Free subcontractor agreement template
with every clause that protects your chain of work.

Why it matters: The agreement must clearly identify which party is the primary contractor (hiring party) and which is the subcontractor — and reference the existence of the prime contract so the subcontractor understands their work sits within a larger client engagement. Misidentifying the contracting party (e.g., using a personal name instead of the business entity) can leave liability in the wrong place.

What Clausio checks: That both parties are identified by legal name and entity type, that the subcontractor role is clearly labeled, and that the agreement references the prime contract or client engagement to which it relates.

Legal basis: Restatement (Second) of Contracts §§ 9, 12–17 (1981) — contract formation requires identifiable parties with legal capacity. [Confidence: medium — Restatement is widely adopted persuasive authority; ALI text is paywalled]

Why it matters: The subcontractor needs to know exactly which portion of the prime contract they are responsible for. An undefined scope creates disputes about what was promised, opens the door to scope creep, and makes it impossible to hold the subcontractor to the delivery standard the end client expects.

What Clausio checks: That deliverables, acceptance criteria, and timeline are specified rather than left open-ended. Flags scope described only in aspirational terms without concrete outputs.

Legal basis: Restatement (Second) of Contracts §§ 201–203 (1981) — ambiguities in a standardized agreement are construed against the party who supplied the language (contra proferentem). [Confidence: medium]

Why it matters: This is the most critical clause in a subcontractor agreement. Without a written copyright assignment from the subcontractor, the primary contractor cannot transfer copyright to the end client — even if the primary contractor has already promised to do so in the prime contract. A broken chain of title means the end client may not legally own the work they paid for, and the primary contractor is liable for the gap.

What Clausio checks: Whether the agreement includes a written copyright assignment covering all deliverables, distinguishes subcontractor pre-existing IP (retained by the subcontractor) from assigned deliverables, and grants any necessary license for pre-existing IP embedded in the deliverables.

Legal basis (high confidence): 17 U.S.C. § 101 — a commissioned work is a "work made for hire" only if it falls within one of nine statutory categories AND a signed written instrument designates it as such. Most subcontractor deliverables do not qualify — a written copyright assignment is required. 17 U.S.C. § 204(a) — any transfer of copyright ownership must be in writing and signed; oral agreements do not transfer copyright. Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989) — the Supreme Court held that an independent contractor's work does not automatically vest copyright in the hiring party.

Why it matters: The primary contractor remains bound by every obligation in the prime contract, including the subcontractor's portion. Without flow-down language, the subcontractor is not contractually required to meet the end client's requirements — creating a gap the primary contractor must absorb alone. Flow-down clauses also protect the primary contractor from liability if the subcontractor violates a client-mandated restriction (e.g., data handling, regulatory compliance).

What Clausio checks: That the agreement identifies which prime-contract obligations flow down to the subcontractor, that the subcontractor acknowledges awareness of the relevant prime contract requirements, and that the subcontractor indemnifies the primary contractor for flow-down violations.

Legal basis: General contract law — a primary contractor cannot delegate their liability to a client by subcontracting alone; delegation transfers the duty to perform but not the underlying liability (Restatement (Second) of Contracts § 318). Flow-down clauses create a direct contractual remedy against the subcontractor. [Confidence: medium]

Why it matters: Primary contractors often want to condition subcontractor payment on receipt of payment from the end client ("pay-when-paid"). Courts in many states treat pay-when-paid clauses as shifting timing of payment (acceptable) rather than eliminating the obligation to pay if the client never pays (generally not acceptable). Without clear payment terms, a subcontractor can sue for their fee regardless of whether the primary contractor has been paid.

What Clausio checks: That fee amount, invoicing procedure, payment due date, and any pay-when-paid or pay-if-paid conditions are specified. Flags pay-if-paid clauses as high-risk in states where they are disfavored or unenforceable.

Legal basis: Restatement (Second) of Contracts § 347 — expectation damages for non-payment. Pay-when-paid vs. pay-if-paid enforceability varies by state; several states limit or void absolute pay-if-paid clauses (most prominently in construction, but courts have applied similar reasoning in services contexts). Note: NYC subcontracting arrangements over $800 may trigger the NYC Freelance Isn't Free Act (N.Y.C. Admin. Code § 20-928). [Confidence: medium for Restatement; NYC statute high; pay-if-paid state law varies]

Why it matters: Subcontractors routinely access the end client's confidential information — business plans, proprietary data, customer lists — without being in direct privity with that client. The primary contractor is responsible for ensuring this information is protected. Without a confidentiality clause that covers client information, the primary contractor has no contractual remedy if the subcontractor discloses something the end client considers a trade secret.

What Clausio checks: That confidential information is defined (including client information received through the engagement), the subcontractor's obligations are spelled out, and the DTSA whistleblower-immunity notice is included (18 U.S.C. § 1833(b)).

Legal basis (high confidence): Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836 — federal civil cause of action for trade-secret misappropriation. 18 U.S.C. § 1833(b) — written notice of DTSA whistleblower immunity is required to preserve eligibility for exemplary damages and attorney's fees. Uniform Trade Secrets Act (UTSA) — adopted by 48 states and DC, providing parallel state-level protection.

Why it matters: A subcontractor who learns the end client's identity may approach them directly for future work, cutting out the primary contractor. A non-solicitation clause prevents this for a defined period after the engagement. The "no direct contact" clause during the engagement protects the primary contractor's relationship and ensures the client receives a unified communication channel.

What Clausio checks: Whether a no-direct-contact or non-solicitation clause is present, whether it is scoped by time and subject matter, and whether it is likely to be enforceable in the applicable jurisdiction. Flags overly broad restrictions in California-governed contracts.

Legal basis: Non-solicitation enforceability varies by state; most states apply a reasonableness standard (time, scope, legitimate business interest). California effectively prohibits most post-engagement non-solicitation agreements under Bus. & Prof. Code § 16600. Consult counsel for California-governed arrangements. [Confidence: medium — state law varies; California rule is high confidence]

Why it matters: A primary contractor who exercises too much control over a subcontractor's methods, schedule, or tools risks having that relationship reclassified as employment — triggering payroll tax liability, workers' compensation obligations, and potential benefits claims. The IC classification clause documents the subcontractor's independent status.

What Clausio checks: That the agreement states IC status, that the subcontractor controls their own methods and equipment, and that the subcontractor is responsible for their own taxes and insurance. Flags if classification language is absent or contradicted by other terms.

Legal basis (high confidence): IRS Common-Law Test — behavioral control, financial control, type of relationship. IRS guidance. California's ABC test (Lab. Code § 2750.3 / AB5) is significantly stricter.

Why it matters: If a subcontractor's work injures a third party, infringes a copyright, or breaches the prime contract, the primary contractor may face a claim from the end client that originated with the subcontractor's conduct. A mutual indemnification clause ensures the subcontractor holds the primary contractor harmless for losses caused by the subcontractor's own acts or omissions.

What Clausio checks: That indemnification obligations are present, that the subcontractor indemnifies the primary contractor for losses caused by the subcontractor's breach, IP infringement, or third-party claims arising from the subcontractor's work, and that the clause does not require a party to indemnify against their own sole negligence.

Legal basis: General contract law — indemnification as contractual risk allocation (Restatement (Second) of Contracts, general principles). Anti-indemnity statutes in approximately 46 states void provisions requiring indemnification for a party's own sole negligence or willful misconduct. [Confidence: medium — anti-indemnity statutes primarily target construction; applicability to services varies by state]

Why it matters: In multi-party arrangements, the governing law in the prime contract and the subcontract should ideally match — divergence creates complexity when a dispute involves obligations that run through both agreements. A dispute resolution clause (arbitration or mediation-first) keeps subcontract disputes from cascading into the primary contractor's relationship with the end client.

What Clausio checks: That governing law and venue are specified, that a dispute resolution mechanism is named, and that the chosen governing law is consistent with (or at least not incompatible with) the prime contract's governing law.

Legal basis: Restatement (Second) of Conflict of Laws § 187 (1971) — courts enforce the parties' chosen governing law unless the chosen state has no substantial relationship to the transaction or applying it would violate a fundamental policy of the state with the greater interest. [Confidence: medium]
Federal Arbitration Act, 9 U.S.C. § 2 (high confidence) — a written arbitration clause "shall be valid, irrevocable, and enforceable" save for standard contract defenses.