The Five Biggest Contract Mistakes Subcontractors Make

After years of working in construction finance and seeing hundreds of subcontractor businesses up close, a pattern emerges. The businesses that run into serious financial trouble almost always have a contract problem at the root of it — a clause they signed without fully understanding.

The good news is that most of these mistakes are entirely avoidable. Here are the five most common — and what to do instead.

Mistake 1 — Signing Without Reading

This sounds obvious, but it is by far the most common mistake. Time pressure is real — main contractors often want contracts signed quickly, sometimes giving subcontractors just days to review documents that run to 50 pages or more. The temptation is to skim the commercial terms, check the price and programme look right, and sign.

The problem is that the most damaging clauses are rarely in the commercial terms. They're in the general conditions — the sections that govern what happens when things go wrong. Termination rights. LAD rates. Pay-less notice windows. Fitness for purpose obligations. These are the clauses that can cost you tens of thousands of pounds, and they're buried in dense legal language.

Mistake 2 — Assuming It's the Standard Form

Many subcontractors know that JCT contracts are industry standard, and assume that if a main contractor says they're issuing a JCT subcontract, it will be broadly fair and balanced. This assumption is expensive.

Main contractors routinely amend JCT standard forms — and the amendments almost always favour the main contractor. Retention rates get increased. Pay-less notice windows get shortened. Termination for convenience clauses get added. These changes are legal, and once you've signed, you're bound by them.

Mistake 3 — Not Keeping Records of Variations

This is the mistake that causes more payment disputes than almost anything else. Work on site rarely goes exactly to the original contract scope. Instructions are given verbally. Extra work gets done. Changes happen. And at the end of the job, the main contractor disputes the value of variations because there's no written record of the instruction.

• Confirm every verbal instruction in writing immediately — a WhatsApp message saying "confirming your instruction to..." is often sufficient evidence
• Keep a variations log from day one — date, description, approximate value, who instructed it
• Photograph all additional works before, during, and after — especially works that will be covered up
• Submit variation valuations promptly and in writing — don't leave them to the final account

Mistake 4 — Ignoring the Retention Clause

Retention is money that belongs to you. Too many subcontractors treat it as money they might get eventually, rather than money they're owed and need to actively manage. The result is retention that sits unpaid for years, or is lost entirely when a main contractor becomes insolvent.

Before you sign, check the following in the retention clause:

• What is the retention rate? The JCT 2024 standard is 3% — anything higher is a non-standard amendment
• When is the first half released? It should be at practical completion of your subcontract works, not the main contract
• How long is the defects liability period? The JCT standard is 12 months — 24 months ties up your money for much longer
• Is there any retention protection? A retention bond or trust account protects your money if the main contractor becomes insolvent

Mistake 5 — Not Understanding the LAD Rate

Liquidated and Ascertained Damages — LADs — are the amount deducted from your payment for every week you finish late. They're standard in JCT contracts and reasonable in principle. The problem comes when the rate is disproportionate, or when delay is caused by factors outside your control but the contract doesn't adequately protect you.

Before you sign, check:

• What is the LAD rate? Is it per week or per day? Calculate your maximum exposure
• Is the rate a genuine pre-estimate of loss? If not, it may be challengeable as a penalty clause
• What relevant events allow you to claim an extension of time?
• Is the extension of time process clearly defined with a reasonable notification period?

The Common Thread

All five of these mistakes share a common cause — signing a contract without fully understanding what you're agreeing to. The solution isn't complex legal expertise. It's taking the time to read, identify the risks, and ask questions before you sign rather than after.

The businesses that avoid these mistakes aren't the ones with the biggest legal teams. They're the ones that treat every contract as an important business decision — because it is.