Subcontractor Agreement Template

What Is a Subcontractor Agreement?

A subcontractor agreement is a legally binding contract between a general contractor (or prime contractor) and a subcontractor in which the subcontractor agrees to perform a defined portion of a larger construction project. The subcontractor is not in a direct contractual relationship with the project owner; instead, the subcontractor's obligations flow through the general contractor, who remains responsible to the owner for the entire project.

The agreement defines the specific trade work the subcontractor will perform, the quality standards and specifications to be met, the project schedule, payment terms, insurance requirements, and the process for handling changes, disputes, and termination. It often incorporates by reference the terms of the prime contract between the general contractor and the project owner, creating a "flow-down" of obligations from the prime contract to the subcontract.

Subcontractor agreements are used across all sectors of construction — residential, commercial, industrial, and infrastructure. They are equally important for a small home-renovation project with two or three trades and a billion-dollar commercial development with dozens of specialty subcontractors.

The agreement serves a dual purpose. For the general contractor, it ensures that each trade performs their work on schedule, to specification, and with adequate insurance coverage, allowing the general contractor to meet their obligations to the project owner. For the subcontractor, it guarantees payment for completed work, defines the scope so the subcontractor is not asked to perform unpaid extra work, and establishes a clear legal framework for resolving disagreements.

Why You Need a Subcontractor Agreement

Subcontracting relationships are complex and high-stakes. A written agreement is essential for managing that complexity.

Scope definition prevents disputes about what is included in the subcontractor's work. On a typical construction project, the line between one trade's work and another's can be blurry. Who installs the blocking for the electrician's panel? Who patches the drywall after the plumber finishes their rough-in? A subcontractor agreement that clearly defines the scope of work for each trade — including a list of exclusions — eliminates these gray areas.

Payment protection is critical for subcontractors, who often operate with thin margins and tight cash flow. A written agreement with a defined payment schedule, clear invoicing requirements, and retainage terms gives the subcontractor an enforceable right to payment. For the general contractor, a defined payment structure prevents overpayment for incomplete work and provides leverage to ensure quality.

Insurance and safety compliance protects everyone on the project. The subcontractor agreement requires the subcontractor to carry specified insurance coverages and to comply with safety regulations. If a subcontractor's worker is injured and the subcontractor lacks workers' compensation insurance, the general contractor may be held financially responsible. The agreement shifts that risk where it belongs.

Schedule coordination is another key benefit. Construction projects depend on precise sequencing of trades. The subcontractor agreement ties the subcontractor's performance to the project schedule and defines the consequences of delays. This gives the general contractor the ability to enforce schedule compliance and manage the critical path.

Legal protection from mechanic's liens, indemnification claims, and warranty obligations rounds out the reasons. A subcontractor who is not paid can file a lien against the property, creating problems for the owner and the general contractor. Indemnification clauses allocate liability for injuries and property damage. Warranty provisions ensure that the subcontractor stands behind their work after completion.

Key Components of a Subcontractor Agreement

• Party identification — General contractor and subcontractor, including license and insurance details.
• Project description — Project name, location, and owner.
• Scope of work — Detailed description of the subcontractor's trade work, including inclusions and exclusions.
• Contract documents — List of drawings, specifications, and prime-contract provisions incorporated by reference.
• Subcontract price — Lump sum, unit price, or cost-plus.
• Payment terms — Invoice schedule, payment timing (often "pay-when-paid"), retainage, and lien-waiver requirements.
• Project schedule — Start date, milestone dates, and completion date for the subcontractor's work.
• Change orders — Process for pricing and approving changes to the subcontractor's scope.
• Insurance — Required coverages and limits, with the general contractor named as additional insured.
• Indemnification — Hold-harmless provisions covering injury, property damage, and third-party claims.
• Safety — Compliance with OSHA and project-specific safety plans.
• Warranty — Workmanship warranty period and callback obligations.
• Dispute resolution — Mediation, arbitration, or litigation.
• Termination — For cause and for convenience.
• Independent contractor status — Confirmation that the subcontractor is not an employee.

How to Write a Subcontractor Agreement

1. Review the prime contract. Understand the general contractor's obligations to the project owner, including scope, schedule, quality standards, and insurance requirements. Many of these will flow down to the subcontractor.

2. Define the subcontractor's scope precisely. Use the project plans and specifications to identify exactly which work items belong to the subcontractor. List exclusions to prevent scope overlap with other trades.

3. Set the subcontract price. Negotiate a lump-sum, unit-price, or cost-plus arrangement. Ensure the price includes all labor, materials, equipment, and overhead required for the subcontractor's scope.

4. Establish payment terms. Define invoicing procedures, payment timing (net 30 is common; pay-when-paid clauses are used but may have limited enforceability depending on the jurisdiction), retainage percentage, and lien-waiver requirements.

5. Incorporate the project schedule. Specify the subcontractor's start and completion dates and their relationship to the overall project schedule.

6. Require insurance. Specify minimum coverage limits for general liability, workers' compensation, and auto liability. Require the subcontractor to name the general contractor as an additional insured.

7. Include indemnification and safety clauses. Require the subcontractor to indemnify the general contractor for claims arising from the subcontractor's work and to comply with all safety regulations.

8. Draft change-order, dispute-resolution, and termination provisions. Align these with the prime contract terms where possible.

9. Confirm independent contractor status. Include language confirming that the subcontractor is an independent contractor, not an employee.

10. Review with legal counsel and execute. Both parties should have the agreement reviewed by their attorneys before signing.

Free Subcontractor Agreement Template

SUBCONTRACTOR AGREEMENT

Date: _______________

Project Name: _______________

Project Address: _______________

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PARTIES

This Subcontractor Agreement ("Agreement") is entered into by and between:

General Contractor: _____________ ("Contractor"), with a principal address of _____________, License No. _____________

Subcontractor: _____________ ("Subcontractor"), with a principal address of _____________, License No. _____________, insured under Policy No. _____________

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CLAUSE 1 — SCOPE OF WORK

The Subcontractor agrees to furnish all labor, materials, tools, equipment, and supervision necessary to perform the following portion of the Project ("Work"):

[Describe the subcontractor's specific scope of work here, referencing applicable sections of the Project plans and specifications. Attach Exhibit A — Scope of Work Detail.]

Exclusions: The following items are specifically excluded from the Subcontractor's scope: _____________

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CLAUSE 2 — CONTRACT DOCUMENTS

The following documents are incorporated by reference and form part of this Agreement:

• Project Plans dated _____________
• Project Specifications Sections _____________
• Prime Contract General Conditions (to the extent applicable to the Subcontractor's Work)
• Exhibit A — Scope of Work Detail

In the event of a conflict, this Agreement shall take precedence over incorporated documents.

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CLAUSE 3 — SUBCONTRACT PRICE

The Contractor agrees to pay the Subcontractor the total sum of $_____________ ("Subcontract Price") for the satisfactory completion of the Work described in Clause 1.

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CLAUSE 4 — PAYMENT TERMS

The Subcontractor shall submit monthly progress invoices by the _____ of each month. Invoices shall detail work completed, materials stored, and the amount requested. The Contractor shall pay approved invoices within _____ days of receipt. Retainage of ___% shall be withheld from each progress payment and released within _____ days of final completion and acceptance of the Subcontractor's Work.

The Subcontractor shall provide conditional lien waivers with each invoice and unconditional lien waivers upon receipt of each payment.

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CLAUSE 5 — PROJECT SCHEDULE

The Subcontractor shall commence Work on _____________ and shall complete all Work by _____________. The Subcontractor shall coordinate with the Contractor's overall project schedule and shall not delay or interfere with the work of other trades. The Contractor shall provide reasonable notice of schedule changes. If the Subcontractor's Work is delayed due to causes beyond the Subcontractor's control, the completion date shall be extended proportionally.

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CLAUSE 6 — CHANGE ORDERS

Any modification to the Subcontractor's scope, price, or schedule shall be documented in a written Change Order signed by both Parties. The Subcontractor shall provide pricing for proposed changes within _____ business days of the Contractor's request. No changed work shall proceed without a signed Change Order.

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CLAUSE 7 — INSURANCE

The Subcontractor shall maintain the following insurance coverages:

• Commercial General Liability: $_____________ per occurrence / $_____________ aggregate
• Workers' Compensation: As required by law
• Automobile Liability: $_____________ combined single limit

The Subcontractor shall name the Contractor as an additional insured on the general liability policy. Certificates of insurance shall be provided before the Subcontractor commences Work.

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CLAUSE 8 — INDEMNIFICATION

The Subcontractor shall indemnify, defend, and hold harmless the Contractor, the Project Owner, and their agents from all claims, damages, losses, and expenses (including attorney's fees) arising from the Subcontractor's performance of the Work, except to the extent caused by the Contractor's sole negligence.

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CLAUSE 9 — SAFETY

The Subcontractor shall comply with all applicable OSHA regulations and the Project's site-specific safety plan. The Subcontractor shall provide its workers with required personal protective equipment and safety training. The Subcontractor is solely responsible for the safety of its employees and the methods used to perform the Work.

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CLAUSE 10 — WARRANTY

The Subcontractor warrants all workmanship for a period of _____________ year(s) from the date of substantial completion of the Project. During the warranty period, the Subcontractor shall promptly correct any defective work at no additional cost to the Contractor. Manufacturer warranties on materials shall be assigned to the Contractor (or Project Owner).

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CLAUSE 11 — INDEPENDENT CONTRACTOR

The Subcontractor is an independent contractor and is not an employee, agent, or partner of the Contractor. The Subcontractor is solely responsible for its own taxes, benefits, and compliance with employment laws.

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CLAUSE 12 — DISPUTE RESOLUTION

Disputes shall first be submitted to mediation. If unresolved within thirty (30) days, either Party may pursue binding arbitration or litigation in the state where the Project is located. The prevailing Party shall recover reasonable attorney's fees.

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CLAUSE 13 — TERMINATION

The Contractor may terminate this Agreement for cause if the Subcontractor fails to perform the Work in accordance with this Agreement and does not cure the default within seven (7) days of written notice. The Contractor may terminate for convenience upon written notice, in which case the Subcontractor shall be compensated for Work completed and materials ordered. Upon termination, the Subcontractor shall promptly remove equipment and leave the Work area in a safe condition.

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CLAUSE 14 — GOVERNING LAW

This Agreement shall be governed by the laws of the State of _____________.

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CLAUSE 15 — ENTIRE AGREEMENT

This Agreement, including all exhibits and Change Orders, constitutes the entire agreement between the Parties. Amendments must be in writing and signed by both Parties.

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SIGNATURES

General Contractor: ___________________________ Date: _______________

Printed Name and Title: ___________________________

Subcontractor: ___________________________ Date: _______________

Printed Name and Title: ___________________________

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Exhibit A — Scope of Work Detail

How to Use This Template

1. Download the template in Word or PDF format.

2. Review the prime contract to understand the obligations that will flow down to the subcontractor.

3. Complete the scope of work in Clause 1 and Exhibit A with specific trade-work descriptions and exclusions.

4. Enter the subcontract price in Clause 3 and set payment terms, retainage, and invoicing procedures in Clause 4.

5. Insert schedule dates in Clause 5 aligned with the overall project schedule.

6. Set insurance requirements in Clause 7 based on the project's risk profile and the prime contract requirements.

7. Define the warranty period in Clause 10.

8. Have both parties review with legal counsel before signing.

9. Sign in duplicate and provide copies to both parties.

10. Distribute certificates of insurance before the subcontractor mobilizes to the project site.