Purchase terms for a construction company using subcontractors

A construction company answers to its client for everything on site, including the work of subcontractors it does not employ. Subcontract terms have to flow down the main contract's obligations and programme, comply with the payment and adjudication rules that apply to construction contracts, put defects and delays where they belong, and cover insurance, site conduct and the Construction Industry Scheme. I draft those terms for a fixed fee of £995, delivered in five working days.

Who this is for

Building contractors, main contractors and construction companies in England and Wales engaging trade subcontractors (groundworks, electrical, plumbing, roofing, plastering and the rest) on commercial and residential projects. These are business-to-business terms for the contractor's side.

What matters in contractor-side subcontract terms

Flowing down the main contract

The subcontractor should carry, for its part of the works, the obligations the contractor owes its client: the specification, the standard of workmanship, the programme, the warranties and the defects period. The terms should say that the subcontractor has seen or been told the relevant main contract provisions, that its work must allow the contractor to comply with them, and that the subcontractor is liable to the contractor for any loss the contractor suffers to its client because of the subcontractor's work.

Payment, notices and the Construction Act

Subcontracts for construction operations between businesses are construction contracts under the Housing Grants, Construction and Regeneration Act 1996, which implies staged payments for contracts of 45 days or more, requires payment and pay less notices on time under sections 110A and 111, bans pay-when-paid under section 113, and gives either party the right to adjudication under section 108, with the Scheme for Construction Contracts (England and Wales) Regulations 1998 filling any gap in the contract's mechanism. The terms should set a compliant payment mechanism with due dates, final dates and notice periods the contractor can operate, because a missed pay less notice means paying the sum applied for.

Programme, delay and instructions

The terms should require the subcontractor to work to the programme and to the contractor's instructions, to notify delay promptly, and to accelerate or reprogramme where instructed, and should say that the subcontractor is liable for the contractor's losses from its delay, including sums the contractor pays its client. Variations should be instructed in writing and valued by a stated method, and the terms should say that work done without an instruction is not paid as a variation.

Defects, insurance and site conduct

The subcontractor should be responsible for its defects for the same period as the contractor is to its client, return to remedy them at its own cost, and indemnify the contractor for claims arising from its work, and the terms should require public liability and, for design, professional indemnity insurance at stated levels. The subcontractor's operatives must comply with the contractor's site rules, method statements and health and safety requirements under the Health and Safety at Work etc. Act 1974 and the Construction (Design and Management) Regulations 2015, under which the contractor is usually principal contractor, and the contractor should be able to remove anyone who does not.

Status, CIS, termination and set-off

Subcontractors are engaged as independent businesses, and the terms should say so and require them to account for their own tax; the Construction Industry Scheme under Chapter 3 of Part 3 of the Finance Act 2004 applies to payments to construction subcontractors and the terms should require the subcontractor to provide its verification details. The contractor should be able to terminate for breach, insolvency or if the main contract ends, to set off sums it is owed, and to engage others to complete the work at the subcontractor's cost. Interest on late payment under the Late Payment of Commercial Debts (Interest) Act 1998 applies as the terms provide.

What it costs

Customer or supplier terms and conditions, £995. One set of terms, customer-facing or supplier-facing, drafted for your business. Five working days.

Review of your existing terms, £495. You already have terms and want them checked and brought up to date. Returned marked up with my amendments and an explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the terms and conditions drafting page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A full set of bespoke terms drafted for your business, reflecting the legal requirements that apply to your business and sector
• A note in plain English explaining the terms I have drafted for you
• Liability, payment, termination and IP provisions that protect your position and are drafted to withstand scrutiny from the other side
• Guidance on how to incorporate the terms properly
• Your questions and comments answered by email or phone
• One round of amendments to finalise the terms ready for use

What is not included

• Negotiating your terms with individual customers (I am happy to quote for this as an additional service if required)
• Sector-specific regulatory compliance beyond the contract terms themselves
• Website privacy notice and cookie compliance, which I quote separately
• Terms governed by the law of another country
• Tax advice

Questions I am often asked

We forgot to send a pay less notice and the subcontractor is claiming the full application. Do we have to pay it?

For that payment cycle, the Construction Act requires it, and an adjudicator will confirm it within weeks. The terms give you the mechanism; operating it on time is essential.

Our client is charging us for a defect in the subcontractor's work. Can we recover it?

If the terms make the subcontractor liable for the contractor's losses to its client arising from its work, and responsible for defects for the same period, yes. Notify the subcontractor promptly and give it the chance to remedy.

Can we make payment to the subcontractor conditional on our client paying us?

Pay-when-paid clauses are banned in construction contracts by the 1996 Act, except in the client's insolvency in narrow circumstances. Set payment terms you can meet.

Related guidance and services

• Terms and conditions drafting, £995, the service this page describes
• Contract review, £495
• Terms and conditions for a domestic builder
• Subcontractor terms for a cleaning company

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.