Hi Tom,
This is a query that we receive quite frequently from companies who are working with third party “subcontractors” , who want to ensure that their contracts (with both their clients and sub-contractors) adequately protect them.
Your client will most likely require you to include a clause in your contract with them to the effect that your company will be held responsible for the acts/omissions of any third parties or subcontractors that you use to provide any part of the services. You could try and negotiate this part with them, however, note that the general position that tends to be taken is that if the client is paying you directly for these “value added services” (perhaps you make a margin), then you will be the party responsible for ensuring that you (and these sub-contractors) deliver the services that your client has selected. Even if you don’t make a margin, the client may still assert that you contract directly with these companies instead of them, to save them the administrative burden. You may be able to negotiate that you are not responsible for subcontractor performance if say, the client is making payments directly to the sub-contractor for these services. In which case, negotiate away!
If you have accepted to be responsible for sub-contractor performance with your client, then you should be protecting your company by establishing a set of terms with each of the sub-contracted companies, to include clauses that are no less protective than the ones included in your client agreement. Your contract with the subcontractors should set out the precise scope of services that you expect them to deliver as part of your agreement with the client and should include remedies/penalties which you can assert directly against them in the event that they do not perform in accordance with the specified terms. Sometimes, it can be an easy task in “mirroring” the client’s contract to do this, however we’d recommend that in order to ensure that the contract terms accurately apply correctly and as you are intending, that you have a lawyer review these wherever possible, before issuing to your subcontractor.
Then, should your client want to raise an issue with you under their agreement for failure of the sub-contractor to perform, you should be able to “claw back” from the subcontractor anything that is owed from them to you, so that you can then pass this on to the client.
Hope that helps. Should you require any specific contractual or further legal advice, then of course we’d be happy to help.
