subcontractors to prove that they have insurance in place.  However, a certificate alone does not bestow any rights under their policy to you. In order for you to be covered under their policy for any liability that they create while working on your behalf, they need to issue you two Additional Insured endorsements: CG 2010 (for Ongoing Operations) and CG 2037 (for Completed Operations).  You should make requesting these endorsements a standard matter of course when entering into any subcontractor agreement.  There is no need for you to take responsibility for mistakes that your subcontractor makes.

This, of course, assumes that you are entering into a formal agreement with them in the first place.  Many of you are likely issuing a simple purchase order to a subcontractor for their work. This is not sufficient. You want to get your subcontractors to sign the same type of contract with you that your customers are requiring you to sign with them.  You should be passing that liability downstream, as we say in the insurance business.

Below, we have posted a boilerplate subcontractor contract in an editable Word format.  Additionally, you will see the same contract in a PDF format with commentary under each provision that explains, in plain English, the intended purpose of that language.  You can then customize the contract to your liking for each subcontractor with whom you do business.

Contractual Armor

Suggestions for protection when manufacturing a product to a customer’s or GC’s spec.

The following contractual language may limit a subcontractor’s liability and may be worthy of discussion before a contract is signed and work is started on a project.

50-State Indemnity Provision Enforceability Survey

Chances are that you have entered into contracts that have indemnity provisions whereby your customer attempts to have you indemnify them for your or your subcontractor’s actions, and for your customer’s sole negligence as well. While you may find this concept preposterous – why should you be responsible for what your customer does? – it doesn’t stop a large customer from using their leverage against you. The good news for you is that these provisions are not necessarily legally enforceable in every state. In fact, some states have anti-indemnity statutes that specifically prohibit such provisions.

How do you know whether your state or your customer’s state has such a statute? We, in conjunction with Tressler LLP, have done the research for you and you can access it below.

Contract Review Program

We understand that most of you do not employ a team of lawyers that review your sales contracts with customers before you sign them.  In all likelihood, you personally read through them, understanding about 75% of the intentionally confusing legalese before begrudgingly executing the agreement so that you can start your work.  The problem is that you don’t really know what you’re getting yourself into should something go wrong – a missed deadline, a product failure or something completely out of your control like your customer misusing your perfectly manufactured product.  We want to help you with this process.

Beginning January 1, 2019, each STICO liability insured will be allowed access to the contract and insurance expertise of an attorney at Lewis Brisbois, a national law firm.  STICO has entered into an agreement with Lewis Brisbois whereby our insureds will receive a heavily discounted rate of $500 per contract. STICO will split this cost with you evenly for up to three contract reviews per year.

The review will entail an attorney reading through your contract, pointing out potential problem areas and suggesting changes.  You may then have a follow-up conversation with that attorney to discuss any specific questions or concerns you may still have. The intent is to educate you and help you enter into better, less one-sided contracts with your customers.

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