Empty spaces are provided on the A401, where the parties can complete the details of their agreement. Several sections of the contract provide space on certain terms that the parties can negotiate together, such as a contract-required withholding rate, bonds or insurance, interest rates for late payments, etc. It is likely that subcontractors will also have to pay for the payment documents required by the contract. These may include requests for wages, continuation sheets and change orders. If you buy individual documents, they start at $10 per piece. If a subcontractor submits payment requests over several months or years, these costs can be added up quickly. The AIA produces some of the most commonly used construction contracts in the industry. Since the construction contract governs all aspects of the project, including implementation conditions, work volume and compensation, it is important for any subcontractor to understand the impact of the documents they have signed. The terms of the contract have a direct impact on a subcontractor`s cash flow in a project. If the effects of the conditions are not included, payment may be delayed or discontinued. The AIA`s contract documents are standardized forms that apply to many commercial or residential projects. For subcontractors, the most common AIA contract is the A401 type agreement between the contractor and the subcontractor. Like the AIA A201 and other standard form documents, the AIA has made some changes to the insurance industry.
For example, the subcontractor must purchase professional liability insurance when necessary to provide professional services and supplementary insurance coverage must be primarily and non-contributory to the contractor`s insurance. The subcontractor is required to notify the termination or modification of the insurance coverage. 11.3.1 – ”If, for some reason that is not the subcontractor`s fault, no certificate of payment is issued, if the contractor does not receive payment in a timely manner or does not pay the subcontractor within seven days of receiving the payment by the owner, the final payment to the subcontractor is made upon request.” The AIA® document A401™ is the standard agreement between the contractor and the subcontractor, which is intended to establish the contractual relationship between the contractor and the subcontractor. Standard form outsourcing adds a new section on professional services provided by the subcontractor. The new section specifies that the subcontractor is not required to perform work or activities that may be considered architectural or engineering practices, unless indicated in the subcontracting documents, unless the subcontractor is authorized to provide such services. Where professional services such as architecture or engineering are required, the contractor must issue all performance or design criteria and the subcontractor is entitled to meet the information or criteria provided by the supplier. However, the contractor has the right to ”count” himself on all drawings, calculations, specifications, certificates and other documents drawn up by the subcontractor. Some premium contracts allow the early release of part or all of the withholding, as well as payments made by the subcontractor. As a subcontractor, you have the right to request a copy of the main contract (contract with the owner) in order to verify the terms of payment that concern you.