Construction Sub-Contract (Fixed Price, Payment Notice With Retention)
This Construction Sub-Contract (Fixed Price, Payment Notice With Retention) is designed for use by a Main Contractor appointing a sub-contractor, such as a plumber, electrician, plasterer or bricklayer to work for on a small scale construction project.
This construction sub-contract now includes General Data Protection Regulation (GDPR)-compliant clauses (see under “Clause 9” below).
The Agreement provides for a fixed price for the job, with payments to be made in instalments. The payment procedure requires the Contractor to serve a payment notice rather than the Sub-Contractor submitting an invoice.
There are retention provisions. If a retention is not required, please use one of our No Retention templates.
If payment is to be made in instalments based on invoices submitted by the Sub-Contractor, please see our Invoiced Instalments Sub-Contracts. If there is simply to be one payment on completion of the Works, please see our Lump Sum Payment templates. If a more robust Sub-Contract template is required, including provisions for variations, extensions of time and liquidated damages, please see our Longer Form Sub-Contracts.
Clause 1 contains definitions. Brief details of the Main Contract need to be given. A description of the sub-contract Works should be inserted in the Schedule.
Clause 2 covers engagement of the Sub-Contractor. This clause confirms the self-employed status of the Sub-Contractor and refers to the Construction Industry Scheme (CIS). This is a HM Revenue & Customs scheme that governs how contractors in the construction industry must handle payments to their subcontractors. Further information can be found at https://www.gov.uk/government/collections/construction-industry-scheme-cis-detailed-information.
Clause 3 deals with timescales. Dates can be inserted for the Works to start and finish. There is a requirement for the Sub-Contractor to rectify any defects that are notified to him within 3 months of practical completion.
Clause 4 sets out the Sub-Contractor’s obligations. These include carrying out the Works in a proper manner, provision of tools and materials and compliance with laws and regulations.
Clause 5 contains the Contractor’s obligations. These cover providing access to the site, providing tools and materials (optional) and compliance with the Construction, Design & Managements Regulations (the CDM Regulations).
Clause 6 relates to liability, indemnity and insurance. There is the option to limit the Sub-Contractor’s liability to a fixed sum.
Clause 7 covers payment. The agreed price must be inserted here. The Contractor is required to submit payment notices on a monthly basis and to pay the amount stated in the notice within 14 days. If the Contractor fails to serve a payment notice the Sub-Contractor may submit a payment application. A specified percentage of the price (e.g. 5%) is retained until four months after practical completion or one month after any defects have been remedied.
Clause 8 deals with non-competition and non-solicitation. These optional provisions protect the Contractor by restricting the Sub-Contractor's ability to provide similar services for competitors and by preventing the Sub-Contractor from "poaching" the Contractor's staff or clients. Both restrictions are subject to optional limitations including time and geographical radius.
Clause 9 is compliant with the GDPR. One or both sub-clauses in square brackets should be retained, if and as appropriate, where there is to be any data processing (sub-clause 9.6) and/or data sharing (sub-clause 9.5). However, if there is to be data processing but you prefer not to have to prepare a separate Data Processing Agreement (referred to in sub-clause 9.6), you may, in place of 9.6, insert our data processing clauses numbered 1.2 – 1.8 and Schedule: you will find them by clicking here.
Clause 10 requires both parties to keep information about the other party confidential.
Clause 11 is a “force majeure” clause. A party will not be held liable for a delay that is caused by an “act of god”.
Clause 12 deals with termination of the Agreement. Either party can terminate if the other is in breach of the agreement or becomes insolvent. The Agreement terminates automatically if the Main Contract is terminated. There is an optional clause allowing no-fault termination by giving 28 days’ notice in writing.
Clause 13 covers dispute resolution and refers to negotiation, mediation, adjudication and arbitration.
Clause 14 contains miscellaneous standard clauses including provisions for the service of notices.
Clause 15 is a jurisdiction clause. The Schedule needs to be completed by the parties with details of the works and the goods, materials and equipment that each party will provide.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
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