When a GC hands you a subcontract, it was written by their side to protect their side, and six clauses in particular can quietly move risk from them to you. Learn to spot them in five minutes before you sign, because that is the only cheap moment you will ever get to change them. None of these are illegal or unusual. They are standard, and that is the problem, because "standard" is how a clause that could sink you gets signed without a second look. Here is the scan: the six red flags, what each one does to you, and where to read more.
1. Pay-if-paid (contingent payment)
What it does: makes the owner actually paying the GC a condition of you ever getting paid. If the owner goes broke or refuses to pay, you can legally collect nothing, even for a perfect job.
How to spot it: the words "condition precedent," or "shall not arise unless and until Contractor receives payment from Owner." Vague "subject to receipt of payment" language usually reads as the milder pay-when-paid version.
What to do: ask to change it to pay-when-paid, or add a backstop that caps how long you can go unpaid regardless of the owner. Some states ban the worst version outright. See the pay-if-paid guide and route your state.
2. Broad-form indemnity and hold-harmless
What it does: makes you pay for losses, injuries, and legal bills that were not your fault, sometimes including the GC's own negligence. Your insurance may not even cover the promise you just made.
How to spot it: "indemnify, defend, and hold harmless... caused in whole or in part by any party, including the indemnitee." That "in whole or in part" and "including the indemnitee" language is the tell.
What to do: push for limited-form indemnity, tied to your own negligence only, and cap it at the insurance you are required to carry. Many states limit the harshest versions. See the indemnity guide.
3. No-damages-for-delay
What it does: limits you to a time extension with no money when the job runs late, even when the delay is the owner's fault. Months of extended overhead and idle crews, unpaid.
How to spot it: language saying your "sole remedy" for delay is an extension of time, or that you waive any claim for delay damages.
What to do: try to carve out owner-caused delay and active interference. Some states void these clauses on public work. See the delay guide.
4. Flow-down (incorporation by reference)
What it does: binds you to the entire prime contract between the owner and the GC, including terms you never read, like the owner's schedule, general conditions, and dispute rules.
How to spot it: "the Subcontractor assumes toward the Contractor all obligations the Contractor assumes toward the Owner," or any clause "incorporating" the prime contract "by reference."
What to do: ask for a copy of the prime contract and read the parts that flow down before you sign. You are agreeing to be bound by them. See the subcontractor agreement guide.
5. Termination for convenience
What it does: lets the GC end your subcontract at any time for any reason, with no fault on your part, often paying you costs and demobilization but not the profit on the work you did not get to do.
How to spot it: "Contractor may terminate this subcontract for its convenience for any reason whatsoever."
What to do: make sure the clause pays you for all work performed plus demobilization, and negotiate a fee or stated profit percentage on the terminated work so a no-fault cancellation does not wipe out your margin. See the termination guide.
6. Lien and bond waivers
What it does: signs away your mechanic's lien or bond-claim rights, sometimes in the contract itself before you have been paid a dime. Those rights are often your only real leverage to get paid.
How to spot it: any clause where you "waive" or "release" lien or bond rights, and especially any waiver that is not tied to actually receiving payment. Watch the lien waivers you sign with each progress payment too, because an unconditional waiver can release more than you have been paid.
What to do: never waive lien or bond rights up front, and only sign a payment-tied waiver that matches money actually in hand. Many states regulate or void advance lien waivers. See the lien waivers guide.
How to run the scan
- Read the payment, indemnity, delay, termination, and lien clauses first, every time. That is where the risk lives, not in the scope.
- Do not assume a scary clause is unenforceable. Enforceability of every one of these varies by state, and litigating whether a clause is void is expensive even when you win.
- Ask for changes in writing. You will not win every edit, but you will win some, and asking tells the GC you read your contracts, which changes how they deal with you.
- Price the risk you cannot negotiate out. If a GC insists on pay-if-paid and broad-form indemnity, you are being asked to carry their risk for free. Put that in your number or walk.
Common questions
What clauses should I watch for in a subcontract?
The six that most often shift risk onto you are pay-if-paid, broad-form indemnity, no-damages-for-delay, flow-down, termination for convenience, and lien or bond waivers. Each is standard in GC subcontracts and each can cost you money you never agreed to lose: getting stiffed when the owner does not pay, covering someone else's fault, eating delay costs, being bound to a contract you never read, losing your profit on a cancellation, or signing away your leverage to get paid. Read those clauses before you sign and negotiate the worst of them.
Can I negotiate a GC's standard subcontract?
Yes. A subcontract is negotiable like any contract, and the GC's standard form is written to protect the GC, so you can and should ask to change the clauses that shift risk onto you. You will not win every edit, but asking often softens the worst language and signals that you read your contracts. Focus on pay-if-paid, broad-form indemnity, no-damages-for-delay, and any flow-down you have not read. Get changes in writing, and price any risk you cannot negotiate out into your number.
Are dangerous contract clauses actually enforceable?
It depends on the clause and your state. Many states limit or void the harshest versions of these clauses, like broad-form indemnity, pay-if-paid, and no-damages-for-delay, but many enforce them if the wording is clear. Do not assume a scary clause is dead just because you heard your state bans it, and do not assume it is bulletproof either. Enforceability is a state-by-state question, and litigating whether a clause is void is expensive even when you win, so negotiate the clause down and confirm the rule in Working in Your State.
Should I have a lawyer review a subcontract?
For a large subcontract, or the first time a new GC hands you a form loaded with pay-if-paid and broad-form indemnity, yes, one attorney review is worth the money. A construction attorney can tell you which clauses are enforceable in your state and which to fight, and often the review pays for itself by catching one risk-shift clause. For small, familiar jobs you can usually run the six-clause scan yourself, but the bigger the job and the heavier the risk-shifting, the more a professional read pays off.
The honest bit
- Whether each of these clauses is enforceable, limited, or void is state-specific and changes with new legislation. This guide teaches you to spot them; get the enforceability rule for your state from Working in Your State and from each clause's own guide.
- These clauses being "standard" does not make them fair or harmless. Standard is exactly how a risk-shift clause gets signed without a second look.
- This is general guidance, not legal advice. On a large or unfamiliar subcontract, have a construction attorney read it once before you sign.
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