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What is subcontracting?

Subcontracting is the delegation by a party of some or all of its obligations under a contract between it and a customer to a third party (the subcontractor) for performance by the subcontractor. For the purposes of this Q&A, we refer to the party wishing to subcontract its obligations as ‘the supplier’.

When permitted:

1. •

   such subcontracting will 'discharge' the supplier’s obligation to perform the subcontracted obligations under the main contract (provided that the subcontracted obligations are performed in accordance with the requirements of the main contract), and

2. •

   the customer is obliged to accept the subcontractor’s performance in accordance with the main contract as if the supplier had tendered such performance directly

Where vicarious (ie subcontracted) performance is permitted, there is no transfer of the supplier’s liability under the main contract to the subcontractor. The supplier remains liable to the customer under the main contract for the non-performance by the subcontractor, even where the customer consents to the vicarious