EM Law are experts in advising clients on subcontracts. Our lead contracts lawyer is Neil Williamson who has extensive experience in advising clients on a wide range of commercial law matters.
A subcontract is a separate contract entered into by a party (main contractor) to a contract (main contract) under which they agree with another person (the subcontractor) that the subcontractor will perform their obligations under the main contract in return for consideration of some kind. In general, the other party to the main contract is obliged to accept the subcontractor’s performance if the subcontractor fulfils all that the main contractor had agreed to do under the main contract.
Subcontracts can therefore be an effective way of delegating contractual obligations to a third party.
The main contractor remains liable for the performance of the main contract, with the result that it is liable to the other party to the main contract for any default in performance by the subcontractor. Equally, the other contracting party is not generally entitled to sue the subcontractor for breach of contract unless they have a claim in tort or a direct third party right.
Subcontracts are commonly used in a number of sectors including construction, transportation, manufacturing and information technology. In these situations, the main contractor agrees to carry out certain works for a customer. It then elects to use subcontractors to carry out some or all of those works under separate subcontracts. The main contractor may view the subcontractor as an essential member of the project team, and work very collaboratively with it. If the work being subcontracted is less critical to the main contract, the main contractor and sub-contractor may have a more arms-length relationship. The relationship between the main contractor and the subcontractor is normally reflected in the structure and terms of the subcontract.
Generally, a subcontract is a separate contract that does not affect the position of the parties to the main contract, as there is no privity of contract between the subcontractor and the other party to the main contract.
In industries where subcontracts are particularly common, such as construction, the parties to the main contract will make express provision to ensure that the customer acquires directly enforceable rights against subcontractors, typically by means of collateral warranties and express third party rights.
Essentially, there are two different types of subcontracts:
The most common contract provisions that customers look to be flowed down are:
For any questions you may have concerning subcontracts contact Neil Williamson.
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