Subcontracts Battle of the Forms
Kegler Brown Construction Newsletter November 1, 1994 by Don Gregory
There are several forms of subcontracts commonly used by general contractors and subcontractors in the construction industry. Starting with the most favorable to subcontractors and moving to the least favorable would be:
- AIA A401 - Endorsed by ASA, but has never been accepted by AGC. Envisions important role but little liability exposure for architect.
- AGC 640/ASA 4100/ASC 52 - Endorsed by all 3 of these organizations, it is a reasonable compromise between contractor and subcontractor interests.
- AGC 600 - This subcontract formerly endorsed by AGC, has never been accepted by ASA.
- Proprietary forms - These in-house proprietary forms are typically used by large general contractors whenever possible and are generally the least favorable to subcontractors.
A summary of the key components of the three generally accepted trade association subcontracts is as follows:
Form Subcontract Comparison
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AIA A401
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AGC 640/ASC 52/ASA 4100
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AGC 600
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Timing of payment
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3 working days after receipt from owners
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7 days after receipt from owner but no later than resonable time
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7 days after receipt from owner
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Contingent payment
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Yes, but paid upon demand if delay not caused by sub (11.3)
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Yes - "Pay when paid" but no later than "resonable time" (14.2.7)
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Yes - "Pay when paid" (5.2.5)
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Changes
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Promptly or not less than two working days preceding contractor's deadline (5.3)
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Written notice by sub within 7 days of event (13.2.3)
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Written notice by sub within 5 days of event (6.3)
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Incorporation of prime contract
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Both parties bound by prime contract (2.1, 16.1.2)
Subcontract controls (2.1)
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May be listed to incorporate by reference (3.1)
Subcontract controls (3.2)
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May be listed to incorporate by reference (2.2, 16.5)
Subcontract controls (2.3)
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No damage for delay
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No, damages for delay not precluded (A201 8.3.3)
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No, damages for delay not precluded (13.3.2)
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Yes, sole remedy for delay is time extension unless contractor recovers (6.4)
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Indemnity
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Sub indemnifies contractor for his negligence in whole or in part (4.6.1)
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Sub indemnifies contractor for his negligence in whole or in part (12.1)
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Sub indemnifies contractor for his negligence in whole or in part (12.1)
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Safety
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Sub is to comply with contractor's safety directions (4.3.1)
Sub shall stop work if PCP / asbestos encountered (4.3.3)
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Sub to indemnify contractor for fines due to sub's safety failure on this job (9.14.9)
Sub shall stop work if PCP / asbestos / hazardous substances encountered (9.17.1)
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Sub is to follow contractor's safety directions (8.7)
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Lien waivers
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Not specifically referenced
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No unconditional lien waivers prior to payment (14.2.2)
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May submit conditional lien waivers (5.1.5)
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Mediation
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Not required
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Suggested (15.1)
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Not required
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Arbitration
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Yes, AAA arbitration mandatory (6.1)
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Yes, AAA arbitration mandatory (15.2)
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Yes, AAA arbitration mandatory (14.1)
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Attorney's fees
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None
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To prevailing party in suit or arbitration (7.4)
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To prevailing party in suit or arbitration (15.4)
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*All cites refer to sections in form contract except those marked A201 which refers to A201 general conditions which may be incorporated into the AIA 401.