Contract Drafting for the Private Sector

(Drafting Subcontractor, Supplier and Personnel Contracts)

For bidders participating in tenders and contractors entering into contracts, we prepare the technical annexes (scope of work, work programme, delivery and acceptance schedules) and financial data (unit prices, progress payments, penalty and security calculations) of subcontractor, supplier, vehicle hire and personnel contracts. The legal structure of the contract terms and the legal review of the text are legal services provided by a lawyer and are not part of this service.

Each of these relationships is subject to different rules. Subcontractor, supplier and personnel contracts that are inconsistent with the subject matter of the tender may cause problems during delivery, payment, labour, penalty, warranty and acceptance stages. Likewise, if an obligation under the public contract forming the main framework is not properly transferred to the subcontracts, the contractor may be unable to fulfil its responsibility towards the contracting authority.

Kılıç Kurumsal Danışmanlık A.Ş. (Kılıç Kurumsal) supports contractors in structuring their subcontractor, supplier and personnel contracts in conformity with the main tender documents. The purpose here is to reduce uncertainties that may arise during performance by defining the parties' duties from the outset and to prepare the necessary subcontracts.

A. What Do Subcontractor, Supplier and Personnel Contracts Mean?

1. Subcontractor Contract

A subcontractor is a natural or legal person who performs part of the work covered by the contract, by its nature, under a contract entered into with the contractor. Under contracts whose tender documents permit the engagement of subcontractors, the contractor may have specific parts of the work performed by subcontractors.

A subcontractor contract governs the performance by another natural or legal person of a specific part of the work under the public contract. The subcontractor performs the part it has undertaken in accordance with its contract with the contractor.

Whether the tender documents permit the use of subcontractors must be examined in advance. Where necessary, the contracting authority's approval must be obtained. The entirety of the work may not be assigned to a subcontractor. Engaging a subcontractor does not terminate the contractor's responsibility towards the contracting authority.

(See: Subcontractor: https://www.kilichukuk.org/Sozluk/alt-yuklenici )

(See: Engagement of Subcontractors (Service Procurements) : https://www.kilichukuk.org/Sozluk/alt-yuklenici-calistirilmasi-hizmet-alimlari )

(See: Engagement of Subcontractors (Construction Works) : https://www.kilichukuk.org/Sozluk/alt-yuklenici-calistirilmasi-yapim-isleri )

2. Supplier Contract

A supplier contract governs the purchase and delivery of materials, products, machinery, spare parts or other inputs required to perform the work covered by the tender. The supplier's primary duty is to deliver the product defined in the contract in the required quantity, to the required standard and at the required time.

Merely naming a contract a 'supply contract' is not sufficient. If the supplier carries out production, installation or part of the work on site with its own personnel, the actual nature and extent of the mutual obligations must also be determined separately.

(See: Supplier: https://www.kilichukuk.org/Sozluk/tedarikci )

3. Personnel Contract

A personnel contract governs the employment relationship between the contractor and the employee. The employee's duties, place of work, remuneration, working hours, leave and other working conditions are specified in this contract.

The fact that personnel will work on a specific public procurement contract does not remove their rights under employment legislation. Likewise, contractual provisions may not contravene statutory rules on wages, leave, working hours, occupational health and safety or termination.

B. How Should a Contractor Draft Subcontractor, Supplier and Personnel Contracts Within the Scope of the Contracted Work?

1. The Main Contract Must Be Reviewed

When drafting subcontracts, the main contract signed with the contracting authority, administrative specifications, technical specifications, projects, work programme and other annexes must first be reviewed. Provisions on time, quality, delivery and records in the subcontracts must not conflict with the main contract.

2. Mutual Obligations Must Be Determined Correctly

A company that ultimately undertakes part of the work may be a subcontractor. A company that only delivers goods is a supplier. A person working under the contractor's direction and management may be personnel. In this context, subcontracts prepared in accordance with the main contract must define the mutual obligations in detail.

3. Authority and Approvals Must Be Checked

The authority of the persons signing the contract and the company details must be verified. Conditions concerning debarment, qualification, notification, remuneration, permits and licences must be drafted according to the characteristics of the work. The notification or approval procedures stipulated in the tender documents for subcontractors must be completed.

C. How Should a Subcontractor Contract Be Drafted?

1. The Division of Work Must Be Clearly Defined

The production work or service to be performed by the subcontractor must be clearly stated in terms of the work item, location, quantity, project and technical specifications. No work should be left unallocated between the contractor and subcontractor or designated to be performed twice.

2. Timeframes Must Be Linked to the Main Work Programme

The commencement, interim delivery and completion dates must be structured in accordance with the main work programme. The effect of a subcontractor's delay on other work, the notice of delay and the period for rectification must be specified separately.

3. Price and Progress Payment Arrangements Must Be Established

A unit price, lump-sum price or another payment method may be selected. The measurement method, progress payment period, required documents, advance payment, deductions, tax and payment date must be stated without room for doubt.

4. Quality and Inspection Conditions Must Be Determined

The materials, tests, samples, quality certificates and inspection methods to be used must be specified. The contractor's responsibility towards the contracting authority must not remove the subcontractor's responsibility arising from its own work.

5. Delivery and Acceptance Stages Must Be Separated

An internal acceptance procedure may be prepared for the subcontractor's delivery of the work to the contractor. However, this acceptance does not constitute provisional or final acceptance by the contracting authority. The conditions under which deficiencies and defects identified by the contracting authority will be passed on to the subcontractor must be included in the contract.

6. Warranty and Liability for Defects Must Be Stated

The warranty period, repair method, replacement period and the party responsible for the costs must be determined. The subcontractor's period of liability must be arranged with due regard to the acceptance and warranty schedule in the main contract.

7. Personnel and Occupational Safety Arrangements Must Be Explained

The professional qualifications, commencement documents, protective equipment and site rules applicable to persons employed by the subcontractor must be determined. Occupational health and safety duties, the notification procedure and coordination arrangements must be set out in writing.

8. Rules on Amendments, Time Extensions and Termination Must Be Included

The scope of the work must be changed only with the written approval of authorised persons. How the subcontract will apply if the term of the main contract is extended, the main contract is terminated or the quantity of work changes must be established in advance.

D. How Should a Supplier Contract Be Drafted?

1. Products and Documents Must Be Fully Defined

The product's name, quantity, technical specifications, manufacturer, model or part number where applicable, and the required quality certificates must be stated. The tender, catalogue, drawings and data sheets must be made annexes to the contract.

Care must be taken to ensure that the supplier contract complies with the technical conditions in the main contract signed between the contractor and the contracting authority.

2. The Delivery Schedule Must Comply with the Main Contract

The supplier's delivery date must be set before the delivery date undertaken by the contractor towards the contracting authority. The time required for production, transport, customs clearance, installation and testing must be taken into account separately. Liability arising from delays must be clearly stated.

3. Price and Expenses Must Be Itemised

Whether the price is fixed or variable must be stated. The party responsible for tax, transport, insurance, packaging, exchange-rate differences, customs and installation costs must be clearly specified.

4. Transfer of Risk and Title Must Be Determined

The point at which responsibility passes to the buyer if the product is damaged or lost must be stated. For international supplies, the delivery rule and customs obligations must also be selected separately.

5. Arrangements for Inspection and Acceptance, Rejection and Replacement Must Be Established

Where and how the product will be inspected must be determined. The rejection of a non-compliant product, delivery of a replacement, testing costs and the consequences of delay must be specified in the contract.

6. Defects, Warranty and Technical Support Must Be Addressed

The procedure for notifying and remedying visible or subsequently discovered defects must be stated. The conditions for warranty, maintenance, spare parts, training and technical support must be consistent with the obligations under the main public contract.

7. Traceability and Confidentiality Must Be Protected

Serial numbers, origin, test reports, certificates of conformity and production records may be included in the delivery file. For defence, security or technology work, access to technical information, end-user conditions and document retention arrangements must be established separately.

E. How Should Personnel Contracts Be Drafted?

1. The Type of Contract Must Reflect the Actual Nature of the Work

Open-ended, fixed-term, full-time or part-time working arrangements must be assessed according to the nature of the work. If a fixed-term contract is to be established, the reason forming its basis must be clearly stated.

2. Duties and Place of Work Must Be Explained

The employee's title, duties, reporting unit, workplace and, where necessary, the project site where the employee will work must be stated. The authority to change duties must not be unlimited or left uncertain.

3. Remuneration and Payment Conditions Must Be Specified

The gross remuneration, payment date and components of the remuneration must be explained. The conditions for meals, travel, bonuses, subsistence allowances and similar payments must be stated separately. Provisions that remove statutory rights or render the employee's remuneration uncertain must not be used.

4. Working Hours and Overtime Must Be Regulated

Daily and weekly working arrangements, shifts, rest breaks and weekly rest days must be specified. The conditions under which overtime may be worked and how it will be compensated must be established in accordance with the legislation.

5. Rules on Leave, Medical Reports and Absence Must Be Stated

The procedures for annual leave, compassionate leave, medical reports and notification of absence must be explained. Personnel's statutory leave entitlements must not be reduced by contract.

6. Occupational Health and Safety Provisions Must Be Included

Training, health surveillance, protective equipment, site rules and accident reporting must be regulated. Just as the employee must comply with safety rules, the employer's duty to provide a safe working environment must also be expressly preserved.

7. Confidentiality, Personal Data and Company Assets Must Be Regulated

How trade secrets, tender documents, pricing information, personal data and technical files may be used must be specified. The issue and return of computers, telephones, identity cards, vehicles and other company assets must be recorded.

8. Termination and Handover Must Be Explained

Notice periods, just causes and exit procedures must be arranged in accordance with the legislation. The procedure by which departing personnel will hand over files, passwords, documents and ongoing work must be determined.

F. How Can Three Interrelated Contracts Be Kept Consistent?

1. Common Terms Must Have a Consistent Meaning

The concepts of work items, delivery, acceptance, defects, delay and confidentiality used in the main contract must not have different meanings in the subcontracts.

2. Schedules Must Be Prepared Together

The subcontractor's production work, the supplier's delivery and the personnel commencement date must be shown in a single master schedule. The effect of a delay on one date on the other contracts must be identified in advance.

3. Notification Arrangements Must Be Standardised

It must be determined to whom, within what period and by which written method significant events such as delays, defects, changes, occupational accidents and confidentiality breaches will be reported. Significant commercial notifications must be made in a manner that can subsequently be proved.

4. Responsibilities Must Be Proportionate When Transferred Between Parties

Not every obligation undertaken by the contractor towards the contracting authority should be imposed on another party without distinguishing its subject matter. A subcontractor, supplier or member of personnel must be assigned only responsibilities that relate to their own work and are capable of being performed.

G. Documents That May Be Provided at the End of the Service

Some of the documents that Kılıç Kurumsal may prepare for companies participating in tenders, in connection with the main contract they will enter into with the contracting authority, are listed below:

• A subcontractor contract and its annexes may be prepared together with the scope of work, work programme, payment schedule, and quality and delivery documents.
• A supplier contract and technical annexes may be prepared, with the product list, technical specifications, delivery plan, inspection conditions and warranty documents appended to the contract.
• A personnel contract and job description may be prepared together with working conditions, an explanation of duties, confidentiality obligations and a company asset issue form.
• Main contract compliance schedule; obligations towards the contracting authority and their corresponding provisions in the subcontractor, supplier and personnel contracts are shown in a single schedule.
• Delivery, payment and notification schedule; significant dates, responsible persons, required documents and notification periods are presented together.
• List of uncertainties and measures; provisions requiring clarification and priority matters relating to delay, payment, labour, quality and acceptance are listed.

H. Scope Limitations of the Service

Kılıç Kurumsal provides consultancy on the structured transfer of tender and main contract provisions into subcontracts, the establishment of workflows and the preparation of corporate documents.

Conducting litigation, acting under a power of attorney, legal representation or handling disputes on behalf of an employee or company are not within the scope of this service. If such a need arises, it is explained that the matter must be assessed within a separate professional organisation.

The drafts prepared must be reviewed and approved by the employer's authorised units according to the current conditions of the work. No engagement provides an assurance that a public tender will be won or that no dispute will arise.

I. Tell Us About Your Requirements

You can submit your application by completing the form on the “Corporate Service Request” subpage under the “CONTACT” main menu of our website. In your application, it is sufficient to state whether the main public contract has been signed, whether a subcontractor or supplier has been selected, whether the personnel have started work and whether an existing draft is available.

You may briefly explain the type of work, delivery date, the contracts you wish to have prepared and the priority issues. Following the initial assessment, the scope of work, documents to be delivered, timeframe and persons to be assigned will be determined in writing.

Contact Details: https://www.kilickurumsal.com.tr/iletisim

Kılıç Kurumsal Danışmanlık A.Ş. conducts its work from its Ankara headquarters. Meetings may be held in person or online depending on the nature of the work.

Telephone: +90 312 285 96 00.