🔨 Subcontractor Agreement Template — Free Template

A subcontractor agreement for a prime contractor hiring a sub to perform a portion of the work owed to the prime's client. Includes flow-down terms, pay-when-paid, insurance, indemnification, and (for construction) lien waivers.

Who needs this

General contractors, agencies, IT consultancies, and any prime contractor who subcontracts portions of work. Also for subcontractors who want clear written terms.

What it covers

• Scope of subcontracted work
• Flow-down of prime contract terms
• Compensation & pay-when-paid
• Schedule & delays
• Insurance requirements
• Indemnification & defense
• Independent contractor status
• Conditional/final lien waivers (construction)
• Termination & change orders

Template clauses

1. Scope of Work

Subcontractor shall perform the work described in Exhibit A (the "Subcontract Work") in connection with Contractor's prime contract with [PRIME CLIENT NAME] dated [PRIME CONTRACT DATE] (the "Prime Contract") for the project located at [PROJECT LOCATION] (the "Project"). The Subcontract Work shall be performed in accordance with the plans, specifications, and other documents identified on Exhibit A.

2. Flow-Down of Prime Contract Terms

Subcontractor acknowledges receipt of the relevant portions of the Prime Contract. To the extent applicable to the Subcontract Work, Subcontractor assumes toward Contractor all obligations and responsibilities that Contractor assumes toward the Prime Client under the Prime Contract. In the event of a conflict, the Prime Contract controls as to scope, schedule, and standards of performance, and this Subcontract controls as to payment between Contractor and Subcontractor.

3. Compensation

Contractor shall pay Subcontractor {{#when pricing_method=fixed}}a fixed price of $[AMOUNT]{{/when}}{{#when pricing_method=hourly}}time-and-materials at $[RATE]/hour{{/when}}{{#when pricing_method=unit}}unit pricing as set forth on Exhibit A{{/when}} for the Subcontract Work, subject to approved change orders.

4. Payment Terms

Subcontractor shall submit invoices monthly (or upon milestone completion as specified on Exhibit A), accompanied by supporting documentation and, for construction projects, conditional lien waivers covering the work invoiced. Contractor shall pay undisputed amounts within {{payment_net_days}} days of receipt, OR (for pay-when-paid construction projects) within ten (10) days after Contractor receives corresponding payment from the Prime Client.{{#when project_type=construction}} Retainage of {{retainage_percent}} of each payment may be withheld and released upon final completion and acceptance.{{/when}}

5. Schedule

Subcontractor shall commence the Subcontract Work on [START DATE] and complete it by [COMPLETION DATE], in accordance with the Project schedule. Time is of the essence. If Subcontractor's delay causes Contractor to incur liquidated damages under the Prime Contract, Subcontractor shall be liable to Contractor for its proportionate share.

6. Change Orders

No change to the scope, schedule, or price shall be effective unless documented in a written change order signed by both parties. Subcontractor shall not be entitled to payment for any change in scope not authorized by a written change order.

7. Independent Contractor

Subcontractor is an independent contractor, not an employee or agent of Contractor. Subcontractor is solely responsible for (a) the means and methods of performing the Subcontract Work; (b) hiring, supervising, and paying its own employees and lower-tier subcontractors; (c) all federal, state, and local taxes; and (d) compliance with all applicable laws, including OSHA and worker classification rules. Subcontractor shall furnish a Form W-9 prior to first payment.

8. Insurance

Throughout the term, Subcontractor shall, at its expense, maintain at least the following coverages: (a) Commercial General Liability — $1,000,000 per occurrence / $2,000,000 aggregate; (b) Automobile Liability — $1,000,000 combined single limit (if vehicles used); (c) Workers' Compensation — statutory limits, plus Employer's Liability of $1,000,000; and (d) Professional Liability (E&O) — $1,000,000 per claim (if professional services rendered). Contractor and Prime Client shall be named as additional insureds on coverages (a) and (b) on a primary, non-contributory basis. Subcontractor shall furnish certificates of insurance before commencing work.

9. Indemnification

To the fullest extent permitted by law, Subcontractor shall defend, indemnify, and hold harmless Contractor, Prime Client, and their respective officers, directors, employees, and agents from and against all claims, damages, losses, and expenses (including reasonable attorneys' fees) arising out of or resulting from Subcontractor's performance of the Subcontract Work, but only to the extent caused by the negligence or willful misconduct of Subcontractor, its employees, or its lower-tier subcontractors. This indemnification shall not apply to the extent caused by the sole negligence of an indemnitee.

10. Lien Waivers (Construction Projects)

If the Project is subject to mechanic's lien laws: (a) with each progress payment request, Subcontractor shall submit a conditional lien waiver in the form required by the state where the Project is located, for the amount currently being requested; (b) upon receipt of each progress payment, Subcontractor shall submit an unconditional lien waiver for that payment; and (c) upon final payment, Subcontractor shall submit a final unconditional lien waiver covering all amounts paid through final completion. Failure to submit required lien waivers permits Contractor to withhold payment.

11. Warranty

Subcontractor warrants that the Subcontract Work will be free from defects in materials and workmanship and will conform to the requirements of Exhibit A and the Prime Contract. This warranty extends for {{warranty_period}} from substantial completion or such longer period as required by the Prime Contract. Subcontractor shall promptly, at its expense, correct any defective Subcontract Work identified during the warranty period.

12. Default & Termination

Contractor may terminate this Subcontract for cause, in whole or in part, upon Subcontractor's (a) failure to supply sufficient skilled workers or proper materials; (b) failure to make payment to its employees, lower-tier subcontractors, or suppliers; (c) failure to comply with applicable law; or (d) material breach not cured within five (5) business days of written notice. Contractor may also terminate for convenience upon written notice, in which case Subcontractor shall be entitled to payment for work properly performed through the date of termination, plus reasonable demobilization costs, but excluding lost profits on unperformed work.

13. Limitation of Liability

Except for indemnification obligations and breach of insurance requirements, neither party shall be liable for any indirect, incidental, consequential, or punitive damages arising under this Subcontract. The foregoing does not limit Subcontractor's liability for liquidated damages flow-down or its warranty obligations.

14. Governing Law & Disputes

This Subcontract shall be governed by the laws of the State of [STATE]. Any dispute shall first be addressed through good-faith negotiation. If unresolved within thirty (30) days, the dispute shall be resolved {{#when dispute_method=court}}in the state or federal courts located in [COUNTY, STATE].{{/when}}{{#when dispute_method=arbitration}}by binding arbitration in [CITY, STATE] under the Construction Industry Arbitration Rules of the American Arbitration Association.{{/when}}

15. Miscellaneous

This Subcontract (with Exhibit A) constitutes the entire agreement between the parties and supersedes all prior negotiations. Subcontractor may not assign or further subcontract any portion of the Subcontract Work without Contractor's prior written consent. Any amendment must be in writing. If any provision is held unenforceable, the remaining provisions shall continue in full force.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date written above.

[PARTY A NAME]
Signature: __________________________
Date: ______________

[PARTY B NAME]
Signature: __________________________
Date: ______________


EXHIBIT A — SUBCONTRACT WORK

Description of Work: {{scope_of_work}}
Applicable Plans / Specifications: {{plans_specs}}
Materials Supplied by Subcontractor: {{materials_by_sub}}
Materials Supplied by Contractor: {{materials_by_contractor}}
Start Date: {{effective_date}}
Completion Date: {{deadline}}
Price: {{#when pricing_method=fixed}}${{fee_amount}}{{/when}}{{#when pricing_method=hourly}}${{hourly_rate}} per hour, time and materials{{/when}}{{#when pricing_method=unit}}{{unit_pricing}}{{/when}}

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