Subcontractor Agreement Template

What a subcontractor agreement is, and who issues it

A subcontractor agreement (subcontract) is the contract between a general contractor and a trade contractor for a defined piece of a larger project. It sits under the prime contract between the GC and the owner and flows the relevant parts of that contract down to you: the drawings and specifications, the schedule, the insurance requirements, and usually the payment rhythm. What it adds is the deal between the two of you — price, retainage, how changes are priced, what happens when someone is late, and who carries which risk.

On most commercial work the GC hands you their form, often after a letter of intent has held the award while it is drafted. You will use this template in three situations: a direct-to-owner job where you are the prime contractor and need a subcontract for your own sub-tier trades; a smaller GC who has no paper of their own; and as the baseline you read a GC's form against, so you can see which clauses were removed and which were tilted. A subcontract is a different animal from a construction contract between an owner and a contractor, and from a purchase order — see the comparison below.

How this template is organized: the Agreement Summary

Most free subcontract forms scatter blanks through the clauses — retainage of ___% released upon ___ — and you fill them by reading every page. This one puts every deal-specific value on page 1 in an Agreement Summary: parties, project, a short summary of the Work, and a grid of named terms. The fifteen numbered sections then refer to those terms by name: "the Retainage Percentage stated in the Agreement Summary," "the Cure Period," "the Venue." Two things follow. Nobody has to hunt for a blank, and the clause text never needs editing to close a deal — you negotiate the Summary, attach the exhibits, and sign.

The fifteen sections, and the ones that decide whether you get paid

Scope of Work; Contract Documents; Subcontract Price; Progress Payments and Retainage; Changes in the Work; Schedule; Insurance; Licenses, Permits and Compliance; Safety; Warranty; Indemnification; Liens and Waivers; Termination and Suspension; Disputes and Governing Law; and General Provisions. Four of them do most of the work for a subcontractor:

• Section 4 — Progress Payments and Retainage. Applications are due on the Billing Day, payment is due a fixed number of days later, and the contractor must dispute in writing within seven days and pay the undisputed balance. Final payment is tied to a checklist you control: punch list done, closeout documents delivered, final lien waiver furnished.
• Section 5 — Changes in the Work. No changed work without a signed change order; a seven-day notice window; three pricing methods including cost plus the Change Order Markup from the Summary; and a rule that directed work is tracked on daily T&M tickets until the change order is issued. Pair it with the change order template.
• Section 6 — Schedule. Extensions for owner, contractor, weather and other-trade delay with a notice deadline; compensable delay when the contractor or owner causes it; and liquidated damages only if a rate is stated in Exhibit A.
• Section 12 — Liens and Waivers. A conditional waiver with each application and an unconditional waiver for the previous payment, in the form your state requires, and an express statement that nothing waives lien or bond rights in advance of payment. The lien waiver forms follow the same exchange.

Section 9, Safety, is new in this edition: a competent person on site whenever your crews are, JSAs on request, same-day incident reporting, and the contractor's right to stop work for an imminent hazard — the terms GC safety officers now expect to see in writing.

A worked example

The completed example is the subcontract behind every other sample on this site: Brightline Builders engages Summit Mechanical Contractors for the mechanical and plumbing scope of the Harbor Point Medical Office, Building B. Subcontract price $486,200.00; retainage 10%; applications due by the 25th, paid within 30 days; 15% markup on change orders; commencement June 1, 2026 and completion November 18, 2026; general liability $1,000,000 per occurrence and $2,000,000 aggregate, $1,000,000 auto, $2,000,000 umbrella; a 12-month warranty; a 10-day cure period; Colorado law, Denver County venue, mediation then binding arbitration. The change order (CO-003), the pay application for August, and the lien waiver examples all bill against that same $486,200 contract with the same 10% retainage, so you can follow one job from signature to final payment.

Subcontractor agreement vs. construction contract vs. purchase order

Clauses to watch for in a GC-issued subcontract

• Pay-if-paid. "Payment by the Owner is a condition precedent to payment to the Subcontractor" shifts the owner's credit risk to you. Ask for pay-when-paid with an outside date, and read the retainage guide for how release timing interacts with it.
• No damages for delay. Your only remedy for a GC-caused delay is more time, never money. This template makes contractor- and owner-caused delay compensable.
• Broad-form indemnity. You indemnify the GC even for the GC's own negligence. Many states void it; this template is mutual and comparative.
• Notice windows measured in hours. A 48-hour claim notice is designed to be missed. The template uses seven calendar days and lets a shorter prime-contract period apply only if you were given it.
• Advance lien waivers. Language waiving lien rights on signing, rather than on payment. See lien waivers explained.
• Retainage above your state's cap, or with no release trigger. Write the percentage and the release event into the Summary and make the statute control.