Subcontract

A subcontract is the contract between a head contractor (the builder) and a subcontractor (a trade or specialist) for part of the works. It sits one level below the head contract in the contractual chain: the builder owes the principal under the head contract, and engages subbies under separate subcontracts to do the trade work. A typical residential build has one head contract and many subcontracts.

A well-drafted subcontract flows the relevant head-contract obligations down sensibly: the scope of the trade’s portion, the program and milestones, quality and defects standards, insurance and WHS duties, retention, and payment terms. The flow-down should be proportionate. A subbie should carry the obligations that relate to their work, not the entire head contract dumped on them by a one-line reference.

Subcontract payment terms are not a free-for-all. The Security of Payment Acts give subbies a statutory right to claim and recover progress payments regardless of what the subcontract says, and pay-when-paid clauses (paying the subbie only once the builder is paid by the principal) are void under those Acts. Retention held from a subbie is also regulated, with trust-account rules on larger projects. A subcontract term that tries to contract out of these protections does not bind the subbie.

Put the subcontract in writing before the subbie starts, with a clear scope and payment schedule, so a dispute later turns on agreed terms rather than a verbal understanding. See engaging a subbie and subbie payment terms.

Also known as: Subbie contract, trade contract, work order.

Category: Contracts / Building contracts.

Related

• Head contract
• Engaging a subbie

See also

• Pay-when-paid clause
• Retention
• Subbie payment terms
• MBA contracts overview

References

• NSW Building and Construction Industry Security of Payment Act 1999, s.12 (verified 2026-05-23)
• MBA: building contracts (verified 2026-05-23)

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Last updated: 2026-05-30. Verified: 2026-05-23. Quarterly review for currency.