The law and Your Business – Incorporation by Reference of Prime Contract
Tony Zebouni, Lindell Farson & Zebouni
All language in a prime/subcontractor contract is important. A recurring issue for subcontractors is found in the definition of contract documents and certification of inspecting and testing the project site.
Subcontracts often contain similar language:
“Contract Documents” shall mean this Subcontract, together with the Exhibits and Attachments hereto, the Prime Contract between the Owner and Contractor (hereinafter referred to as the “Prime Contract”), and any plans, specifications, drawings, conditions (general and special), addenda or modifications in connection with the Prime Contract. The Contract Documents are enumerated in Attachment B and are available for reasonable times at the office of the Contractor. Subcontractor represents and agrees that it has (i) carefully examined and understands the Contract Documents as the same pertain to the Work; (ii) adequately investigated the nature and conditions of the Project site and locality; (iii) familiarized and satisfied itself with the conditions affecting the performance of the Work; and (iv) entered into this Subcontract based on its own examination, investigation and evaluation of the Project site and the Work and not in reliance upon any opinions or representations of the Contractor.
The failure to familiarize yourself of the requirements of the prime contract could result in a subcontractor being stuck with a responsibility to indemnify the General Contractor, venue in a foreign state, or notice requirements that were not specified in the subcontract. Once you have familiarized yourself of the contents of all the “contract document” you may wish to strike any provision that is not exactly accurate or attempt to negotiate for better contract terms. This negotiation option is available on both private and many public projects. As a general contractor, you would want this language in your agreement with your subcontractors.