Not every subcontract is negotiable — but more are than subcontractors tend to assume. The problem is knowing which clauses are genuinely standard and which ones have been drafted to shift as much risk as possible onto you. Main contractors and their legal teams produce these documents regularly. Most subcontractors review them rarely. That imbalance shows up in the terms.
This post covers seven clauses that regularly appear in UK subcontracts and that subcontractors should push back on. Some are legally questionable. Others are simply commercially unreasonable. All of them are worth challenging before you sign, rather than accepting as a condition of winning the work. The broader subcontractor contract review checklist covers twelve clauses worth checking in full — but these seven are the ones most likely to cause serious problems if left unchallenged.
Payment Traps
1. Pay-When-Paid Conditioned on Upstream Receipt
Pay-when-paid clauses attempt to make your payment conditional on the main contractor first receiving payment from the employer. They are, in most circumstances, unenforceable under the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act). The only statutory exception is upstream insolvency.
Despite this, variations of pay-when-paid logic keep reappearing in subcontracts — sometimes dressed up as "payment milestones" tied to employer sign-off, or set-off provisions broad enough to hold payment indefinitely if a dispute exists upstream. Watch for any wording that links your payment to events outside your control or outside the direct contractor-subcontractor relationship.
What to negotiate: insist that payment terms comply with the Construction Act on their face and that no clause conditions payment on receipt from any third party. The pay-when-paid versus pay-if-paid distinction matters here — pay-if-paid clauses (which can bite in insolvency situations) are different from pay-when-paid, and understanding the difference helps you ask the right questions during negotiation.
2. Extended Payment Cycles and Vague Application Dates
Even where pay-when-paid is absent, long payment cycles can be written into subcontracts without most subcontractors noticing. Payment intervals of 45, 60, or even 90 days appear in bespoke subcontracts. Combined with a submission cut-off that falls early in the cycle, you may end up waiting three months or more for money you earned in week one.
The Construction Act Scheme provides a fallback of 28-day payment intervals where the contract doesn't set adequate terms. But the Scheme is a last resort — far better to negotiate clear terms upfront than to rely on statutory protections after a dispute has begun.
What to negotiate: a payment interval of no more than 28 days, a clearly defined submission deadline (not subject to the contract administrator's discretion), a fixed due date, and a fixed final date for payment. Ambiguity in any of these dates is almost always exploited in the main contractor's favour.
3. Uncapped Set-Off and Contra-Charges
Set-off and contra-charge clauses give the main contractor the right to deduct money from sums they owe you — for alleged defects, delays, or costs incurred because of your works. In principle, this is a recognised mechanism for resolving disputes over costs. In practice, uncapped or loosely drafted set-off clauses become a tool to hold payment indefinitely.
The worst versions of this clause allow deductions without prior notice, without any obligation to substantiate the amount, and without a defined challenge process. Some go further and state that any amounts deducted under the clause are not subject to adjudication until a final account is agreed — which can take years.
What to negotiate: require written notice of any intended set-off before the final date for payment (this is already required under the Construction Act for pay less notices, but some contracts try to expand this beyond what the Act contemplates), ensure any deductions are substantiated with reasonable detail, and confirm your right to refer disputed set-off to adjudication without delay. See our pay less notice guide for more on how this mechanism should work in a compliant contract.
Reviewing a subcontract and wondering which clauses to push back on? LazyQS scans your contract and flags unfair terms — with plain English explanations and suggested amendments for each one.
Liability Shifting
4. Fitness for Purpose Design Obligations
If your subcontract includes any design element, the standard of care clause is one of the most consequential you'll sign. The distinction between "fitness for purpose" and "reasonable skill and care" can determine whether your professional indemnity insurance responds to a claim — or leaves you personally exposed.
Fitness for purpose means the design must achieve the desired outcome, regardless of whether you acted competently and diligently. Reasonable skill and care means you must act as a competent professional in your field would act in the same circumstances. Most PI policies cover the latter and expressly exclude the former.
This is not a theoretical risk. If a design element fails and your contract imposed a fitness-for-purpose obligation, you may face a claim that your insurer declines to cover — meaning you're personally liable for losses that could substantially exceed the value of the subcontract.
What to negotiate: replace any fitness-for-purpose language with "reasonable skill and care." If the main contractor insists on fitness for purpose, escalate immediately to your broker and seek confirmation that your policy will respond. If it won't, the gap in cover needs to be resolved before you sign — not after a problem arises on site.
5. Disproportionate Liquidated Damages Flow-Down
Liquidated damages — fixed sums payable for each day or week of delay — are a legitimate risk management tool. What is not legitimate is flowing the full value of the main contract LDs down to a subcontractor whose works represent a fraction of the overall project value.
A £2 million main contract carrying LDs of £20,000 per week produces a theoretical weekly exposure that, if passed straight to a £200,000 subcontractor, equates to 10% of the subcontract value every seven days. That is not a genuine pre-estimate of the loss caused by that subcontractor's delay — which is the legal test for LDs to be enforceable rather than a penalty.
What to negotiate: LDs should be capped, proportionate to your subcontract value, and should apply only to delay directly attributable to your works. If LDs aren't capped in the contract, that is a red flag that deserves a direct conversation before you sign. The liquidated damages guide for subcontractors covers how to assess whether a proposed LD rate is defensible and what arguments are available when it isn't.
6. One-Sided Termination Rights
Termination clauses in subcontracts are frequently drafted to give the main contractor broad termination rights — including termination for convenience with no requirement to demonstrate cause — while restricting the subcontractor's equivalent rights to very narrow circumstances.
The practical consequence is a contract where you can be removed from site at any time, with limited ability to recover loss of profit on the uncompleted works, while your own right to terminate (for example, for sustained non-payment) is hedged with conditions that are difficult to satisfy.
What to negotiate: ensure termination rights are genuinely mutual, confirm your right to terminate for persistent payment failure, and specify that payment for all work completed to the date of termination is due regardless of which party terminates. Under JCT, clause 7.9 gives subcontractors a termination right for non-payment — check that your subcontract hasn't stripped this out through a bespoke amendment.
Procedural Unfairness
7. Notice Conditions That Extinguish Your Rights
Some of the most damaging clauses in a subcontract aren't about money directly — they're about procedure. Specifically, notice conditions that require you to give written notice within a defined (and short) period as a prerequisite for claiming additional time or money, with the consequence that a failure to give notice on time extinguishes your entitlement entirely.
These clauses are sometimes called "condition precedent" clauses because notice is a condition of the right to claim, not just good practice. They appear in NEC contracts as an intended mechanism for early warning and collaborative management. They also appear in bespoke subcontracts as a trap — written broadly enough to catch common delays and changes, with notice windows of 7 or 14 days that are easy to miss during a busy programme.
What to negotiate: push for notice periods of no less than 28 days, ensure the clause specifies clearly what information the notice must contain, and — most importantly — resist language that makes notice a condition precedent to any entitlement. A fair clause allows late notice where the delay or event was not reasonably apparent within the specified window, or reduces (rather than eliminates) entitlement for a failure to notify promptly.
7 Unfair Subcontract Clauses: Quick-Reference Guide
- Pay-When-Paid — Red flag: payment linked to employer receipt. Negotiate: statutory-compliant terms, no third-party conditionality.
- Extended Payment Cycles — Red flag: intervals above 28 days, vague submission cut-offs. Negotiate: fixed 28-day cycle, defined due and final dates.
- Uncapped Set-Off — Red flag: deductions without notice or substantiation, no challenge process. Negotiate: written notice required, right to adjudicate disputes promptly.
- Fitness for Purpose Design — Red flag: design standard beyond reasonable skill and care. Negotiate: replace with reasonable skill and care, confirm PI cover responds.
- Disproportionate LDs — Red flag: full main contract LDs passed down, no cap. Negotiate: capped, proportionate LDs attributable only to your works.
- One-Sided Termination — Red flag: contractor can terminate at will, subcontractor rights restricted. Negotiate: mutual rights, payment for completed work on any termination.
- Condition Precedent Notices — Red flag: short notice windows, failure extinguishes entitlement. Negotiate: 28-day minimum, no condition precedent wording.
Pushing back on contract terms is uncomfortable — particularly when there's competitive pressure to win the work and mobilise quickly. But accepting terms that shift unreasonable risk onto you doesn't just affect one project. It affects your cash flow, your insurance position, and your ability to operate if something goes wrong.
The seven clauses above are the ones that most often catch subcontractors out. Identifying them during a review is the first step. The second is knowing what to ask for instead — and being willing to have that conversation before you sign. LazyQS contract review flags these issues automatically, so you go into any negotiation knowing exactly where the risks sit.