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Supply Contract with Sub-contractor with Flow Down Provision

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This is an agreement between a contractor and a sub-contractor requiring the sub-contractor to provide all of the materials, supplies and equipment for a construction project. The agreement includes a flow down provision, which means that the terms of the general contract between the owner and the contractor flow down into this sub-contractor agreement, therefore the sub-contractor is essentially responsible for the contractor’s responsibilities to the owner. This agreement can be used by small businesses that offer contracting services and want to engage a sub-contractor to provide supplies for a construction project.

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									This is an agreement between a contractor and a sub-contractor requiring the sub-
contractor to provide all of the materials, supplies and equipment for a construction
project. The agreement includes a flow down provision, which means that the terms of
the general contract between the owner and the contractor flow down into this sub-
contractor agreement, therefore the sub-contractor is essentially responsible for the
contractor’s responsibilities to the owner. This agreement can be used by small
businesses that offer contracting services and want to engage a sub-contractor to
provide supplies for a construction project.
                                   SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (the “Agreement”) made as of ___________ [Instruction: Insert
Date], by and between ___________ [Instruction: Insert Name of Contractor], ___________
[Instruction: Insert Address] (“Contractor”), and ___________ [Instruction: Insert Name of
Sub-contractor], ___________ [Instruction: Insert Address] (“Sub-contractor”).

WHEREAS, Contractor entered into a written contract with ___________ [Instruction: Insert
Owner Name] (the “Owner”), dated as of ___________ [Instruction: Insert Date of General
Contract]) (hereinafter called the “General Contract”), with respect to the construction of
___________ [Instruction: Insert Description of Project] (the “Project”) at ___________
[Instruction: Insert Address] (the “Site”).

WHEREAS, Contractor desires to engage the services of Sub-contractor for the purposes of
furnishing and supplying and materials, supplies and equipment necessary to complete the
Project;

WHEREAS, subject to the terms and conditions contained herein, Sub-contractor desires to
accept said engagement.

NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set
forth, the parties hereto agree as follows:

1. Sub-contractor Services.

    A. Sub-contractor agrees to furnish and supply all materials, supplies and equipment
necessary to complete the construction of the Project at the Site for the Owner, in accordance
with the terms and conditions of this Agreement, and, to the extent that the terms and conditions
of the Contract Documents apply to the work of sub-contractors, the Contract Documents. For
purposes hereof, the “Contract Documents” shall include, the General Contract, any
amendments, addendums, or change orders made thereto, any Drawings and Specifications and
any Addenda prepared by ___________ [Instruction: Insert Name of Architect] (the
“Architect”) and any other documents forming or by reference made a part of the General
Contract.

    B. With respect to Sub-contractor’s work hereunder, Contractor shall assume toward
Subcontractor all obligations and responsibilities that the Owner assumes toward Contractor
pursuant to the Contract Documents; and Sub-contractor shall assume toward Contractor all
obligations and responsibilities that Contractor assumes toward the Owner and the Architect,
respectively, pursuant to the Contract Documents. Insofar as may be applicable to this
Agreement, Contractor shall have the benefit of all rights, remedies and redress against the Sub-
contractor that the Owner has against Contractor pursuant to the Contract Documents; and Sub-
contractor shall have the benefit of all rights, remedies and redress against Contractor that
Contractor has against the Owner, pursuant to the Contract Documents. Where a provision of
such documents is inconsistent with a provision of this Agreement, this Agreement shall govern.
    C. Sub-contractor acknowledges that Sub-contractor is thoroughly familiar with the
requirements of the Contract Documents and this Agreement and that Sub-contractor has
investigated and satisfied himself as to Project, job requirements, availability of materials, and all
other conditions and requirements which could affect the performance of this Agreement. Sub-
contractor agrees that Sub-contractor will not be relieved from Sub-contractor’s responsibility
for fully and faithfully performing this Agreement due to any failure by Sub-contractor to be
fully acquainted with the available information. Sub-contractor acknowledges that Sub-
contractor’s acceptance of this Agreement is based solely on Sub-contractor’s knowledge and
judgment and not on any representation by Contractor not expressly included herein.

   D. Sub-contractor acknowledges that the non-technical provisions of this Agreement and of
the Contract Documents govern with the same importance and authority as the technical
provisions of this Agreement and of the Contract Documents. Sub-contractor agrees that Sub-
Contractor will perform this Agreement so as not to violate any provisions of the Contract
Documents.

    E. The Contract Documents are available at all reasonable times at the office of Contractor
for inspection by Sub-contractor upon request.

     F. Sub-contractor agrees to furnish and supply the materials, supplies and equipment in
strict compliance with the requirements of the Contract Documents. All such materials, supplies
and equipment stored at the Project site shall be at the risk of Sub-contractor and stored only
where and when directed by Contractor. Contractor assumes no responsibility or liability for
materials, supplies and/or equipment received or stored by Contractor on behalf of and in
accommodation to Sub-contractor.

    G. Sub-contractor expressly covenants and agrees to keep himself thoroughly informed as to
the progress of the job; to commence the work within five (5) days after notification by
Contractor; to prosecute the work diligently, continuously and uninterruptedly with all possible
speed; and to complete the work and the several parts thereof at such time or times as directed by
Contractor and so as to not interfere with or delay performance of the General Contract or the
work of any other Sub-contractor or contractor. In the event Sub-contractor fails to carry on the
work at such rates of progress as directed by Contractor, Contractor may at its option require
Sub-contractor at Sub-contractor’s expense to increase the number of workmen and/or hours of
work and/or the amount of materials, supplies or equipment employed in the performance of the
work to bring Sub-contractor’s progress up to the prescribed schedule.

2. Fee. Contractor agrees to pay Sub-contractor for the full, faithful and complete performance
of this Agreement, subject to the terms and conditions hereof, including additions and deductions
as hereinafter provided, the total sum of ___________ Dollars ($________) [Instruction: Insert
Amount].

    A. Contractor agrees to make progress payments to Sub-contractor in an amount equal to
ninety percent (90%) of the value of the Work performed and completed through the last day of
the payment period, as such value is determined by Owner or its authorized representative,
within ten (10) days after Contractor is paid therefor by Owner in at least the same amount.

    B. Contractor agrees to make final payment to Sub-contractor in an amount equal to the
balance of the Fee due Sub-contractor within thirty (30) days after completion of the entire work
of the Project, written acceptance thereof by Owner and Contractor is paid therefor by Owner in
full; provided, however, Sub-contractor shall, as a condition precedent to final payment, execute
and deliver to Contractor (and Owner, if required) a full and valid release and complete
discharge of and from any and all claims and demands whatsoever for all matters growing out of
or in any manner connected with or founded upon, this Agreement or the work contemplated
thereby.

    C. Sub-contractor expressly covenants and agrees that Contractor shall be under no
obligation to pay Sub-contractor for any work on this Project until Contractor has been paid
therefor by Owner, and all payments hereunder are subject to the condition precedent that
Contractor shall first receive from Owner progress and/or final payments in at least the amounts
payable to Sub-contractor on account of the work by Sub-contractor on this Project; otherwise
the time when such payments shall be due Sub-contractor shall be postponed until Contractor has
received same from Owner.

3. Liens, Waivers and Affidavits.

   A. Sub-contractor shall furnish Contractor with such partial releases and waivers of lien
from Sub-contractor, as Contractor may require from time to time on labor and/or material
and/or other claims, and final releases and waivers of lien at the time of final payment under this
Agreement.

    B. Sub-contractor agrees to furnish such sworn affidavits as may be required by Contractor
attesting to Sub-contractor’s financial condition relating to this Agreement and indicating
amounts paid and owing for labor, materials, supplies, equipment and other expenses. Sub-
contractor agrees that Contractor may take such steps as Contractor may deem necessary to
protect Contractor and Owner against any claims filed or reasonable evidence indicating
probable filing of claims.

    C. Sub-contractor agrees that such releases, waivers and affidavits shall be prerequisite for
partial and final payments.

4. Permits, Licenses, Fees and Tests. Sub-contractor shall secure and pay for all permits,
licenses, fees and tests necessary for the execution and completion of the work. Sub-contractor
warrants to Contractor that Sub-Contractor is duly qualified to do business in the state where the
Project is located and that Sub-contractor is properly licensed to perform the work.

5. Compliance. Sub-contractor shall, at the time and in the manner prescribed, abide by and
conduct the work and perform this Agreement in full compliance with any and all applicable
federal, state, local and municipal laws, ordinances and orders and any and all rules and
regulations of governmental boards and bureaus having jurisdiction and shall defend, hold and
save harmless Contractor and Owner from any and all liability with respect thereto.

6. Reports. Sub-contractor agrees to submit promptly and accurately, in the prescribed form,
manner and time, all payroll reports, certificates, guarantees, opening instruction, progress
schedules, or other documents required by the Contract Documents. Sub-contractor agrees to
reimburse Contractor for any expenses, interest and/or penalties occasioned Contractor by the
delay, inaccuracy, omissions or negligence on the part of Sub-contractor in connection with the
submission of the aforementioned documents.

7. Insurance. Sub-contractor shall carry and pay for and maintain in force continuously during
the life of this Agreement, the insurance specified in the Contract Documents, or if not so
specified, such insurance as Contractor and/or Owner consider necessary for the proper
protection of the parties hereto and Owner, and in forms approved by Contractor and/or Owner.

8. Termination by Owner. Should Owner terminate the General Contract or abandon the
Project for any reason, Sub-contractor shall be entitled to receive only such compensation as
provided under the termination clause of the Contract Documents, or in the absence or
inapplicability of such clause, Sub-contractor shall receive only Sub-contractor’s pro rata share
of any termination payments or salvage received by Contractor. In any event, Contractor’s
obligation or liability to Sub-contractor is limited to the amount determined by Owner or the pro
rata share of any profits from the sale, disposal or salvage of the Project.

9. Indemnity. To the fullest extent permitted by law, Sub-contractor shall indemnify and hold
harmless Owner, Architect and Contractor, and all of their agents and employees, from and
against all claims, damages, losses and expenses, including but not restricted to, attorney’s fees
arising out of or resulting from the performance of Sub-contractor’s work under this Agreement,
to the extent such claim is caused in whole or in part by any negligent act or omission of Sub-
contractor or anyone directly or indirectly employed by Sub-contractor or anyone for whose acts
Sub-contractor may be liable, regardless of whether it is caused in part by a party indemnified
hereunder.

10. Default By Sub-contractor.

    A. Sub-contractor shall be liable to Contractor for any loss or damage (including but not
restricted to, any liquidated or other damages which may become due Owner under the Contract
Documents) and extra expenses paid or incurred by Contractor, together with interest thereon at
the maximum legal rate or interest per annum until paid, which are due to Sub-contractor’s
failure to carry out the work in accordance with this Agreement or to properly or timely perform
any term, covenant or condition contained in this Agreement.

   B. If Sub-contractor fails or neglects to carry out the work in accordance with this
Agreement or to properly or timely perform any term, covenant or condition contained in this
Agreement and fails within ___________ (___) [Instruction: Insert Amount] days after receipt
of written notice from the Contractor to commence and continue correction of such failure or
neglect with diligence and promptness, Contractor may, without further notice to Sub-contractor,
and without prejudice to or waiver of any other right or remedy Contractor may have, make good
such deficiencies by whatever method or means Contractor may deem expedient.

    C. If Sub-contractor persistently or repeatedly fails or neglects to carry out the work in
accordance with this Agreement or otherwise to perform in accordance with this Agreement and
fails within ___________ (___) [Instruction: Insert Amount] days after receipt of written
notice to commence and continue correction of such default or neglect with diligence and
promptness, Contractor may, without prejudice to or waiver of any other right or remedy
Contractor may have, terminate this Agreement and finish the work by whatever method or
means Contractor may deem expedient. If Contractor elects to terminate this Agreement,
Contractor shall have the right to take possession of the work and shall have a lien on and may
take over all of Sub-contractor’s equipment, tools, appliances, supplies and materials on the
Project or in storage elsewhere for the Project.

    D. If Contractor pursues any of the foregoing remedies, all monies expended and all of the
losses, damages and extra expenses (including, but not restricted to any liquidated damages
which may become due to Owner under the Contract Documents) shall be deducted from the Fee
and if such expenditures, together with said losses, damages and extra expenses exceed the
amount otherwise due to Sub-contractor hereunder, Sub-contractor shall be liable to and shall
pay to Contractor on demand the full amount of such excess together with interest thereon at the
maximum legal rate of interest per annum until paid.

   E. All rights and remedies of Contractor enumerated in this Agreement shall be cumulative
and none shall exclude any other rights or remedies allowed at law or in equity.

11. Miscellaneous.

    A. It is understood and agreed between the parties hereto that time is of the essence of all of
the terms and provisions of this Agreement.

    B. This Agreement constitutes the entire agreement between the parties hereto with respect
to the specific subject matter hereof and supersedes all prior agreements or understandings of any
kind with respect to the specific subject matter hereof.

    C. In the event that any provision or part of this Agreement shall be deemed void or invalid
by a court of competent jurisdiction, the remaining provisions or parts shall be and remain in full
force and effect.

    D. Any modification to this Agreement must be in writing and signed by the parties or it
shall have no effect and shall be void.

    E. This Agreement is binding upon and shall inure to the benefit of the respective
successors, licensees and/or assigns of the parties hereto. Notwithstanding the foregoing, neither
party may assign or transfer its rights or delegate its obligations under this Agreement without
the other party's prior written consent, which will not be unreasonably withheld.
    F. The waiver by either party of a breach or violation of any provision of this Agreement
shall not constitute a waiver of any subsequent or other breach or violation.

    G. This Agreement shall be governed in accordance with the laws of the State of
_____________ [Instruction: Insert State], applicable to agreements to be wholly performed
therein.

    H. In the event of any dispute between the parties arising out of this Agreement, the dispute
shall be resolved by arbitration under the rules of the American Arbitration Association by an
arbitrator agreed upon in writing by the parties. In the event the parties cannot agree upon the
choice of an arbitrator, each party shall appoint one individual representative and the two party
representatives shall, between themselves, chose an arbitrator.

   I. In the event of any dispute between the parties arising out of this Agreement, the
prevailing party shall be entitled to recover its attorney fees and costs.

IN WITNESS WHEREOF the parties have duly executed this Agreement as of the date first
written above.


CONTRACTOR:


________________________________ [Instruction: sign]
By: ___________________________ [Instruction: Insert Name of Signatory]
Title: ___________________________ [Instruction: Insert Title of Signatory]


SUB-CONTRACTOR:


________________________________ [Instruction: sign]
By: ___________________________ [Instruction: Insert Name of Signatory]
Title: ___________________________ [Instruction: Insert Title of Signatory]

								
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