The subcontractor agreement: what it is and what it should include
A subcontractor agreement is the contract between a builder and a subcontractor for part of a construction project. It sets what you build, what you are paid and when, how changes and delays are handled, and who carries the risk when things go wrong. In Australia it sits under your state's Security of Payment Act, which overrides some of what the agreement says.
AI risk report, not legal advice. The scanner gives general information about the risks in a document. It is not a lawyer, does not know your circumstances, and can be wrong. For decisions with legal consequences, get advice from a construction lawyer.
What a subcontractor agreement should include
- The parties. The exact legal entities and ABNs. Check the builder entity matches the one you priced for, since many builders run a separate company for each project.
- Scope of work. What you are doing, and what you are not. Inclusions, exclusions, drawings and specification by revision number. Most variation disputes start with a vague scope.
- Price and how it is paid. Lump sum or schedule of rates, the claim date each month, what a claim must include, and the payment terms. Check them against your state's statutory cap.
- Time. Start date, completion date or programme, and how extensions of time are claimed. Note every notice window.
- Variations. How changed work is directed, priced and paid, and whether you must proceed before a price is agreed.
- Liquidated damages. The rate for finishing late and whether there is a cap.
- Retention or security. How much is held, in what form, and when each part is released.
- Defects. The defects liability period, when it starts, and what happens to retention at the end.
- Insurance and indemnity. The policies you must hold and the losses you carry. Match the limits to your actual policies.
- Termination and suspension. When either party can end the contract, what you are paid if they do, and how your statutory right to suspend for non-payment fits in.
- Disputes. The steps before court or arbitration. These cannot stop you using Security of Payment adjudication.
- Special conditions. The amendments to the standard terms, often at the back. This is where the real contract usually is.
The standard forms used in Australia
Most commercial subcontracts start from one of these, then add special conditions. Each page shows what the form actually says and where it is usually amended:
Reviewing the agreement you have been sent
The base form matters less than the amendments. Run the agreement against the subcontract review checklist, put the changes you need in a departure schedule, and know the rights the Act gives you whatever the agreement says.
Common questions
What is a subcontractor agreement?
A subcontractor agreement, or subcontract, is the contract between a head contractor (the builder) and a subcontractor for part of the work on a project. It sets the scope, price, payment terms, programme, variations, liquidated damages, retention, defects obligations, insurance, termination and dispute process. In Australian construction it sits under the state's Security of Payment Act, which overrides some terms.
What should be included in a subcontractor agreement?
The parties and ABNs, scope with inclusions and exclusions, price and payment terms, time and extensions of time, variations, liquidated damages, retention or security, defects liability, insurance and indemnity, termination and suspension, dispute resolution, and any special conditions amending the standard terms.
Is there a standard subcontractor agreement in Australia?
Common bases are AS 4901 (often heavily amended), AS 4903 for design and construct, the QBCC commercial template in Queensland, the MBA NSW trade contract, and builders' own templates. The base form matters less than the special conditions, which is where most risk is added.
Should a subcontractor use a template agreement?
On commercial work the builder almost always issues its own subcontract, so the useful job is reviewing it, not drafting one. Check it against a subcontract review checklist, send a departure schedule of the changes you need, and use a lawyer for deeds, guarantees and large exposures.