Free Subcontractor
Agreement Template
When you hire a subcontractor to perform part of the work you owe a client or owner, this agreement passes the right obligations down and keeps the risk where it belongs. Includes a flow-down clause, a pay-when-paid vs pay-if-paid selector (with a state-law warning), indemnification, additional-insured insurance, and lien waivers. Download and send in minutes.
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- Reviewed June 2026
- Covers all U.S. states
Branding (optional)
1 — Contractor (Prime)
2 — Subcontractor
3 — Project & Prime Contract
4 — Payment
5 — Insurance & Legal
PDF: choose "Save as PDF" in the dialog that opens. Attach your scope drawings, the prime contract, and any required insurance certificate as exhibits.
Subcontractor Agreement
Effective Date: enter date above
1. Parties & The Prime Contract
This Subcontractor Agreement ("Subcontract") is made as of enter date above between Contractor name ("Contractor"), and Subcontractor name ("Subcontractor"), for the project known as project / job name.
Contractor has entered into a separate contract (the "Prime Contract") with its client or project owner ("Client") to perform the overall project. This Subcontract does not create any contractual relationship between Subcontractor and the Client, and Subcontractor looks solely to Contractor for payment.
2. Scope of Work & Flow-Down
Work covered: Construction Trade — describe the subcontracted work above
Flow-down: Subcontractor is bound to Contractor by all terms of the Prime Contract to the extent they apply to the Subcontractor's work, and assumes toward Contractor all obligations Contractor owes the Client for that portion of the work. Changes are valid only in a written change order signed by both parties.
3. Payment & Contingent Payment
Subcontract price: USD ($) amount
Pay-when-paid (timing): Contractor will pay Subcontractor within Net 30 after Contractor receives payment from the Client for that work. Receipt from the Client is a timing mechanism only and is not a condition precedent — if the Client has not paid within 60 days of when payment would otherwise be due, Contractor pays regardless.
Undisputed amounts overdue by more than 7 days accrue interest at 1.5%/month. Nothing here waives any statutory prompt-payment, mechanics-lien, or payment-bond right.
4. Insurance & Indemnification
Insurance: Subcontractor maintains commercial general liability insurance of at least $1,000,000 per occurrence (plus workers' compensation where it has employees), names Contractor as additional insured on a primary and non-contributory basis, includes a waiver of subrogation in Contractor's favor, and delivers a certificate of insurance before starting work.
Indemnification: To the fullest extent permitted by law, Subcontractor defends, indemnifies, and holds harmless Contractor and Client from claims and expenses (including reasonable attorneys' fees) arising out of the Subcontractor's work, to the extent caused by the Subcontractor's negligent acts or omissions.
5–9. Standard Clauses
Independent contractor status (DOL NPRM RIN 1235-AA46, 2026) · Warranty & correction of work · Confidentiality & non-circumvention of the Client · Limitation of liability (capped at fees paid; insurance, indemnity, IP & gross-negligence carve-outs).
Lien waivers: Subcontractor furnishes conditional and unconditional lien and claim waivers with each payment and keeps the Project free of liens arising from its work, without waiving statutory lien or bond rights that cannot lawfully be waived in advance.
10. Term, Termination & Governing Law
Either party may terminate for cause after a 10-day cure period; Contractor may terminate or suspend for convenience, or if the Client terminates or suspends the Prime Contract, on written notice, paying for work properly performed to the termination date. Sections 4, 8, and 9 and accrued payment survive. Governed by the laws of governing state.
Contractor
Signature
Print name: _______________
Date: _________________
Subcontractor
Signature
Print name: _______________
Date: _________________
Template preview
Parties & The Prime Contract
1. Parties & The Prime Contract
This Subcontractor Agreement ("Subcontract") is made as of [Effective Date] between [Contractor Name] ("Contractor") and [Subcontractor Name] ("Subcontractor") for the project known as [Project / Job Name]. Contractor has entered into a separate contract (the "Prime Contract") with [Client / Owner] ("Client") to perform the overall project. This Subcontract does not create any contractual relationship between Subcontractor and the Client, and Subcontractor looks solely to Contractor for payment of its work.
Scope of Work & Flow-Down
2. Scope of Work & Flow-Down
Work covered: [e.g. Construction Trade / IT & Technical / Professional & Consulting].
Subcontractor will perform the portion of the project described in the scope above and any attached plans, specifications, or exhibits.
Flow-down (flow-through): Subcontractor is bound to Contractor by all of the terms of the Prime Contract between Contractor and the Client, to the extent they apply to the Subcontractor's work, and assumes toward Contractor all obligations and responsibilities that Contractor assumes toward the Client for that portion of the work — including quality standards, schedule, safety, and change-order procedures. Subcontractor has had the opportunity to review the Prime Contract. Changes to the scope or price are valid only in a written change order signed by both parties.
Payment & Contingent Payment
3. Payment & Contingent Payment
Choose your payment structure: [Pay-when-paid / Pay-if-paid / Independent Net terms].
Pay-when-paid lets Contractor wait until the Client pays before paying Subcontractor, but Contractor must still pay within a reasonable time even if the Client never does. Pay-if-paid makes the Client's payment a condition precedent — the subcontractor carries the risk of the Client's insolvency — and is void or unenforceable in many states (CA, NY, NC, WI, IL, OH, NV, UT, DE, IN, KS, MT, SC, VA). Independent terms pay the subcontractor on Net terms regardless of the Client. Optional retainage, late interest at 1.5%/month, and preservation of all statutory prompt-payment, lien, and bond rights are included.
Insurance & Indemnification
4. Insurance & Indemnification
Insurance (optional toggle): require Subcontractor to carry commercial general liability cover (e.g. $1M per occurrence), name Contractor as an additional insured on a primary and non-contributory basis, include a waiver of subrogation, and provide a certificate before starting.
Indemnification: to the fullest extent permitted by law, Subcontractor defends and indemnifies Contractor and Client for claims arising out of the Subcontractor's work, to the extent caused by the Subcontractor's negligence (a comparative-fault form written to respect state anti-indemnity statutes).
Download the full template — includes independent-contractor status (2026 DOL test), warranty & correction of work, lien waivers or deliverables & IP assignment (your choice), confidentiality & non-circumvention of the Client, a limitation-of-liability cap with carve-outs, and termination & flow-down with the Prime Contract.
Download the full template — free
Fill in your details above and download a ready-to-send subcontractor agreement, then attach your scope, prime contract, and insurance certificate.
What's included in this template
How to use this template
Tie the subcontract to your prime contract
A subcontractor agreement only works if it sits correctly inside the contract chain. Fill in the contractor (you, the prime), the subcontractor, the project, and — importantly — the client or owner you owe the work to under your prime contract. Describe the exact portion of the project the subcontractor will perform, and attach your plans, specifications, or scope drawings as an exhibit. The flow-down clause then passes the relevant prime-contract obligations down to the subcontractor, so you are not left owing the owner something your subcontractor is not also responsible for.
Pick your payment structure deliberately
This is the single most important decision in the document. Pay-when-paid delays payment until you are paid but still requires you to pay the subcontractor within a reasonable time — it is enforceable everywhere and is the recommended default. Pay-if-paid shifts the risk of the client's non-payment onto the subcontractor as a condition precedent, but it is void in many states (California, New York, North Carolina, Wisconsin, Illinois, Ohio, Nevada, Utah, Delaware, Indiana, Kansas, Montana, South Carolina, and Virginia) and the template warns you when you select it. Independent terms pay on Net terms regardless of the client. Add retainage if your prime contract has it.
Lock down insurance, indemnification, and lien protection
For most projects you should require the subcontractor to carry insurance, name you as an additional insured on a primary and non-contributory basis, include a waiver of subrogation, and hand you a certificate of insurance before work starts — turn the requirement on and set the limit. The indemnification clause is written in the comparative-fault, "to the fullest extent permitted by law" form so it stands up under state anti-indemnity statutes. For construction, keep the lien-waiver wording so the subcontractor delivers waivers with each payment; for services, switch to the deliverables, IP, and title wording instead.
Both parties sign — then collect the certificate of insurance
The subcontract becomes binding when both parties sign. If you turned on the insurance requirement, collect the certificate of insurance (and confirm the additional-insured endorsement) before the subcontractor sets foot on site. Use Bonsai to send the agreement, collect e-signatures, and track invoices and payments in one place, or PandaDoc if you run a steady stream of subcontracts and want reusable templates with an approval workflow.
Frequently asked questions
- A subcontractor agreement is a contract between a contractor (the prime or general contractor) and a subcontractor it hires to perform part of the work the contractor owes to its own client or project owner. It differs from a standard independent contractor agreement in one key way: it sits inside a chain of contracts. The contractor has a prime contract with the client or owner, and the subcontract pushes a defined slice of that work — and many of the prime contract's obligations — down to the subcontractor. The subcontractor has no contract with the owner and looks only to the contractor for payment. It is used in construction (a general contractor hiring electrical, plumbing, or drywall trades) and in services (an agency, IT firm, or consultancy hiring a specialist to help deliver a client engagement).
- Both tie the subcontractor's payment to the owner paying the contractor, but they do very different things. A pay-when-paid clause is about timing: the contractor can wait until it receives payment from the client before paying the subcontractor, but it must still pay within a reasonable time even if the client never pays. A pay-if-paid clause is a condition precedent: if the client never pays the contractor, the contractor never has to pay the subcontractor, so the subcontractor carries the risk of the client's insolvency. Because that result is so harsh, many states void pay-if-paid clauses entirely — including California, New York, North Carolina, Wisconsin, Illinois, Ohio, Nevada, Utah, Delaware, Indiana, Kansas, Montana, South Carolina, and Virginia — and even states that allow them require explicit, unambiguous language and will not let them waive lien or bond rights. This template lets you choose pay-when-paid, pay-if-paid, or independent (Net) terms, and warns you when pay-if-paid is risky.
- A flow-down clause binds the subcontractor to the relevant terms of the prime contract — the agreement between the contractor and the client or owner. In effect, the subcontractor assumes toward the contractor, for its portion of the work, the same obligations the contractor owes the owner: quality standards, schedule, safety, change-order procedures, and sometimes dispute resolution. Flow-down clauses keep the whole contract chain consistent so the contractor is not caught owing the owner something its subcontractor is not also on the hook for. Best practice is to give the subcontractor a copy of, or access to, the prime contract, since it is being asked to take on its terms.
- In most cases yes. Contractors routinely require subcontractors to carry commercial general liability insurance (often at least $1,000,000 per occurrence), plus workers' compensation if the subcontractor has employees, and to name the contractor — and often the client or owner — as an additional insured. Additional insured status means the contractor is covered under the subcontractor's policy for claims arising out of the subcontractor's work, so a claim flows to the subcontractor's insurer first. Strong subcontracts also require the coverage to be primary and non-contributory, include a waiver of subrogation (the insurer cannot later sue the contractor to recover), and demand a certificate of insurance before work starts. This template lets you turn the insurance requirement on and set the limit.
- A genuine subcontractor is an independent contractor, not an employee — it runs its own business, supplies its own tools and workers, and controls how the work gets done. But the label in the contract does not decide it; federal and state agencies apply their own tests. The U.S. Department of Labor's classification approach is in flux: a 2026 proposed rule (NPRM, RIN 1235-AA46, published February 27, 2026, not yet final) would reinstate a modified economic-reality test weighing factors such as control and the worker's opportunity for profit or loss. Misclassifying a worker who should be an employee creates tax and wage-law liability, so make sure the relationship is truly independent in practice. This agreement states independent-contractor status, but conduct controls.
- Often, yes — and that is exactly why pay-if-paid clauses are limited. In construction, an unpaid subcontractor usually has powerful statutory remedies: a mechanics lien against the property and/or a claim against the contractor's payment bond. Those rights generally cannot be waived in advance, which is why even enforceable pay-if-paid clauses cannot strip them away. Many states also have prompt-payment statutes that require payment within a set number of days and allow the subcontractor to suspend work or charge interest after proper notice. This template preserves statutory lien, bond, and prompt-payment rights regardless of the payment option you choose; in non-construction services, the subcontractor's main leverage is suspension and a breach-of-contract claim.
Bonsai is built for contractors and service businesses — send the subcontract, collect a signature, and track each subcontractor's invoices and payments automatically.