1. Scope of works: what you're actually agreeing to deliver

The scope schedule decides what you're being paid to do, and what you might be expected to do for nothing because it's implied or flowed down from the head contract. Watch for catch-all wording like "all work reasonably necessary to complete the works" or scope that references a head contract you haven't seen. Get your inclusions and exclusions in writing, and make sure anything you've priced as excluded or provisional is actually excluded on paper.

2. Pay-when-paid and pay-if-paid

These clauses try to make your payment conditional on the head contractor first being paid by the principal. Across Australia, "pay when paid" provisions are of no effect under each state and territory's Security of Payment legislation: a head contractor generally can't make your right to be paid depend on someone else up the chain paying first. They still turn up in amended subcontracts anyway. Knowing the payment-claim and payment-schedule timeframes in your state's Security of Payment Act is one of the most valuable things you can do to protect your cash flow.

3. Time bars and notice clauses

This is where a lot of subcontractors quietly lose money. A time bar says that if you don't notify a delay, variation or claim within a set number of days, you lose the entitlement, full stop. Australian courts will generally enforce a clearly drafted time bar, even one with a short window. Before you sign, check every notice period in the contract and be honest about whether you can meet it on a busy site. Once work starts, treat those deadlines as hard.

4. Back-to-back and flow-down clauses

A flow-down clause pulls the obligations of the head contract down into your subcontract, often a document you never get to read in full. The trap is that the obligations flow down but the matching rights and remedies don't. If you're expected to carry head-contract obligations, ask to see the relevant terms and check that the protections that go with them (extension-of-time rights, payment entitlements, notice timeframes) come down too.

5. Liquidated damages

Liquidated damages (LDs) are a fixed daily or weekly amount you pay for finishing late. Check the rate, whether there's a cap, and how the completion date is set and adjusted. A small daily figure adds up fast over a long delay, and if your only defence against LDs is an extension of time, your ability to claim that EOT and the site records behind it become critical.

6. Retention, bank guarantees and security

Retention is money the head contractor holds back from each payment as security. In Australian subcontracts the total security is commonly capped (often around 5% of the subcontract price), with part released at practical completion and the balance at the end of the defects liability period, frequently around 12 months. Check how much is held, when each part is released, and whether you can swap cash retention for a bank guarantee. Retention that's slow to come back is a real cash-flow cost you should price in, not an afterthought.

7. Set-off and suspension

A set-off clause lets the head contractor deduct amounts it says you owe (back-charges, alleged defects, its own delay costs) straight out of money due to you. A suspension clause lets it pause your work. Both can hit cash flow hard and are often drafted broadly. Look at what triggers a set-off, whether you get notice before it happens, and how a dispute is handled, so a deduction doesn't just appear on your next payment with no warning.

Before you sign: a quick checklist

Make sure you can answer these before you put your name to it:

  • What exactly is in, and out of, your scope, in writing?
  • What are the payment-claim and payment-schedule timeframes, and are any pay-when-paid terms lurking?
  • What are the notice periods for delays, variations and claims, and can you actually meet them?
  • What head-contract obligations flow down, and do the matching rights come with them?
  • What's the LD rate and cap, and how is the completion date adjusted?
  • How much retention or security is held, and when does each part come back?
  • What can be set off against your payments, and with how much notice?

You don't need to be a lawyer to read a subcontract well. You need to know which clauses move risk and money, and to raise the ones that don't work before you sign, not after. If you want a structured way to work through the wording, our free tools (including a clause-analysis tool we're building) are a good place to start. And once work is underway, keeping clean delay, notice and cost records is what turns a tight clause from a trap into something you can manage.