Construction Industry Longer Form Sub-Contract: Daily Rates, Payment on Notice
This Construction Industry Longer Form Sub-Contract (Daily Rates, Payment on Notice) can be used by a builder or main contractor to appoint any kind of building/construction sub-contractor, such as a plumber, electrician, plasterer, bricklayer, tiler, roofer etc. The template is suitable for all building/construction projects where a more detailed form of agreement is required.
The data protection provisions in this document have been updated with reference to the UK GDPR.
This template agreement provides for payments to be made in instalments. The payments are not fixed at the outset but are calculated based on daily rates for the sub-contractor and his staff. There is the option for the sub-contractor to receive an additional payment for materials and expenses. Alternatively, such expenses can be allowed for in the daily rate. The payment procedure requires the contractor to serve a payment notice rather than the sub-contractor submitting an invoice. There are retention provisions and clauses dealing with variations to the works, extensions of time and provision for payment of damages for lateness.
There are also various other, less detailed forms of sub-contract in this group of documents that a builder or main contractor can use to engage a sub-contractor.
All of these construction documents have been professionally drafted for use by those involved in construction projects.
In this Construction Industry Longer Form Sub-Contract (Daily Rates, Payment on Notice):
- 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.
- 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 requires the Sub-Contractor to carry out variations to the Works if reasonably requested by the Contractor. The Sub-Contractor is paid for the variations.
- Clause 7 relates to liability, indemnity and insurance. There is the option to limit the Sub-Contractor’s liability to a fixed sum.
- Clause 8 allows for an extension of time if the Sub-Contractor is delayed for reasons beyond his control.
- Clause 9 is a damages clause akin to a liquidated damages clause. It requires the Sub-Contractor to compensate the Contractor for any loss caused by the Sub-Contractor’s late completion of the works.
- Clause 10 covers payment. The agreed daily rates must be inserted here. If the Sub-Contractor is to be paid separately for materials and other expenses, the first option in clause 7.2 should be chosen and the second option deleted. If the Sub-Contractor is not to receive any separate payment for expenses, the second option should be chosen. The Sub-Contractor is required to submit invoices 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 sum due to the Sub-Contractor (e.g. 5%) is retained until four months after practical completion or one month after any defects have been remedied.
- Clause 11 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 12 is compliant with the UK 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 12.6) and/or data sharing (sub-clause 12.5). 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 12.6), you may, in place of 12.6, insert our data processing clauses numbered 1.2 – 1.8 and Schedule: you will find them by clicking here.
- Clause 13 requires both parties to keep information about the other party confidential.
- Clause 14 is a “force majeure” clause. A party will not be held liable for a delay that is caused by an “act of god”.
- Clause 15 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 16 covers dispute resolution and refers to negotiation, mediation, adjudication and arbitration.
- Clause 17 contains miscellaneous standard clauses including provisions for the service of notices.
- Clause 18 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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