How to Structure a Subcontractor Agreement

Form: Always in writing. Oral agreements are not enough.
Key points to include:

• clear description of deliverables

• deadlines and milestones

• penalties for delays or failure

• liability for defects

• confidentiality and non-compete clauses

• termination options in case of non-performance

Who Is Liable to the Client?

Legally, it’s simple: the main contractor is responsible for fulfilling the agreement with the client.
If the subcontractor makes a mistake, you’re on the hook—unless you’ve properly protected yourself in the contract.

That’s why it’s important to:

• include the right to use subcontractors in your main contract

• include a regress clause in the subcontract—so the subcontractor must reimburse you for any damage they cause

What If the Subcontractor Doesn’t Deliver?

• Send a formal request with a deadline

• If no action → terminate the contract

• If damage occurred → claim compensation or penalties

• If your client is affected → consult a lawyer immediately to minimize losses

Common Mistakes

• no written contract or only informal agreement

• no deadlines or penalty clauses

• no regular quality control

• unclear allocation of liability

• no right of recourse against the subcontractor

💡 Lawyer’s Advice

“Subcontracting is often underestimated—especially when working with smaller suppliers or familiar partners. But these are exactly the situations where losses occur. Always put everything in writing, include penalties and make sure the subcontractor covers any damage they cause.”