Construction Contract Red Flags: A Subcontractor's Checklist Before You Sign

Not every clause deserves equal scrutiny on a first pass — some carry disproportionate risk and should be checked before anything else. First: payment conditions. Is payment to you conditioned on the GC actually being paid by the owner (pay-if-paid), or does the GC owe you regardless, subject only to a reasonable timing delay (pay-when-paid)? The difference, covered in depth in our piece on pay-if-paid vs. pay-when-paid, can mean the difference between getting paid and having no contractual right to payment at all if the owner defaults.

Second: indemnification scope. Are you being asked to indemnify the GC only for your own negligence, or for the GC's negligence too? Third: termination for convenience. Does the clause guarantee you're paid for completed work plus reasonable overhead and profit if the GC terminates without cause, or does it leave that open-ended?

These three deserve first priority specifically because they carry the largest and most common financial exposure across GC-drafted paper generally — everything else on this list matters, but these three are worth checking even when time is extremely short.

If you can only check one thing before signing a contract you don't have time to read fully, make it the payment-condition language covered first here — it has the most direct, and often the largest, effect on whether you actually get paid for the work at all.

If there's one specific phrase worth training your eye to catch, it's "to the fullest extent permitted by law" attached to an indemnification clause with no carve-out for the other party's own negligence. That phrase sounds like standard boilerplate, but without a carve-out, it can be read to require you to indemnify the GC even for harm the GC's own negligence caused — a much broader obligation than most subcontractors intend to accept, and one that directly affects your insurance and bonding profile as covered in our piece on rising insurance and bonding costs.

The fix isn't to refuse indemnification altogether — it's to insist the clause is proportionate: you indemnify for your own negligence, the GC for theirs. That's a standard, reasonable ask, not an aggressive one.

It's worth training your team specifically to search for this phrase whenever a new contract comes in — it's common enough, and consequential enough, that a simple keyword check catches a meaningful share of the highest-risk indemnity language on sight.

A genuinely dangerous pattern in GC-generated paper (as opposed to a standard AIA or ConsensusDocs form) is the absence of protections that a more balanced contract would include as a matter of course: a defined process requiring signed written authorization before extra work, a reasonable notice period for claims (7–14 days is standard; shorter is negotiable and worth pushing back on), and a right to cure before default or termination.

Missing clauses are easy to overlook precisely because there's nothing on the page drawing your attention to them — you have to actively check for what should be there and isn't, which is a fundamentally different (and easier to miss) task than spotting bad language that's actually present.

This is exactly why a checklist-based approach matters more for absences than for bad language — a checklist forces you to confirm each expected protection is present, rather than relying on something jumping out at you while reading.

Liquidated damages tied to the overall project schedule, rather than specifically to delays your scope caused, effectively make you financially responsible for delays created by other trades, the owner, or the GC's own scheduling decisions. Push for LDs scoped specifically to delay you actually caused, and reject joint-and-several liability language that could make you responsible for another trade's delay. For a deeper look at how these clauses should be structured, see our piece on liquidated damages vs. penalty clauses.

This is one of the clearer examples of a clause that looks standard on the surface but has a materially different financial impact depending on exactly how the scope of "delay" is defined.

This check is worth pairing with the excusable-delay review covered in our piece on the current labor shortage's effect on delay clauses, since both address the same underlying question: exactly which delays are you actually financially responsible for.

A related item worth checking at the same time: whether the LD rate itself bears any reasonable relationship to the owner's actual anticipated damages from delay, or whether it looks more like a punitive number picked to discourage any delay at all — the latter is a separate red flag on its own, addressed more fully in the linked piece above.

None of these items require a law degree to spot once you know to look for them — the challenge is doing it consistently, on every contract, under the time pressure that usually accompanies a contract landing on your desk. That's exactly the gap a systematic review process closes: applying the same checklist to every contract, every time, regardless of how rushed the read has to be.

See how RCS applies a checklist like this automatically to every contract you upload, flagging exactly these patterns before you sign.

Print this checklist, or better yet build it into your firm's standard intake process, so that even the busiest week doesn't become the reason one of these items gets missed on a contract that actually mattered.

The value of a checklist like this compounds the longer it's used consistently — over a year of contracts, a firm applying it every time develops a much clearer, evidence-based picture of which GCs' paper is genuinely fair versus which reliably needs pushback.