Standard Form of Agreement Between Contractor and Subcontractor
AIA Document A401–2017, Standard Form of Agreement Between Contractor and Subcontractor, establishes the standard for the contractor-subcontractor work relationship. It is closely connected to AIA Document A201–2017, General Conditions of the Contract for Construction, which it adopts by reference. Thus, it keeps subcontractor obligations in line with those of the contractor under the prime contract, with as little conflict as possible, since everyone works from the same playbook.
What the Form Covers
The AIA Document A401–2017 reaches nearly every significant aspect of the subcontractor–contractor relationship:
- Defining the scope of work
- Schedules and deadlines for performance
- Payment and retainage provisions
- Insurance and bonding requirements
- Procedure for resolving disputes
- Flow-down of contractor obligations to subcontractors
The concept is straightforward—keep the subcontract in line with the prime contract so that timelines, performance requirements, and allocation of risk follow one set of rules.
Limits of the Standard Form
Although AIA Document A401–2017 serves as a good starting point, it is not designed to handle all circumstances. State statute, municipal ordinances, and project-specific requirements typically add another layer of complexity. Lien waivers, prompt payment laws, indemnity caps, and special insurance provisions are the usual suspects. Each project also likely adds its own unique threats that will require customized provisions. Therefore, the AIA Document A401–2017 should never be inserted into a transaction without careful review and editing.
Standard Contractor Revisions
Contractors typically like to ensure that subcontractors bear their fair share of risk—or, often, more. Revisions can include:
- Increasing indemnity provisions
- Broadening insurance obligations
- Adding “pay-if-paid” provisions to shift financial risk down a level
- Limiting “no-damage-for-delay” provisions to narrow subcontractor remedies
- Emphasizing that time is of the essence
These changes protect contractors from financial risk but could put subcontractors in a vulnerable position.
Common Subcontractor Pushback
On the other hand, subcontractors are often tempted to, or forced to, execute the form as-is despite heavily contractor-favoring edits. Subcontractors who feel they have enough bargaining power to propose changes sometimes seek to:
- Replace “pay-if-paid” with “pay-when-paid,” or excise it altogether
- Placing restrictions on retainage or reducing it after substantial completion
- Carving out exceptions to hard no-damage-for-delay provisions
- Restricting indemnity provisions so they don’t extend to another party’s negligence
These changes are focused on payment security and protection from exposure to risks outside the subcontractor’s control.
A Tool, Not a Done Deal
Ultimately, AIA Document A401–2017 is a good start—not an answer. The subcontractor and contractor are approaching it from different directions: one to safeguard themselves financially, the other to gain more favorable payment terms and fairer liability. The form is best when used as a working guide, modified to fit the conditions of the specific project and applicable laws.
Want to Review Your AIA Contract?
Whether you are a contractor looking to manage risk or a subcontractor looking for fair terms, we can help you tailor AIA Document A401–2017, Standard Form of Agreement Between Contractor and Subcontractor, to suit your project. Call today to get started.
