A subcontractor agreement passes a defined slice of a prime contract down to a specialty trade: scope by plans and specs, payment tied to the GC's draw schedule (with pay-when-paid timing clauses common but pay-IF-paid clauses unenforceable in many states), retainage matching the prime (5–10%), flow-down of prime-contract obligations, insurance with additional-insured status for the GC, lien waivers with each payment, and indemnity limited to the sub's own negligence — since broad-form indemnity is void under many states' anti-indemnity statutes.
Subcontractor Agreement Template
Reviewed by the Agiled editorial teamUpdated June 2026
A subcontractor agreement lives between two bigger forces: the prime contract above it, whose terms flow down, and mechanics-lien law below it, which gives the...
Part of our free contract template library — 75+ agreements in Word and PDF, ready to customize and sign.
Full template text
SUBCONTRACTOR AGREEMENT
Date: _______________
Project Name: _______________
Project Address: _______________
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. _____________
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: _____________
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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.
CLAUSE 14 — GOVERNING LAW
This Agreement shall be governed by the laws of the State of _____________.
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.
SIGNATURES
General Contractor: ___________________________ Date: _______________
Printed Name and Title: ___________________________
Subcontractor: ___________________________ Date: _______________
Printed Name and Title: ___________________________
Exhibit A — Scope of Work Detail
- Payment timing
- Tied to GC draws; watch pay-if-paid
- Retainage
- 5% – 10%, matching the prime
- Insurance
- GL $1M + GC as additional insured
- Indemnity
- Own-negligence only, in most states
What your subcontractor agreement should cover
Scope by trade, plans, and exclusions
The sub's slice defined by specification sections and drawings ('electrical per E-sheets dated...'), with explicit exclusions and adjacent-trade boundaries — who patches the drywall the electrician opened is a contract question, not a jobsite argument.
Flow-down clause, read both ways
The sub assumes toward the GC the obligations the GC owes the owner — schedule, quality, safety, documentation. Subs should request the prime contract (or its relevant terms) before signing; flowing down terms sight-unseen is signing a contract you haven't read.
Payment terms and the pay-when/if-paid distinction
Progress payments tied to the GC's draws, due within a stated period of GC receipt. Pay-WHEN-paid sets timing; pay-IF-paid shifts owner-nonpayment risk to the sub — and is unenforceable in many states (New York and California among them). Strike or narrow it; never assume it's boilerplate.
Retainage
Withholding matching the prime (5–10%), released when the prime releases — with a stated outside date so the sub's retainage doesn't ride the whole project when their trade finished in month two.
Change orders and directed work
No extra work without a written CO signed by the GC, priced before performance; verbal field directives confirmed in writing within 48 hours. The trades that document changes get paid for them; the ones that don't, donate them.
Schedule, coordination, and delay
The sub works to the project schedule and its updates, with notice requirements for delay claims (often 7–21 days, and missing the notice window can waive the claim entirely). Acceleration directives priced as changes.
Insurance and additional-insured status
GL at $1M/$2M, workers' comp (statutory), auto, and umbrella as the prime requires — with the GC and owner named as additional insureds on a primary, non-contributory basis, evidenced by certificates and the right endorsements (the certificate alone proves little).
Indemnity, limited lawfully
The sub indemnifies for claims arising from its own negligence and work. Broad-form indemnity (covering the GC's own negligence) is void under anti-indemnity statutes in many states — and signing it anyway invites uninsurable exposure, since CGL policies don't cover assumed liability that broad.
Lien waivers and rights
Conditional waivers exchanged with each payment, unconditional on clearance — and the sub's lien rights preserved through the statutory preliminary-notice machinery (California's 20-day preliminary notice and its cousins). Waiving lien rights in advance is prohibited in most states; don't sign drafts that try.
Safety and compliance
OSHA compliance, the GC's site safety program, licensing for the trade, and — on public work — prevailing-wage and certified-payroll obligations flowing down with audit rights.
Warranty and callbacks
The sub's workmanship warranty matching the prime's duration (commonly 1–2 years from substantial completion), with callback response times stated. Manufacturer warranties pass through with registration completed.
Default, termination, and supplementation
Cure periods before termination for default, the GC's right to supplement a failing sub's forces after notice (with backcharges documented), and payment for work in place on convenience termination.
Typical subcontract terms (U.S., 2026)
| Term | Standard practice | Notes |
|---|---|---|
| Progress payment timing | 7 – 14 days after GC draw | Prompt-pay statutes backstop |
| Retainage | 5% – 10% | Matching the prime contract |
| GL insurance | $1M / $2M | AI endorsement for GC + owner |
| Delay-claim notice | 7 – 21 days | Missing it can waive the claim |
| Workmanship warranty | 1 – 2 years | From substantial completion |
| Preliminary notice (CA) | 20 days from first work | Preserves lien rights |
| Pay-if-paid clauses | Void in many states | NY, CA among them — negotiate |
Subcontract norms track the prime contract and state law — prompt-payment statutes, anti-indemnity rules, and lien procedures vary materially. Public work adds bonding and prevailing-wage layers.
How subcontractor agreements work in practice
The trade sub on a residential GC's project
An electrician, plumber, or framer signs on for their spec sections: scope by sheets, price fixed or unit-based, payment within 7–14 days of the GC's corresponding draw, 10% retainage. The clauses earning their keep: the written-CO discipline (field changes confirmed same-day by text referencing the CO number), the adjacent-trade boundary list, and the preliminary notice filed on time — because the sub's real payment security on a private job is the lien right, and lien rights die on missed statutory deadlines, not on merit.
Reading the flow-down before signing
The flow-down clause makes the prime contract part of the subcontract — including its schedule remedies, no-damages-for-delay terms, dispute forums, and documentation requirements. The professional move: request the prime (or its incorporated terms), and price what's in it. A no-damages-for-delay clause flowing down means the sub's compensation for a stacked, delayed project is a time extension and nothing else — knowable at bid time, painful discovered at month nine. GCs respect subs who ask; the ones who refuse to share terms are telling you something.
When the owner doesn't pay the GC
The scenario the payment clause was drafted for. Under pay-when-paid, the GC gets reasonable time but ultimately owes the sub regardless; under enforceable pay-if-paid (where state law allows it and the clause is explicit), the owner's insolvency becomes the sub's loss. The sub's countermeasures: negotiate the clause before signing, perfect lien rights as the backstop (liens run against the property, not the GC's solvency), and on bonded projects, claim against the payment bond within its notice deadlines. Subs who rely on the GC's goodwill instead of the statutory machinery finance other people's projects.
Mistakes that weaken a subcontractor agreement
Signing pay-if-paid as boilerplate
One word — 'if' instead of 'when' — moves owner-credit risk onto the sub. Many states void the clause; in the ones that don't, it's a negotiation point worth real money.
Missing the preliminary-notice deadline
Lien rights are deadline machines: preliminary notice within days of starting (20 in California), lien recording windows after completion. Calendar them per project — the rights waive themselves silently.
Accepting broad-form indemnity
Indemnifying the GC for the GC's own negligence is void in many states and uninsured everywhere — the CGL policy covers your negligence, not your generosity. Own-negligence indemnity, comparative where available.
Working verbal change directives
Field changes performed on a foreman's say-so become 'disputed work' at payment time. Confirm in writing within 48 hours, price before performing where possible, and keep the CO log current.
Letting retainage ride the whole project
A trade that finished in month two shouldn't wait for month fourteen's project closeout to see its 10%. Negotiate retainage release tied to trade completion and inspection, or a reduction at 50% project completion.
How to use this template
- 01
Download the subcontractor agreement template in Word or PDF.
- 02
Define the trade scope by spec sections and drawings, with exclusions and adjacent-trade boundaries.
- 03
Set payment timing against GC draws — negotiate pay-if-paid language and confirm prompt-pay statute floors.
- 04
Match retainage to the prime with a trade-completion release path.
- 05
Set insurance with additional-insured endorsements, lawful own-negligence indemnity, and the written-CO rule.
- 06
Calendar the lien-notice deadlines for the project's state, then sign with the prime's flow-down terms reviewed.
Skip this template if…
- Non-construction freelance work — use an independent contractor agreement; the lien and retainage machinery doesn't apply.
- Labor-only staffing arrangements — supplying workers under the GC's supervision raises employment and co-employment issues a subcontract doesn't solve.
FAQs
What is a subcontractor agreement?
The contract between a general contractor and a specialty trade, passing down a defined slice of the prime contract: scope by plans and specs, payment tied to the GC's draws, retainage, insurance, indemnity, and flow-down of the GC's obligations to the owner. It sits between the prime contract above and mechanics-lien law below.
What's the difference between pay-when-paid and pay-if-paid?
Pay-when-paid is a timing clause — the GC pays within a reasonable time of receiving the owner's funds but owes the sub regardless. Pay-if-paid makes owner payment a condition of the sub ever being paid, shifting owner-insolvency risk downstream — and it's unenforceable in many states, including New York and California.
What insurance does a subcontractor need?
Typically general liability at $1M/$2M, statutory workers' comp, commercial auto, and umbrella coverage as the prime requires — with the GC and owner named as additional insureds on a primary, non-contributory basis. The endorsement matters more than the certificate; GCs increasingly verify both.
How does a subcontractor protect against nonpayment?
Through the statutory machinery: preliminary notices filed on time (within 20 days of first work in California), conditional lien waivers exchanged only against actual payment, lien recording within the post-completion window, and payment-bond claims on bonded projects. Lien rights run against the property itself — they're the sub's real security.
What is a flow-down clause?
The provision making the prime contract's obligations apply to the sub — schedule, quality, safety, documentation, dispute terms. Since it incorporates a document the sub may never have seen, the professional practice is to request the prime contract's relevant terms before signing and price what's actually in them.
Can a GC backcharge a subcontractor?
Yes, for documented costs of correcting the sub's deficient work or supplementing its forces after notice and a cure opportunity — the agreement should require written notice, an opportunity to cure, and contemporaneous documentation. Surprise backcharges deducted from final payment without that trail are the classic subcontract dispute.
Pair it with the subcontractor invoice template
The contract sets the terms — the invoice collects on them. Free download with the right line items pre-filled.
Need more than a template?
Create, send, and e-sign contracts with Agiled — alongside your CRM, invoicing, and projects.
Start free with Agiled