Education · April 15, 2026 · 7 min read
Before you sign that contract, look for these 9 warning signs that could cost you money, time, or your right to get paid. Most contractors miss at least 3 of them.
Construction contracts are long, dense, and often written by the other side's lawyers. That's by design — the harder a contract is to read, the easier it is to slip in clauses that shift all the risk to you.
Here are the 9 red flags that show up most often in contractor agreements. If you see any of these, stop and negotiate before signing.
What it looks like:
"Contractor shall perform all HVAC work as needed to complete the project."
Why it's dangerous: "As needed" means the GC gets to decide what's included after you've already agreed to a price. You could end up doing twice the work you budgeted for — with no additional pay.
What to negotiate: Specific deliverables with quantities, reference to drawings and specs, and a clear exclusions section that lists what's NOT included in your scope.
What it looks like:
"Payment to Subcontractor is expressly contingent upon General Contractor's receipt of payment from Owner."
Why it's dangerous: This shifts the Owner's non-payment risk entirely to you. If the Owner goes bankrupt or disputes the GC's work, you get nothing — even if your work was perfect.
What to negotiate: Replace with pay-when-paid (a timing provision, not a condition) and add a hard deadline like "payment due within 30 days regardless of receipt from Owner."
What it looks like:
"Subcontractor shall indemnify and defend General Contractor against all claims arising from the work, regardless of whether caused in part by General Contractor's own negligence."
Why it's dangerous: You're agreeing to pay for problems the GC caused. If a GC's crane drops a load and injures someone near your work area, you could be financially responsible. Several states have outlawed this type of clause — but it still shows up.
What to negotiate: Limit indemnification to your own negligence and your own employees' actions. "Comparative fault" or "limited form" indemnity is the standard you should insist on.
What it looks like:
"Owner shall retain 15% of each progress payment until final completion and acceptance of all work."
Why it's dangerous: 10% retainage is industry standard. Anything above that is cash the GC is holding hostage. And watch the release conditions — if retainage isn't released until the ENTIRE project is complete (not just your portion), you could wait years.
What to negotiate: 10% maximum, reduced to 5% at substantial completion of your scope, with full release within 30 days of your work being accepted.
What it looks like: The contract either has no change order section, or says changes can be directed verbally by the GC's superintendent.
Why it's dangerous: You'll do extra work based on verbal instructions, and when it's time to get paid, the GC will say there was never a formal change order — so you're not owed anything.
What to negotiate: All changes must be documented in writing with an agreed price BEFORE work begins. Include a provision that allows you to stop additional work until a change order is signed.
What it looks like:
"Owner may terminate this agreement at any time for convenience upon 24 hours' notice. Upon termination, Contractor shall be compensated only for work completed and accepted."
Why it's dangerous: You've mobilized equipment, bought materials, scheduled crews — and can be kicked off the job with a day's notice. The "accepted" qualifier means the GC can dispute your completed work and pay you even less.
What to negotiate: Reasonable notice period (14-30 days), payment for all work performed (not just "accepted"), reimbursement for materials purchased, and compensation for reasonable demobilization costs.
What it looks like:
"Contractor warrants all work for the life of the project and shall correct any defects at Contractor's sole expense."
Why it's dangerous: A "lifetime" warranty on construction work is absurd — but that doesn't stop it from appearing in contracts. Even a 5-year warranty on most trades is excessive.
What to negotiate: 1-year warranty from substantial completion (industry standard). Clearly define what constitutes a "defect" and who pays for access costs if warranty work requires removing other contractors' work.
What it looks like:
"All disputes shall be resolved by binding arbitration in [distant city], with the non-prevailing party bearing all costs including attorney fees."
Why it's dangerous: This makes it so expensive to fight a dispute that you'll settle for pennies on the dollar just to avoid the costs. If the venue is 500 miles away, add travel and lodging to the price of seeking justice.
What to negotiate: Venue in the county where the project is located. Mediation before arbitration. Each party bears their own costs unless the contract was breached in bad faith.
What it looks like:
"Contractor shall pay $1,500 per calendar day for each day beyond the scheduled completion date."
Why it's dangerous: Delays are often caused by factors outside your control — weather, GC scheduling failures, other trades not finishing on time. Without a cap or exceptions, liquidated damages can exceed the value of your contract.
What to negotiate: A reasonable daily amount tied to actual damages, a cap (typically 5-10% of contract value), and explicit exceptions for delays caused by the GC, weather, or force majeure.
Every one of these red flags is something our AI catches when you upload a contract to ContractDoctors. The review takes minutes, flags the specific clauses that put you at risk, and gives you plain-English alternatives you can take back to the table. Try it before you sign your next contract.
red flags · contract review · risk · checklist