Our company is the coordinator of a Horizon 2020 project, and we need to hire several subcontractors (both enterprises and RTD centers). What should we include in a subcontractor agreement?

Drafting an efficient subcontracting agreement may be a complex matter and should be entrusted to a commercial lawyer, in order to avoid any pitfalls and ensure that the interests of both parties are secured (in particular regarding warranties and liability).

Nonetheless, your agreement shall cover at least the following points:
  • Identification of the parties
  • Definitions
  • Purpose of the agreement:
  • Subcontracting agreement signed in the context of project XXX regarding YYY
  • Obligations of the parties: precise description of the tasks entrusted to the subcontractor, and relevant milestones or timeframe; the beneficiary may also have some obligations (e.g. to provide specific input or guidance)
  • Price and payment modalities for the work that will be performed, and relevant milestones or timeframe
  • If relevant, monitoring mechanisms (e.g. checking that the work is correctly performed before each payment instalment is made)
  • Ownership of the work and related intellectual property rights: this part should mention which party (beneficiary or subcontractor) retains the intellectual property rights (IPR) over the subcontracted work. In principle, the beneficiary should acquire ownership of the results and related IPR developed under the subcontracting agreement, or at least appropriate user rights (please see further explanations below)
  • Confidentiality clause
  • Liability and warranties clause - relates to the liability of either party to the other for breach of the obligations under the agreement
  • Duration of the Agreement – the agreement should include provisions on the date when it enters into force, the duration and the forms of termination
  • Law and jurisdiction clause
  • Signatures and date
Regarding intellectual property rights, please keep in mind that in Horizon 2020, subcontractors are third parties to the grant agreement and as such have no specific, automatic ownership rights to the results. Therefore the involvement of subcontractors in a project should not hinder the implementation of this project, and any rights that they require should not deprive project partners of the possibility of fulfilling their obligations under the project: performing their tasks, granting access rights, disseminating their results, exploiting them, etc. For this reason, the Horizon 2020 Rules for Participation (RfP) provide that “if [...] any party working for a participant [is] entitled to claim rights to results, the participant concerned shall ensure that it is possible for those rights to be exercised in a manner compatible with its obligations” (see article 41.3 RfP). That is why it is generally recommended that project beneficiaries who resort to subcontractors make it clear, in the subcontracting agreement that the ownership vests in the beneficiary and not the subcontractor. This is usually the most straightforward solution. If the subcontractor insists on getting ownership of the work performed, the project partner would at least need to negotiate all appropriate licensing rights in order to be able to access and use the results in the same way as if it owned them. In that case, the terms of the licenceshould be sufficiently broad to allow the beneficiary to perform all its obligations under the grant agreement – during project implementation and the exploitation phase alike. Do not hesitate to contact us again should you need more clarifications on this particular point.