Sub-Contractor Agreements are important to make sure both your business and the sub-contractor are aware of the scope of work to be performed and are clear on the roles and responsibilities of both parties. Imagine you’re subcontracting for the creation of a website, and you’ve been asked to price up the job. The project already started, and the client has hired another freelancer to assist you. This is when you knock up a quote, but you do not attach the Terms and Conditions stating your rules to start working. You trust this person and the fact that you will get paid on time, and because the project is urgent to finish, you think to yourself, “I cannot waste any time on contracts, I should just get the job done.” Big mistake.
Weeks go by, there are all kinds of delays, you still haven’t received the upfront deposit and your other payment claims have been short paid. Things are getting nasty, and you call a lawyer to find out where you stand. The lawyer asks you for a copy of the subcontract. You start to feel nervous and sheepishly hand over the client’s email accepting your quotation.
Great, the lawyer says – we can use the T&Cs that you had on your quote! But you remember that moment in which you decided to not bother the client with such things. This is not a happy-ending kind of story. It’s one of those where you learn the hard way.
The moral of the story is that you should have some terms on your quotes. Here’s 3 reasons why:
Terms and Conditions Make Your Quote A Real, Live Contract
Your terms and conditions don’t have to be 10 pages of legal gibberish. You can set out the deal breakers for your business (price, payment terms, program and variation management and termination) in less than a page.
If you’ve done that, and you find yourself in the story I wrote above, the ending will be a happy one because those Terms and Conditions will protect you from not getting paid.
Manage Client Expectations And Streamline Negotiations
For most larger jobs, there will be a formal subcontract, and it will set aside the terms and conditions that you have on your quote.
But, if your deal breakers were on the quote (e.g., an up-front deposit or more favourable payment terms), it makes it a lot easier to negotiate them into a subcontract that you receive from the client. That’s because you’ve let your client know what they were in for, right at the outset.
Demonstrate That Your Business Is A Legit Professional Operation
The days of verbal agreements are behind us. Professional businesses understand that it’s worthwhile capturing the terms of the deal in a written agreement, because that reduces the potential for arguments down the track.
If your business is growing, your clients will expect you to understand what’s involved in protecting your business. They know that business risk management is what helps you make a profit, and that means they’ll achieve a better project outcome.
Bigger clients aren’t going to be frightened off by your legal and commercial expectations appearing on the quotation. Far from it – they’ll know that they’re dealing with a worthy business partner.