For Subcontractors-Incorporation By Reference: A Contract Clause Worth Negotiating

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Authored by attorney Casaundra M. Maimone

Subcontractors should review proposed terms and negotiate final terms that are best suited to their role on the project.  One concern is the impact of clauses incorporated by reference that might involve scope of work, quality, payment and disputes. In government contacts many clause must be “flowed down” to subcontractors, but not all clauses are required, and these requirements often do not apply to private projects.

To the extent possible, subcontractors should attempt to limit the documents that are incorporated by reference into the subcontract. Specifically, subcontractors should seek to limit their obligations only to the terms and conditions set forth in the specific technical specifications by which they bid the work. An example of such a clause is as follows:

The subcontract consists of this written document, technical specification sections ___ and drawing numbers ___ and ___. This subcontract does not include, nor incorporate by reference, any other contract documents such as bidding requirements, general conditions, supplementary conditions, modifications to general conditions, or any other documents by which the general contractor is obligated to the owner.

In sum, subcontractors should try to limit their obligations such that they are only required to perform their work in accordance with the specific technical specifications and plans upon which they based their bid. By doing so, subcontractors avoid risk associated with terms of the general contract, the effect of which might increase the cost of the work or preclude or limit their ability to recover damages down the road.

These articles are meant to bring awareness to these topics and are not intended to be used as legal advice.

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