Reviewing the subcontract: the clauses that decide whether a job pays

The GC's subcontract usually replaces your proposal, so read it before you sign. Check that your scope, price and qualifications are attached; then read the clauses that decide whether the job pays: flow-down of the prime contract, payment and pay-if-paid terms, retainage, indemnity and defense, delay and schedule, change order notice deadlines, backcharges, warranty and termination. Many of these vary in enforceability by state — ask for changes in writing, and have large contracts reviewed by a construction attorney.

By Michael Reddy, IntelBid

After this lesson you can

Confirm the subcontract carries your scope, price and qualifications
Spot the clauses that shift risk and money onto you
Ask for specific changes before signing

This lesson is education, not legal advice

Subcontract terms and how courts enforce them vary by state and by project. Use this as a checklist of what to read and ask about — and have a construction attorney review any large or unusual subcontract.

First: is your deal actually in it?

Scope matches your proposal — the product codes, areas, alternates the owner accepted, and nothing extra added by a broad phrase like “all flooring work shown or implied.”
Price matches your final proposal version, including accepted alternates.
Your qualifications and exclusions are attached or incorporated by reference — see inclusions and exclusions.
Documents listed are the ones you priced — drawings, specs and addenda by number and date.

Which clauses deserve a careful read?

Clause	What it can do to you	What to ask for
Flow-down	Binds you to the GC's contract with the owner — terms you haven't seen	A copy of the prime contract's relevant sections
Payment and pay-if-paid	Makes the owner's payment a condition of yours	Pay-when-paid with an outside date — see pay-if-paid
Retainage	Holds a percentage until the whole project closes	A lower rate, reduction at 50%, or release at your scope's acceptance — see retainage
Indemnity and defense	Makes you pay for, and defend, claims beyond your own work	Limit it to claims caused by your work; many states restrict broader indemnity
Schedule and delay	Holds you to the GC's schedule, passes down liquidated damages, or bars delay claims	Schedule tied to access and prior trades; LDs only for delays you cause
Change order notice	Waives your claim if written notice misses a short deadline	A workable notice period, and know exactly what it is
Backcharges	Lets the GC deduct costs from your payments	Written notice and a chance to fix before any backcharge
Warranty	Requires a longer workmanship warranty than you priced	Match what you priced, and the manufacturer's terms
Lien waivers	Requires waivers before you're paid	Conditional waivers until payment clears — some states restrict advance waivers
Termination for convenience	Ends your subcontract without cause	Payment for work done, materials ordered and demobilization
Disputes	Sets venue, arbitration and attorney fees	A venue you can reach and mutual fee terms

Change order notice deadlines are where money is lost

Many subcontracts require written notice of a change within a short window, and missing it can waive the claim entirely. Find the deadline before you start work, and put it on every job's checklist — change orders covers the process.

How do you ask for changes?

Mark up, don't just complain
Send redlined language or a short list of specific changes, clause by clause.
Prioritize
Pick the few that matter most on this job — scope attachment, payment, notice deadlines, indemnity — rather than rewriting everything.
Trade where you can
A GC unwilling to change retainage might accept a deposit on material, or faster payment terms.
Get the final version in writing
Agreed changes belong in the signed document or a signed rider, not an email thread.
Know your walk-away
A job with unlimited indemnity, pay-if-paid and short notice periods can cost more than it earns.

What should a subcontractor look for in a subcontract?

That the scope, price and qualifications from your proposal are included, and the terms for flow-down, payment and pay-if-paid, retainage, indemnity, delay, change order notice, backcharges, warranty, lien waivers, termination and disputes.

What is a flow-down clause?

A clause that binds the subcontractor to the obligations the GC owes the owner under the prime contract. Ask for the relevant parts of the prime contract so you know what you're agreeing to.

Are broad indemnification clauses enforceable?

It depends on the state. Many states have anti-indemnity laws limiting how far a construction contract can make you cover others' negligence. Have a construction attorney review indemnity language on significant contracts.

Key points

Make sure your scope, price and qualifications are in the signed contract.
Payment, retainage, indemnity, delay, notice and backcharges decide whether a job pays.
Ask for specific, prioritized changes in writing — and get legal review on big contracts.

In IntelBid · Won project → Project Docs

The contract lives with the job

Store the executed subcontract and its riders in the won project's Project Docs in IntelBid — an office-only tab, so pricing and contract terms stay away from field users. Change orders on the job then start from the contract proposal's terms.

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About the author. Michael Reddy builds IntelBid, bid management software for commercial flooring subcontractors. These lessons come from the bid desk: how the work is priced, won and paid for.