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Partners and their Subcontractors: Who’s Really Responsible?

Guest Post by Contributing Author Ken Presti

Question: Who’s really responsible when things go wrong on a project that involves contractors and sub-contractors? Is it the prime contractor, or the sub?

Answer: That’s for the judge to decide.

Save→ Close→ Exit→ Attach→ Send→ Crack open a cold one. My job here is done.

The truth is that I’m only half-joking. Because so much of the outcome depends on how the contract is written. If you have serious questions around this, you should talk to a lawyer. I’m not one, so I don’t dispense legal advice. I don’t even own a pair of tasseled loafers. But a few things that fall under the general category of conventional wisdom have surfaced over the years.

For example, who exactly is the sub-contractor subbing to? Are they a subcontractor of the prime contractor, or are they working for you, and not the contractor? This means they’re not really subcontracting at all, even though it might appear that way from a practical perspective.

This type of detail is generally found in the fine print; a location in the contract where the truly significant stuff is buried among larger quantities of the mind-numbingly mundane. The content virtually screams, “Nothing to see here, folks!”, but those who merely gloss over it, or perhaps ignore it altogether, do so at their own peril. Just like in war movies, landmines are never clearly marked.

So the time that you spend poring over all that boring text is time well invested in your own self-protection. Under many circumstances, it might be worth your while to get an attorney to read it. This is especially true if the terms contain clauses that seem to be unclear. Or if the contract is governed by the laws of a state other than the one in which you are located. Personally, I always prefer simplicity in contracts, and anything that seems out of place or difficult to put into context is a warning sign.

Certainly, you can ask questions about the intentions around any clause in a contract. And you can specifically inquire about the liability of the prime contractor versus the sub-contractor. But at the end of the day, the legal definition of whatever is in the document will supersede anything that was spoken into thin air. So you have every right to be careful and cautious.

Given that many of these issues might be covered in general business law, the necessary legal help might not be all that expensive. And it might not delay the sales cycle all that much.

Alternatively, you might ask to replace their document with one that is more to your liking. Many times this will not fly. But sometimes it just might. At the very least, you might be able to persuade the contractor to strike clauses from their own contract that raise your concern. The degree to which they need your business can be the deciding factor. So the close of the month, and the close of the quarter can sometimes work in your favor.

At the end of the day, due diligence is the key. Taking short cuts around the small print, and avoiding certain aspects of the discussion make the signer of the contract a lot more vulnerable than the writer of the contract. So executing on that due diligence is most certainly a wise investment of your time.

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