How to Review a Subcontractor Agreement Before You Sign

The 10-Point Subcontract Review Checklist

You've been offered work. The GC sent over a subcontract. The scope looks right and the price is in the ballpark. Before you sign, here's what you need to check — in order of importance.

This isn't a legal overview. It's a practical checklist built for contractors who need to know whether this deal is worth doing.

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1. Scope of Work — Is It Specific Enough?

The scope section defines what you're agreeing to do. Vague scope is how contractors end up doing extra work for free.

Check for:

• Specific deliverables, not general descriptions ("install 200 LF of 8" ductwork in mechanical room B" vs. "HVAC work as needed")
• Explicit exclusions (what you're NOT doing)
• Whether scope references other documents (drawings, specs) and whether you have copies of them
• Language like "all work reasonably necessary" or "and all incidental work" — these are open-ended traps

Red flag: "Subcontractor shall perform all work shown on drawings plus all work reasonably necessary to complete the project." Without a written change order process, this language can be used to demand extra work at no extra charge.

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2. Price and Payment Terms — When Does the Money Come In?

Check for:

• Total contract value clearly stated
• Schedule of values or payment application process (how you bill)
• Payment cycle (weekly? monthly? upon milestone?)
• How long after submitting a pay app does payment arrive?
• Is there a pay-when-paid or pay-if-paid clause? (See our separate article for detail on this)
• Retainage: what percentage, when does it release, and what are the conditions?

Red flag: No defined payment timeline. If the contract just says "payment upon receipt from Owner" with no backstop, you could be waiting indefinitely.

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3. Change Order Process — How Are Extras Handled?

This is where the most money gets left on the table. Scope will change on almost every job. The question is whether you'll get paid for it.

Check for:

• Requirement for written, signed change orders before extra work begins
• Who has authority to authorize change orders (not just the foreman on site)
• Pricing methodology for changes (T&M? Unit prices? Negotiated lump sum?)
• Whether you can stop work if a change order is disputed

Red flag: "All changes must be approved in writing, but Subcontractor may be required to proceed with work pending approval." This is how you do extra work and then get told no one authorized it.

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4. Indemnification — How Much Risk Are You Taking On?

The indemnification clause defines who's responsible for injuries, accidents, property damage, and legal claims. It's usually buried on page 8 and looks unreadable, but it matters more than the payment terms.

Check for:

• Are you being asked to indemnify the GC for their own negligence? (Broad-form indemnification — see red flag below)
• Is the indemnification mutual? Or just one direction (you protect them)?
• Is there a cap on your liability?

Red flag: "Subcontractor shall defend and hold harmless General Contractor from any and all claims arising out of or related to the work, including those caused by the negligence of General Contractor." This makes you pay for their mistakes.

The fix: Add "to the extent caused by the acts or omissions of Subcontractor" after every indemnification obligation.

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5. Insurance Requirements — Do You Meet Them?

Most subcontracts require specific minimum coverage amounts. Signing before confirming you're covered creates gaps that void your protection.

Check for:

• General liability minimum (typically $1M per occurrence / $2M aggregate)
• Workers' compensation requirements
• Auto liability
• Umbrella/excess requirements
• Additional insured requirement (you name the GC as additional insured)
• Whether there's a specific waiver of subrogation requirement

Before signing: Give the insurance requirements page to your broker. Confirm you meet or can meet every requirement before the job starts.

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6. Schedule and Liquidated Damages

Check for:

• Start date and completion date (are they realistic?)
• Milestone dates (if any)
• Liquidated damages: if the project runs over, how much per day are you on the hook for?
• Whether delays by the GC or Owner adjust your completion date (float)

Red flag: "$1,500/day liquidated damages" with no definition of what counts as a delay, no excusable delay provisions for weather or owner-caused delays, and no force majeure clause.

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7. Termination — What Happens If It Goes Sideways?

Check for:

• Termination for cause: what triggers it? Is there a cure period (time to fix the problem)?
• Termination for convenience: can the GC walk away at any time, and what do they owe you?
• What happens to materials you've bought or crews you've mobilized?

Red flag: Termination for convenience with payment limited to "work completed." That can mean you eat mobilization costs, materials in transit, and lost profit on the remaining work.

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8. Dispute Resolution

Check for:

• Is it arbitration or litigation?
• Where is dispute resolution required? (A GC in Texas shouldn't be able to require you to litigate in their home state)
• Who pays attorney's fees if there's a dispute?
• Is there a mediation step before arbitration/litigation?

Many subcontracts require binding arbitration — which isn't necessarily bad, but check the arbitration organization (AAA, JAMS, etc.) and understand that arbitration costs money upfront.

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9. Flow-Down Provisions

Flow-down means the GC is pushing down obligations from their contract with the Owner onto you. You may be agreeing to terms you've never seen.

Check for:

• Any language that says you're bound by the "Prime Contract" or "General Contract"
• Whether you have the right to review the prime contract before signing
• Whether specific high-risk provisions (safety requirements, special insurance, liquidated damages) are being flowed down

The right approach: Ask to review any prime contract provisions that affect your scope before signing.

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10. Warranty and Workmanship

Check for:

• Duration of warranty (one year is standard; two years is common on some project types)
• What "defective work" means — is it objective, or can the GC call something defective at their discretion?
• Who bears the cost of accessing warranty items (do you cover travel, drywall repair, etc.)?

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Use ContractDoctors

This checklist covers the major issues, but it's not exhaustive — a real subcontract can have 20-30 pages of terms to work through. Upload your subcontract to ContractDoctors and our AI will systematically check all 15 standard provisions, flag what's missing or one-sided, and give you specific recommended language to negotiate — in plain English, built for contractors.