Q&As

Can a prohibition on subcontracting prevent a supplier from recruiting temporary external personnel to provide some or all of the contract services?

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Published on LexisPSL on 17/01/2017

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Can a prohibition on subcontracting prevent a supplier from recruiting temporary external personnel to provide some or all of the contract services?
  • Meaning of ‘subcontract’
  • Is there a distinction where the supplier acquires additional internal resource to assist in the provision of the services where responsibility for performance of the contract remains with the supplier?
  • Other considerations

An analysis of the issues raised in this question will largely turn on the construction of the word ‘subcontract’ and whether, in any given circumstance, the procuring by a party of additional external resources falls within that definition.

We have undertaken a limited case search but have been unable to find any authority in which this point was considered. However, the below information may be useful.

Meaning of ‘subcontract’

It will first of all be necessary to establish on the facts and in the context of the clause which prohibits it, whether a subcontract has been created. Subcontracting is the delegation by one 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. Contractual liability for performance of the obligations remains with the original party. See Practice Note: Subcontracting for guidance on general issues relating to subcontracting.

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