An acceptable compromise might be to offer a conditional lien waiver in advance of payment to be followed by an unconditional lien waiver once payment is received. All subcontractors should be alert to the provisions of the prime contract when an incorporation by reference clause is encountered. Particularly inequitable are provisions that incorporate only the contractor's responsibilities, but not its rights against the owner. As change orders typically are the most contentious issue between parties on a construction project, subcontractors should pay special attention to the notice and approval provisions for change orders contained in both the subcontract and prime contract and ensure that they are satisfied. Subcontractors may want to resist provisions that allow the general contractor to direct the changed work without an agreement in advance to pay a mutually acceptable price for the change.
Many subcontractors favor arbitration over litigation.
Virtually all subcontractors should resist venue and jurisdiction provisions that attempt to force the dispute to be resolved in an inconvenient forum far from the project. Examples of unacceptable risk-shifting might include a broad indemnification relating to matters other than personal injury and property damage, indemnification of a party from its own negligence and indemnification for OSHA fines, particularly any enhanced penalties based upon the contractor's prior experience on unrelated projects. Integration Subcontractors who neglect to carefully compare the scope of work in the subcontract to their earlier bid proposal are greatly disappointed to learn that this standard clause will allow the subcontract to control over the bid proposal or any prior negotiations. Some add the bid proposal as an exhibit to the subcontract to deal with this problem. Under this clause, unresolved subcontract claims or change order requests may inadvertently be waived when final payment is received for the original contract sum.