Is subcontracting permitted?

Construction

Norway Small Flag Norway

Subcontracting is generally permitted and commonly done. For NS 8405, 8406 and 8407 there are even corresponding sub-contracts available for this purpose.

The main contractor does however bear the full risk and responsibility for any subcontracted work, and under the NS contracts the employer is in some circumstances entitled to reject the contractor's choice of subcontractor.

Sweden Small Flag Sweden

Yes. It is permitted and very common. In a Swedish construction project, some 70-80% of the works is typically subcontracted.

Hong Kong Small Flag Hong Kong

Subcontracting is permitted in Hong Kong and indeed is the usual and wide-spread practice. To a very large extent, main contractors subcontract the direct execution of the construction work to their own choice of domestic contractors for the portion of the work it will not perform with its own workforce; the second-tier sub-contractor often then sub-contracts to a third-tier, and so on down the chain. Under traditional general contracting, the main contractor is responsible for all operations on the site and coordinating other contractors involved in the construction, whether or not sub-contractors have been engaged.

United Kingdom Small Flag United Kingdom

Yes. It is common for the main contractor to subcontract the majority of its obligations to third parties. Generally, the main contractor will remain liable to the employer under the main contract for any default arising from subcontractors’ performance. However, the main contractor is not vicariously liable in tort for the performance of its subcontractors. The employer is generally not entitled to sue a subcontractor unless it has a claim in tort or a direct third party right (see question 20).

United States Small Flag United States

Subcontracting in the United States is not only permitted but often encouraged. Most general contractors lack experience or expertise in a specific trade for which it must provide services as part of the overall project. Subcontracting also provides a way to reduce costs or to mitigate risk. Among the benefits, subcontractors are generally less expensive than hiring full-time employees, subcontractors warrant the services they provide, risk can be transferred through a subcontract, and subcontracts can easily be terminated. Subcontracts often contain “flowdown” provisions, allowing the terms of the principal contract to flow down through the subcontract to the subcontractor. This makes the subcontractor liable to the contractor for the same things for which the contractor is liable to the owner.

Serbia Small Flag Serbia

Subcontracting is permitted. However, only when and if the Law on Public Procurement is to be applied, in such case is the contracting authority obliged to state already within the tender documents whether the public procurement will allow that the bidder entrusts the execution of such public procurement to a subcontractor. While doing that, it has to be stated exactly which percentage of total procurement value may be entrusted to the subcontractor. However, by the virtue of the same law that percentage may not be larger than 50%.

Updated: April 24, 2018