Subcontracting clause review checklist

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Clients reviewing a service agreement often ask for subcontracting to be banned outright. The instinct is understandable, but a flat prohibition rarely matches reality: most vendors rely on cloud services, freelancers or group companies to deliver the work, and a ban that does not reflect the actual delivery model just becomes a standing breach that nobody enforces.

How broad is "subcontracting"

The usual clause bars subcontracting the whole or part of the work without the client's prior written consent, but what counts as subcontracting needs defining: routine use of a cloud tool, help from a group company, or only handing the engagement to another company outright? Too broad a definition makes everyday tool use require approval every time; too narrow a definition lets participants the client wants to know about slip through. Once defined, consent can be tiered: case-by-case written consent for sensitive work, advance notice for routine matters, and blanket consent for a vendor's established partners.

What the subcontractor must promise, and who answers for it

Approving subcontracting only works if the subcontractor is bound by confidentiality, data-protection and security obligations equivalent to the vendor's own, backed by enough information to actually vet it. Whether the vendor answers for the subcontractor's acts as its own, whether the client can claim against the subcontractor directly, and whether that liability sits inside or outside any liability cap all need separate treatment, and a further layer of sub-subcontracting deserves the same scrutiny as the first.

Personal data, security and the revised subcontracting law

Where personal data is involved, the client needs a real way to confirm the subcontractor's access controls, storage location and incident-reporting deadlines, and this matters even more once an overseas subcontractor or cloud service is involved. Since 1 January 2026, the former Subcontract Act (下請法) has been renamed and revised as the Act on Ensuring Appropriate Transactions Involving Small and Medium-sized Subcontractors (取適法), and subcontracting clauses should also be checked against its rules on payment terms, order specification and prohibited cost-shifting.