Reviewing a construction subcontract from a main contractor

A main contractor's subcontract passes the main contract down to the subcontractor with the contractor's own protections added: back-to-back obligations, payment periods tied to the contractor's own receipts, retention, wide set-off, liquidated damages and design responsibility the subcontractor did not price. The Housing Grants, Construction and Regeneration Act 1996 overrides some of it and the rest has to be negotiated. I review the subcontract from the subcontractor's side and return it marked up with a written explanation of the changes and the terms the Act already controls, for a fixed fee of £895 in five working days.

Who this is for

Specialist and trade subcontractors in England and Wales, including mechanical and electrical, groundworks, roofing, cladding, joinery, steelwork, fit-out and civils businesses, that have been sent a subcontract, a bespoke form or an amended standard form by a main contractor, and want to know what they are signing before they start on site. Both parties are businesses, so the Act applies; it does not apply to a contract with a residential occupier.

What to look for in a construction subcontract

Whether the Construction Act applies and what it implies

Part II of the Housing Grants, Construction and Regeneration Act 1996 applies to a construction contract for construction operations between businesses and implies terms the subcontract cannot exclude: a right to refer any dispute to adjudication at any time under section 108, stage payments for work lasting 45 days or more under section 109, and the payment notice regime. Where the subcontract fails to provide compliant terms, the Scheme for Construction Contracts (England and Wales) Regulations 1998 fill the gap. The review identifies the operations that fall outside the Act, such as certain plant installation and off-site manufacture, and checks that the subcontract's payment and adjudication clauses comply rather than leaving the Scheme to apply by default.

Payment notices, pay less notices and pay-when-paid

The subcontract must set a due date and a final date for payment, and the contractor must give a payment notice under sections 110A and 111 stating the sum it considers due, or a pay less notice before the final date, failing which the sum applied for becomes the notified sum and must be paid. The review checks the application, due date and notice periods for compliance, that the final date for payment is not tied to the contractor's own receipt, and that any clause making payment conditional on the employer paying the contractor is struck out, since section 113 bans pay-when-paid except where the employer is insolvent. Interest under the Late Payment of Commercial Debts (Interest) Act 1998 applies where the subcontract's own interest term is not a substantial remedy.

Retention, set-off and the final account

Retention held against the subcontractor should be at a stated percentage, released in two halves at practical completion of the subcontract works and at the end of the defects period for the subcontract works, not the main contract works, and held in trust where the contractor will agree it. The review checks the contractor's set-off rights, which should be limited to sums notified in a pay less notice, the final account procedure and the time limit for the contractor to dispute it, and that the subcontractor's claims are not barred by a clause requiring notice within days of every event.

Design responsibility, fitness for purpose and the Defective Premises Act

Subcontracts often make the subcontractor responsible for the design of its works, including design prepared by the contractor's consultants, and warrant fitness for purpose rather than reasonable skill and care. Fitness for purpose is wider than the subcontractor's professional indemnity insurance covers, so the review asks for a reasonable skill and care standard, for design responsibility limited to design the subcontractor prepares, and for the collateral warranties the subcontract requires to be on the same terms. Where the works are to a dwelling, section 1 of the Defective Premises Act 1972 imposes a duty to see that the work is done in a workmanlike manner so that the dwelling is fit for habitation, which cannot be excluded, and the Building Safety Act 2022 has extended the limitation periods for claims under it.

Programme, delay, liquidated damages and extensions of time

The subcontract will require the subcontractor to work to the contractor's programme, to notify delay within short periods, and to pay the contractor's losses under the main contract, including the main contract liquidated damages, if the subcontractor causes delay. The review checks that the subcontractor is entitled to an extension of time for the contractor's own delays and for events the main contract recognises, that any liquidated damages in the subcontract are a genuine pre-estimate or proportionate to a legitimate interest in the sense of Cavendish Square Holding BV v Makdessi [2015] UKSC 67, that the subcontractor's liability for the contractor's main contract damages is capped, and that acceleration is paid for.

CDM duties, site conditions and termination

The subcontractor is a contractor under the Construction (Design and Management) Regulations 2015 with the duties in regulation 15 for planning and managing its own work, and the subcontract should not transfer the principal contractor's duties to it. The review checks the allocation of site facilities, access, scaffolding, welfare and waste; that unforeseen ground conditions and asbestos are the contractor's risk or an event giving time and money; and that termination for the subcontractor's default requires notice and a period to remedy, with payment for work done and materials on site whichever party terminates. The subcontract should also record how the Construction Industry Scheme deductions will be made.

What it costs

Complex review, £895. Heavily negotiated or unusually complex documents. Five working days.

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review 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

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The subcontract says we are paid when the main contractor is paid. Is that enforceable?

Not for construction operations under the Construction Act. Section 113 of the Housing Grants, Construction and Regeneration Act 1996 makes a pay-when-paid clause ineffective unless the employer is insolvent. The review strikes it out and replaces the payment terms with compliant due dates, final dates and notice periods.

They want us to sign the subcontract before we get the main contract documents. Should we?

The subcontract will bind you to main contract terms you have not seen, so the review asks for the relevant main contract provisions to be supplied and identified before you sign, and for the incorporation clause to be limited to those provisions rather than to the whole main contract so far as applicable.

Can we adjudicate if they refuse to pay a notified sum?

You can. The right to refer a dispute to adjudication at any time is implied into every construction contract under the Act and cannot be excluded. The review checks that the subcontract's adjudication clause and the named nominating body comply with the Act, and that nothing in the clause delays or conditions the right.

Related guidance and services

• Contract review, £895, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a subcontract under a government contract

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.