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Subcontractor Agreement
Drafted for B2B service subcontracting in England and Wales
A B2B subcontractor agreement for engaging specialist suppliers to deliver work as part of a project you have contracted with your end Client. Anti-pay-when-paid, IP assignment with chain of title, embedded Article 28 DPA terms, back-to-back performance, and tiered liability with separate treatment of IP infringement and data protection breach.
What's included
- ✓Parties (Main Contractor and Subcontractor) with Main Contract reference
- ✓Construction Act exclusion (sections 104 and 105 of the 1996 Act)
- ✓Back-to-back performance with Flowed-Down Requirements protection
- ✓Two-instalment fee structure (50/50 deposit and balance)
- ✓Express anti-pay-when-paid provision
- ✓Independent contractor status with PI and PL insurance requirements
- ✓Present and future IP assignment with full title guarantee
- ✓Pre-existing IP licence-back with sub-licence rights to Client
- ✓Moral rights waiver from individual authors and chain-of-title obligations
- ✓Acceptance and Rectification regime with 10-Business-Day Rectification Period
- ✓Confidentiality (5 years general, indefinite for trade secrets)
- ✓Embedded Article 28 data processing terms (Schedule 1)
- ✓Compliance with the Bribery Act 2010 and Criminal Finances Act 2017
- ✓Health and safety obligations for on-site work
- ✓6-month customer non-circumvention restriction
- ✓Subcontracting and assignment controls
- ✓Tiered liability cap (ordinary claims and IP/confidentiality/data claims)
- ✓Cascade termination on Main Contract termination, suspension, or scope reduction
- ✓12-month mutual non-solicitation
- ✓Force majeure clause
Recent legal changes
This subcontractor agreement is drafted for B2B service subcontracting in sectors such as digital agencies, creative agencies, marketing agencies, dev shops, and professional services firms. The Main Contractor engages the Subcontractor to perform part of the work the Main Contractor has contracted to deliver to its end Client under a separate Main Contract. The contract is expressly not a construction contract within the meaning of the Housing Grants, Construction and Regeneration Act 1996. The framework covers anti-pay-when-paid drafting, present and future IP assignment with chain-of-title controls, an embedded Article 28 DPA schedule, tiered liability with separate treatment of IP infringement and data protection breach, narrow customer non-circumvention restrictions, acceptance and rectification mechanics, and subcontracting and assignment controls.
What is a Subcontractor Agreement?
A subcontractor agreement is a contract between a Main Contractor (typically an agency or service provider) and a Subcontractor (typically an independent specialist or supplier) setting out the terms on which the Subcontractor performs part of the work the Main Contractor has contracted to deliver to a third-party Client. The agreement governs scope, fees, IP ownership, confidentiality, and the commercial relationship between Main Contractor and Subcontractor, while the Main Contract continues to govern the relationship between Main Contractor and Client.
When do you need one?
You need a subcontractor agreement when your agency or business engages a specialist supplier to deliver part of a project for one of your clients. The contract is particularly important where IP assignment, confidentiality, customer protection, and data processing obligations need to flow through cleanly from your end Client down to your supplier.
Last updated: 20 May 2026
Frequently asked questions
Who owns the intellectual property created during a subcontractor engagement?
Under this agreement, all Intellectual Property Rights created by the Subcontractor in performing the Services (the Project IP) are assigned to the Main Contractor, by way of present and future assignment, with full title guarantee. The Subcontractor retains ownership of its Pre-existing IP (frameworks, code libraries, design systems, methodologies, tools) but grants the Main Contractor a perpetual licence to use it to the extent incorporated into the Deliverables. The Main Contractor can sub-license to the Client and to their respective service providers. This structure is designed so that title and rights flow cleanly through to the end Client without contractual gaps.
How is the back-to-back performance obligation structured?
The Subcontractor must perform the Services to the standard required under the Main Contract, but only to the extent that those requirements have been disclosed to the Subcontractor in writing as "Flowed-Down Requirements". This protects the Subcontractor from being bound to invisible Main Contract terms, while protecting the Main Contractor through an autonomous baseline of reasonable skill and care, good industry practice, and compliance with the agreed specification. If there is any inconsistency between this agreement and the Flowed-Down Requirements, this agreement prevails unless the parties expressly agree otherwise in writing.
Does this agreement permit "pay when paid"?
No. The agreement contains an express anti-pay-when-paid provision: the Main Contractor's obligation to pay the Fee is not conditional on the Main Contractor receiving payment from the Client under the Main Contract, and the Main Contractor may not withhold, defer, or reduce payment solely because the Client has disputed or delayed payment under the Main Contract. This is a defensive position in favour of the smaller party in a typical subcontracting chain.
Why is this agreement not for construction work?
Construction subcontracts are governed by the Housing Grants, Construction and Regeneration Act 1996, which imposes specific statutory payment provisions, prohibits pay-when-paid arrangements, and requires adjudication routes. This agreement is expressly excluded from that regime: it does not cover construction operations within section 105 of the 1996 Act or design, surveying, or advisory services relating to construction operations within section 104(2). For construction subcontracting, a different template is needed.