Subcontractor Contract Template: What to Include and What to Watch For

Why Subcontractor Agreements Matter More Than You Think

Most subcontractors receive contracts from general contractors — they don't create them. But understanding what should be in a fair subcontractor agreement helps you spot what's missing or unfair in the contracts you receive.

A well-drafted subcontractor agreement protects both parties. When one side has all the protection and the other has all the risk, it's a sign you're working with the wrong GC — or you need to negotiate.

Essential Sections of a Subcontractor Agreement

1. Scope of Work

The scope defines exactly what work you're responsible for. Vague scope language is one of the biggest sources of disputes. Watch for:

• Clear description of work to be performed
• Reference to plans and specifications (with specific version/date)
• What's explicitly not included
• How changes will be handled and approved

2. Payment Terms

This is where most subcontractors get hurt. Key elements include:

• Contract amount: Fixed price, unit price, or time & materials
• Payment schedule: Progress payments, milestones, or upon completion
• Retainage: Percentage held back and when it's released
• Pay-when-paid vs pay-if-paid: Huge difference (see our guide)

3. Change Order Process

Changes happen on every job. The question is whether you get paid for them. Look for:

• Written approval required before work begins
• Clear pricing methodology for changes
• Timeline for GC to approve or deny change requests
• Right to stop work if change order not approved within X days

4. Indemnification

Indemnification clauses determine who pays when something goes wrong. There are three types:

5. Insurance Requirements

Standard requirements include:

• General liability ($1M/$2M is common)
• Workers' compensation
• Auto liability
• Umbrella/excess liability (for larger projects)
• Additional insured endorsements for the GC and owner

6. Dispute Resolution

How will conflicts be resolved?

• Mediation: Non-binding, often required as first step
• Arbitration: Binding decision, usually faster than court
• Litigation: Traditional court process
• Venue: Where disputes will be heard (watch for inconvenient locations)

7. Termination Rights

Both parties should have the right to end the contract under certain conditions:

• Termination for cause (breach, non-payment, etc.)
• Termination for convenience (with appropriate compensation)
• Notice requirements
• What you're owed if terminated (work completed + materials)

What's Usually Missing (That Should Be There)

• Your right to stop work for non-payment
• Clear lien rights preservation
• Time limit for GC to approve pay applications
• Protection against scope creep
• Mutual indemnification (they protect you too)

Don't Have Time to Read 30 Pages?

Upload your subcontract to SubShield and we'll identify the critical issues in under 60 seconds. You'll see exactly which clauses put you at risk and get discussion points to address with your GC.