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What is the Subcontracting Agreement

The Subcontracting Agreement (or third party processing) is the agreement by which a company (called the customer), instructs another company (called a subcontractor) to create products or services that can be incorporated into its production process, in the face of the payment of a fee.

In particular, the contracted company is part of a specific phase of the customer’s production process. Therefore, the subcontractor undertakes to respect the times, methods and technical specifications dictated by the client company.

When using the contract processing agreement

Subcontracting is used by a client company that does not carry out all the phases of its production process, assigning an external company to manage a part of it. This agreement, in fact, is often used by the company that wants to assign another company to provide some processing on raw materials or semi-finished products. For example, a textile company that produces clothing uses a smaller company to produce and process parts of the final product, issuing directives on the specifications and technical procedures to be followed, and supplying the necessary materials.

This agreement can only be entered into by companies (or entrepreneurs). This means that both the client and the subcontractor must professionally carry out an organized activity, for profit, for the production or exchange of goods or services. For example, the builder who professionally builds and sells buildings is a company. On the contrary, the artist who occasionally sells his paintings and who does not manage an organized production process is not a business.

The pact should not be confused with the realization of a defined work. When the assignment consists in the realization of a work to be delivered within a certain period, such as the creation of a website, a work contract must be used.

Furthermore, this model cannot be used to commission a periodic supply of goods. In this case, the appropriate document is the contract for the administration of goods.

The law on subcontracting

The subcontracting is regulated by the l. 192 of 1998. The legislation provides, in particular, some requirements that the agreement must have. Among these, the main ones are the written form, the indication of the price, the payment methods and the relative terms, the specifications of the requested good or service (e.g. functional or constructive characteristics), the delivery and testing methods.

Furthermore, some cases of nullity are envisaged. For example, the clause that attributes intellectual property rights to the client is null and void, without providing for reasonable consideration for the subcontractor.

Furthermore, a specific discipline is envisaged for the abuse of economic dependence. This situation occurs when the client uses his position to obtain particularly unfavorable conditions for the counterparty. In these cases, in addition to considering these conditions null and void, the law provides for the subcontractor’s right to compensation for damage and the possibility of requesting a provision from the Antitrust Authority.

What the facsimile subcontracting agreement contains

Our subcontracting agreement model meets all legal requirements. The main clauses concern:

  • Subject: the description of what is supplied to the client company by the other company in charge
  • Quality standards: to guarantee minimum levels of supply
  • Fee: the possibility of indicating fixed or variable fees, indicating in a clear and specific manner the methods and terms of payment
  • Duration of the relationship: for a fixed or indefinite period, with the possibility of automatic renewal
  • Reimbursement of expenses: for particular costs incurred by the supplier
  • Exclusive: to bind the supplier not to enter into business with the customer’s competitors, within the limits imposed by the law for the protection of the market
  • Confidentiality: To prevent the provider from disclosing confidential information
  • Intellectual property: to manage the intellectual property rights inherent to the service
  • Work safety: to ensure compliance with the relevant legal requirements when necessary
  • English language: if the counterparty is foreign, it may be useful to generate the document in English to facilitate the negotiation

At the end of the interview, we will guide you step by step through all the necessary subsequent steps.

Information you need

All parts data are required to complete the document.

Remember that our interview does not generate a simple subcontracting contract facsimile. Based on your answers, the system automatically elaborates a customized contract model for your needs, guaranteeing its correctness.

The document can be modified in all its parts without time limits. Don’t worry so if you don’t have all the information available during the interview, you can always enter it later.

Other names

This agreement concerns a wide range of different situations and can therefore be governed by more than one type of contract, taking on different names, for example:

  • Continuous service provision
  • Maintenance and assistance
  • Web marketing
  • Catering (or banqueting)
  • Outsourcing (outsourcing)
  • Professional engagement letter
  • Hosting
  • Third-party production

Other useful templates and facsimiles

  • Contract for the Periodic Supply of Goods: to regulate the supply of goods between suppliers and their customers
  • Work Contract: to entrust a company with the construction and delivery of a defined work
  • Non-Disclosure Agreement: to protect you if you have to share confidential information
  • Contract for the Use of Spaces and Services: to share a space or an equipped office and offer functional and connected services