Right, so the tender has landed, the price is in, and now the head contractor has sent through the sub-contract. Sixty-three pages of legal language that reads like it was written by someone who has never set foot on a construction site. What do you do?
Most tradies do one of three things. They sign it without reading it — because who has time? They skim it, miss the bad bits, and sign it anyway. Or they spend an evening with a highlighter and a headache, unsure of what they are actually looking at. None of those are great options. Because the clauses buried in a standard commercial sub-contract can genuinely cost you serious money if you do not know what you are agreeing to.
Why sub-contract reviews matter more than most tradies realise
Sub-contracts are drafted by the head contractor's lawyers, for the head contractor's benefit. The default position of almost every standard form sub-contract is to transfer as much risk as possible down the chain to you. That does not mean you cannot push back — most head contractors expect subcontractors to raise issues, and a professional response is often more effective than just rolling over.
The checklist — what to look for
1. Scope of works
Before anything else, confirm the scope matches what you actually priced. Watch for vague language, references to documents you have not seen, and catch-all phrases like "all works necessary for the complete execution" that could expand your obligations well beyond what you quoted.
2. Payment terms
When can you submit claims? How long does the head contractor have to respond? Are there "pay when paid" clauses that make your payment conditional on the builder getting paid first? These are restricted under SOPA in most states but still appear in some contracts. Read them carefully.
- What is the reference date for payment claims?
- How long does the head contractor have to issue a payment schedule?
- When is payment actually due after a claim is accepted?
- What retention is held, and when is it released?
3. Retention
Retention is typically five percent of the sub-contract value. What varies is when you get it back. Some contracts hold full retention until after the defects liability period — which can be twelve months or more after the job finishes. Know exactly what triggers the release before you sign.
4. Variations
This is where most disputes start. Sub-contracts frequently require written pre-approval for variations, with strict time limits for submitting claims after the fact. If you carry out verbally instructed work without following the contract process, you may have no entitlement to payment for it regardless of how clearly you were told to do it.
- Is written pre-approval required before carrying out variation works?
- What are the time limits for submitting variation claims?
- What happens if verbal instructions are given but not formally approved?
The variation golden rule: If you are doing work outside your original scope and you have not submitted a variation claim for it, you are doing it for free until proven otherwise. Submit claims in writing as the work arises — not at the end of the project when memories are conveniently hazy.
5. Defects liability
Typically twelve months from practical completion — but some contracts extend this or effectively restart the clock when defects are rectified. Confirm what constitutes a defect, how long the period runs, and whether you are responsible for defects caused by other trades.
6. Liquidated damages
Liquidated damages (LDs) are pre-agreed daily penalties for delay. They can be substantial — sometimes thousands of dollars per day — and are typically deducted directly from your progress payments. Know the rate, know what delays you are responsible for, and know what protection exists for delays outside your control.
7. Termination rights
Most sub-contracts give the head contractor broad rights to terminate — sometimes for convenience (any reason at all) — with limited compensation to you. Understand what notice is required and what you are entitled to be paid if the contract ends early.
Watch for "back to back" clauses. These make your obligations mirror the head contractor's obligations to the principal — meaning you take on risks and timeframes from a contract you have never seen and cannot negotiate. If you see the words "back to back" or "to the same extent as the head contract," get it reviewed before you sign.
8. Insurance requirements
Check the required insurance types and minimum cover amounts against your current policies before signing. Common requirements include public liability, workers compensation, and in some cases professional indemnity. Some contracts require the head contractor to be listed as an additional insured.
What to do when you find something you are not happy with
Be professional, specific, and reasonable. Do not just say "I do not like clause 14." Say "Clause 14.3 requires written approval before all variations, but we regularly receive verbal directions on site — can we agree on a ratification process within five business days?" That is a conversation a reasonable head contractor can engage with. Many problematic clauses get amended before signing — but only if someone asks.
When to get help
For smaller projects on terms you know well, a thorough read-through using this checklist may be sufficient. For large commercial contracts with significant liquidated damages exposure, complex scope, or unusual clauses — getting a professional review is money well spent. A good sub-contract review does not just flag problems. It tells you what to negotiate, how to frame it, and whether the project is worth taking at the terms on offer.