A letter of intent to hire a subcontractor is a letter signifying that a subcontractor intends to perform work for a general contractor. This letter of intent expresses a preliminary agreement between a subcontractor and a principal contractor. The letter signifies that the two parties will negotiate the articles contained in the letter in good faith. The parties involved usually formalize this agreement by signing a legally binding subcontractor agreement.
This article discusses subcontractors and what to include in your letter of intent to hire a subcontractor. We provide a format for this letter and a sample letter for you to read.
Subcontractor vs. Contractor
General contractors often perform large construction jobs. This contractor, also known as prime or principal contractor, is responsible for providing the materials, equipment, services, and labor to complete each job.
When a general contractor requires assistance to complete a particular part of a job, they generally hire a subcontractor. Subcontractors offer expert knowledge in their field and can perform specific jobs more efficiently and skillfully than a general contractor. Subcontractors are not entitled to benefits, so they are more cost-effective than hiring additional staff to complete the job.
Contractors frequently hire subcontractors to perform work in the following fields:
- Plumbing
- Electrical
- Roofing
- Air Conditioning and Heating
- Carpentry
- Framing
- Drywall
- Cabinetry
- Painting
- Flooring
- Landscaping
Subcontractors are generally associated with construction, but they also work in fields like consulting, interior design, service repair, and other types of independent work.
Tip: Many contractors will not employ subcontractors who cannot show proof of insurance. Hiring a subcontractor without verifying their insurance can leave a contractor open to lawsuits. Most contractors will not take this kind of risk.
Your letter of intent to hire a subcontractor is an agreement between you and the other party. It serves as the starting point for a legally binding contract or subcontractor agreement. Whether you are the primary contractor or the subcontractor, be sure this letter contains the following details about the proposed job.
- Contractor and Subcontractor names
- Effective date (date you write the letter)
- Payment amount and method
- Job location
- Job start and end dates
- Subcontractor responsibilities
- Binding Effect
- Last date to accept the letter’s terms
Binding Effect: Clearly state if the conditions of the letter are legally binding or non-binding. Neglecting this detail can create legal problems if one party thinks the letter is binding and the other party does not.
Print your letter on company letterhead. Use a consistent format for each letter of intent to hire a subcontractor to ensure you include all the necessary information in each letter. Include an area for the contractor and subcontractor to sign stating they accept the terms of the letter.
Letter of Intent to Hire a Subcontractor (Format)
SUBCONTRACTOR LETTER OF INTENT
Effective Date: {date}
RE: Intent to work as a subcontractor
This letter of intent expresses the basic terms agreed upon by the contractor and the subcontractor. The contractor and subcontractor may sign a formal agreement at a later date.
Contractor Name: {name}
Subcontractor Name: {name}
Location: {address of the job location}
Material and Services Provided by the Subcontractor: {Details of the job the subcontractor will perform.}
Payment Amount:
Payment Method:
Start Date: {date the work will begin}
End Date: {date the work will be completed}
Binding Effect: This letter of intent is {(binding) or {non-binding)}. The parties agree that this letter is {(enforceable) or (not enforceable)} by either party. The terms of this letter serve only to enable the parties to reach an agreement in the future.
This letter of intent is governed under the laws of {your state}.
Acceptance: Please sign below no later than {date} to signify your acceptance of the terms of this letter.
Contractor: Date:
{Contractor Name}
Subcontractor: Date:
{Subcontractor Name}
Sample Letter of Intent to Hire a Subcontractor
SUBCONTRACTOR LETTER OF INTENT
Effective Date: May 2, 2030
RE: Intent to hire a subcontractor to perform work
This letter of intent signifies the contractor and the subcontractor agree on the terms within. The contractor and subcontractor may sign a formal subcontractor agreement in the future to the benefit of both parties.
Contractor Name: Jackson Enterprises
Subcontractor Name: Hart Electrical
Job Location: 20368 South Birmingham, Elysium, NC, 28659
Material and Services Provided by the Subcontractor: The subcontractor “Hart Electrical” will provide all the electrical materials and labor needed to provide electrical service at the job location. The subcontractor will arrange all necessary electrical inspections and certifications at the job location.
Payment Amount: $6,590.00
Payment Method: The contractor will pay the subcontractor immediately after receiving inspection reports and certifications.
Start Date: May 25, 2030
End Date: June 15, 2030
Binding Effect: This letter of intent is considered to be non-binding. The parties agree that this letter is not legally enforceable by either party. The terms contained within this letter of intent are meant to assist the parties in creating an agreement at a later date. Neither the contractor nor the subcontractor is bound by this letter of intent.
This letter of intent is governed by the laws of the state of North Carolina.
Acceptance: Please sign below no later than May 12, 2030, to signify your acceptance of these terms.
Contractor: Mason Ellory, Jackson Enterprises Date: May 6, 2030
Mason Ellory, Jackson Enterprises
Subcontractor: James Hart, Hart Electrical Date: May 8, 2030
James Hart, Hart Electrical
Letter of Intent to Hire a Subcontractor (Word Template)
Letters of intent to hire a subcontractor can be written by either the principal contractor or the subcontractor. This letter serves to outline the basic terms of a proposed job. When you write a letter of intent, be sure to clearly state whether the letter’s terms are binding or non-binding. Include job and payment details, and create an area for both parties to sign, signifying their agreement.
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