Subcontracting development work offshore - contract information

[salaryman]

I am considering subcontracting some development work to an offshore company. My company doesn't have the time to do the development and we have good relations with an offshore start-up who have given a good price for the work.

Could anyone offer any advice about how best to arrange contracts for such a deal? Presumably there should be two contracts - one between my company and the client and another between my company and the development team, but I'm very interested in how the contract between my company and the client is set up. If the worst happened and the offshore company fail to deliver, how can I best avoid being liable to deliver the work?

Ideally I would seek professional legal advice about this, but the margins on this project mean that it would probably cost me more money to do that than I stand to make. Perhaps I should just bite the bullet and pay this first time?

All advice welcomed and if anyone can point me in the direction of some quality subcontracting contract templates I'd be extremely grateful.

Cheers.

[mcquiggd]

I could certainly point you in one direction, but youd have to be a very, very flexible person to actually arrive at your destination.

Maybe just sack your staff and hire illegals - much cheaper.

Or, take a pay cut yourself.

HTH.

[XLMonkey]

1. There should be two contracts - you to the client, you to the offshore company
2. You can find direct and subcontracting templates by going to www.pcg.org and search for contract templates. Alternatively, just take the contracts that you have got from agents in the past and do a search and replace....
3. You should not be trying to avoid liability if the offshore company goes under -- the only real value you are offering the client is peace of mind. If you don't offer that, then the client may well work out that there is no point in involving you. You should be making your willingness to take liability for successful delivery a selling point, not trying to get out of it.
4. You should not take the business if you
- don't have confidence that the offshore co can deliver
- don't have some kind of contingency arrangement (even if it means working weekends) to do the work if they do mess up.
(more money generally comes with more risk - only you can judge what the real level of risk is)

[Mordac]

I am considering subcontracting some development work to an offshore company.

The very best of luck to you. You're going to need it. I hope the end product is neither business critical nor urgent.

[mcquiggd]

"an offshore start-up who have given a good price for the work."

Why not just cut out the middleman (you), and put them in touch with your client?

Seems like you have mismanaged / underestimated anyway, so maybe they will do a better job

[lawspeed]

Subcontract Agreements

As stated above, you will need a subcontract agreement with the offshore developer, and a professional services agreement in place with the client which must explicitly allow for subcontracting take place. It is extremely important in situations such as this for you to ensure that these agreements are drafted to mirror each other. In essence this means you will need to obtain the contracts from a single source if you wish to minimise your own risk exposure. Simply performing a 'find and replace' on a standard agency contract is not going to give you robust terms (even if those terms were drafted by a reputable contract draftsman which is not always the case) because:
a) An agency contract is drafted for an agency relationship whereby the agency is merely facilitating the provision of labour / services, and is not taking responsiblility for that work. This is not appropriate for a three party subcontract relationship.
b) You will need two agreements (one up the chain, one down) which are each drafted to take into consideration the rights and obligations contained in the other.

We would of course be happy to help with preparing these contracts for you.