Does a handshake count?
A lot of commercial subcontract work in Calgary starts on a phone call and a text. Alberta's own construction payment law accepts that. In the Prompt Payment and Construction Lien Act, a proper invoice has to identify the authority for the work, "whether in a written or verbal contract or otherwise." A verbal deal can be a contract, and the Act's payment deadlines can run on it.
The trouble with a verbal deal is not that it is invalid. It is that when the two sides remember the scope, the price or the deadline differently, there is nothing to settle it with. Writing it down is how you avoid having that argument at the end of the job, when the money is on the line.
Use a standard form if you can
Canada has standard subcontract forms. CCA 1 is the Canadian Construction Association's stipulated price subcontract, built to sit under the standard CCDC 2 prime contract. It sets out the parties' obligations, changes, payment, non-payment by the owner, insurance, indemnities, warranties and dispute resolution, and it is available through local construction associations.
Many GCs use their own form instead. Whichever you sign, these are the things to find in it before you do.
The checklist
Scope
- What is in, and what is out, by drawing and specification section, not just "drywall." Exclusions written down are worth more than inclusions assumed.
- Who supplies what: materials, lifts, bins, temporary power, heat.
- The drawings and specs the price is based on, listed by revision. A price is only as good as the set it was priced from.
Price and payment
- The price, and whether it includes GST.
- The billing cycle. In Alberta, proper invoices go to the owner at least every 31 days, and your invoice to the GC needs to land in time to be part of it.
- The payment terms. The Act says the GC pays you within 7 days of being paid for your work. Section 5 of the Act makes void any agreement that the Act does not apply, or that its remedies are not available to you.
- Holdback. The owner retains 10%; find when yours is released. The prompt payment guide has the 60-day rule and the exceptions.
Changes
- Changes in writing, priced before the work. Find how a change is requested, approved and paid, and who on the GC's side can approve one. A verbal change on a busy site is an easy thing to end up arguing about.
- Back charges. Find what the GC can charge back to you, how you are told, and how fast you have to respond.
Schedule
- Start date and duration, and what happens if the GC's site is not ready on the start date.
- Delays you do not cause: how you are paid for standby or remobilizing.
Insurance and safety
- Insurance: the liability limit, additional insureds, and the deadline for your certificate. The CGL guide covers what those words mean.
- WCB: a current clearance letter, and personal coverage if the contract requires it.
- Site safety: the prime contractor's orientation and hazard assessment rules you will work under.
Disputes
- Adjudication. Alberta lets the parties name, in the contract, the Nominating Authority to use for a payment dispute: ARCANA (AB) or ADACC. A clause that names a specific adjudicator in advance has no effect under the regulation.
- Warranty: how long, and from when, completion of your work or of the whole project.
If it is verbal anyway
Some jobs will start on a call. Then make the call into a document:
- Send a short email the same day: scope, price, start date, who supplies what, and "please confirm."
- Keep the reply. An email both sides answered is a written record.
- Put every change in a message before you do the work, with the price.
- Make sure your invoices are proper invoices, so the payment deadlines apply to them.
Working commercial jobs around Calgary? Join Syndex as a subcontractor. It is free.