What to check before signing a subcontract in Australia: the 12-point checklist

The 12-point subcontract review checklist

Each point is self-contained. Work through them against the actual document in front of you.

1. Payment terms and the Security of Payment Act. Confirm the payment claim and payment schedule timeframes, and check they don't contract out of your Security of Payment Act rights. SOP Act rights cannot be signed away, but contracts routinely bury terms that make claiming harder. Know when you are entitled to claim and the date payment becomes due — in Victoria that is a monthly entitlement from the last day of the month, not a contractual reference date.

   Statutory payment timeframes by state (defaults if your contract is silent)

   State	Security of Payment Act	Head contractor must respond with a payment schedule	When payment falls due (subcontractor)
   NSW	Building & Construction Industry Security of Payment Act 1999	Within 10 business days of your payment claim	20 business days after the payment claim (15 business days where the claim is under a head contract)
   VIC	Building & Construction Industry Security of Payment Act 2002 (reforms from 15 Apr 2026)	Within 10 business days of your payment claim	Max 20 business days after the claim (from 15 April 2026); 10 business days if the contract is silent
   QLD	Building Industry Fairness (Security of Payment) Act 2017	Within 15 business days of your payment claim	10 business days default; contract can set up to 25 business days for subcontracts
   WA	Building & Construction Industry (Security of Payment) Act 2021	Within 15 business days of your payment claim	Max 25 business days after the claim for subcontracts (a longer contractual term is void)

   These are statutory defaults and caps — a contract can shorten them but generally can't extend beyond the cap. "Business days" exclude weekends, public holidays and year-end shutdown periods, which differ by state — in NSW, Victoria, Queensland and WA the shutdown runs from 22 December to 10 January inclusive. WA's Act applies to contracts entered on or after 1 August 2022. Adjudication application windows differ by state and scenario; check the relevant Act or state building authority for your contract. SA, TAS, NT and ACT have their own equivalent Acts.

2. "Pay when paid" clauses. These are void under the Security of Payment Act across every Australian state and territory. If the subcontract says you only get paid when the head contractor gets paid, that clause is unenforceable. Don't accept the commercial behaviour it's trying to create.

3. Extension of time (EOT) provisions. Find the notice period for claiming an EOT and the trigger events that qualify. Time bars here are strict. Miss the notice window and you can lose a legitimate claim for delay you didn't cause. Note whether notice must be in writing and to whom.

4. Liquidated damages (LDs). Check the daily or weekly rate and what it's calculated against. An LD rate is an unenforceable penalty if it's extravagant and unconscionable, or out of all proportion to the head contractor's legitimate commercial interests. Compare the rate to the value of your trade package, not the whole project.

5. Variations and how they're valued. Confirm how variations are priced, the notice you must give before doing varied work, and whether the contract lets the head contractor direct work without agreeing a price first. Doing varied work without following the notice clause is the most common way subbies don't get paid for it.

6. Set-off and back-charge rights. Look for clauses that let the head contractor deduct money from your payments for alleged defects, delay or other contracts. Broad set-off rights let them withhold your money on assertion alone. Check what notice they must give before setting off.

7. Retention and security. Confirm the retention percentage, when the first half is released (usually practical completion) and when the second half is released (usually end of defects liability period). Check whether retention is held in trust and whether you can substitute a bank guarantee.

8. Defects liability period (DLP). Check its length and what obligations survive it. Confirm whether the DLP restarts on rectified work, which can extend your exposure well beyond the headline period.

9. Indemnities and insurance. Read the indemnity clause for scope that's wider than your actual responsibility. An indemnity that covers the head contractor's own negligence, or losses outside your control, is a red flag. Confirm the insurance limits you're required to carry match what you actually hold.

10. PPSR registration. Decide whether to register on the Personal Property Securities Register before you start. If you supply materials or plant, registration can protect your position if the head contractor becomes insolvent before you're paid. Unregistered, your goods can be caught in the administrator's pool.

11. Unfair contract terms. Standard-form subcontracts can contain unfair contract terms that are void under the Australian Consumer Law, including unilateral variation rights, broad termination-for-convenience clauses and one-sided indemnities. A term that lets one party change the deal but not the other is the classic example.

12. Termination and suspension rights. Check what lets the head contractor terminate (including termination for convenience), what notice you get, and what you're paid on termination. Confirm your own right to suspend work — the SOP Acts give you a statutory right to suspend for non-payment, after giving the required statutory notice, whatever the contract says.