AGC of Washington’s standard subcontract form is one of the most widely used subcontract forms in Washington. As the form was last updated ten years ago in 2009, the AGC of Washington Legal Affairs Committee decided to update the form and make appropriate revisions based on feedback from members and recent developments in the law. The Legal Affairs Committee formed a subcommittee composed of representative general contractors, subcontractors, and other members to review the subcontract. After months of meetings and numerous revisions, the subcommittee recommended the revisions to the Legal Affairs Committee and then the Board of Trustees.
The new, improved form deserves careful study because it has important implications on the rights and duties between general contractors and subcontractors. The areas that received the most significant update are as follows:
– Notice: Previously, the claim notice requirement was brief and included in the initial Obligation and Responsibilities paragraph. For additional clarity, the claim notice requirement was expanded and integrated with the dispute provisions in Section U.
– Scheduling: The previous version left some ambiguity as to what schedule is applicable and room for confusion should a specific “Project Schedule” not be issued. The revised version clarifies the schedule requirements as well as includes a specific requirement for Subcontractor daily reports.
– Payments: In the payment section, language was added that clarifies (a) if applicable to the subcontractor, the subcontractor must submit payment releases and other verifications required by a Union/Collective Bargaining Agreement; (b) allows for the issuance of joint checks to the subcontractor and sub-tier subcontractors or suppliers if necessary, and (c) provides for the subcontractor’s submittal of a schedule of values for lump sum subcontracts.
– Termination: As part of the termination section, though there was always a termination for convince option, language was added that if the Contractor terminates the Subcontractor for default, but that determination is later deemed to be wrongful, without cause, or unjustified, the default termination will convert to one for convenience. This is standard language in most contract forms and allows the general contractor a safeguard should there be an issue with the termination for default. Additional language was also added that, should the Subcontractor file for bankruptcy, the notice required for taking action is reduced to minimize delay to the Project and mitigate resulting damages.
In addition, there were a number of minor revisions to clean up formatting, references, and defined terms. As with any standard form, modifications may be necessary to address the risks associated with a particular project or company. Prior to its completion, execution, or modification, consultation with an attorney and insurance advisor is encouraged. The AGC of Washington specifically disclaims all warranties, express or implied, including any warranty of merchantability or fitness for a particular purpose.
Lindsay Watkins is the current Chair of the AGC Legal Affairs Committee and was a member of the subcommittee. Should you have any questions about the revised form or would like to review a redlined version, please contact Lindsay at Ahlers, Cressman, & Sleight, PLLC or Michele Willms with AGC of Washington.