Which of the following statements regarding subcontracting is true?

Derrek owns a factory and employs a Facilities Management Company called Balls FM to look after certain aspects of the factory including cleaning and testing the machinery to ensure they are in good working condition. One day he realises that one of the cleaners doesn’t work for Balls FM, he works for another company called Bells FM.

Which of the following statements regarding subcontracting is true?
A . Subcontracting would be if Derrek delegated responsibility for managing the contract to a member of his team
B. Balls FM have committed a fundamental breach of the contract
C. It is okay for Balls FM to subcontract out part of the contract to Bells FM if they are unable to fulfil their obligations
D. Subcontracting is never allowed in a contract unless specifically mentioned.

View Answer

Answer: C

Explanation:

"It is okay for Balls to subcontract" is the correct answer. This question is testing whether you know that subcontracting can be a remedy in a contract. It is usually okay for a supplier to use a subcontractor if they’re unable to fulfil their responsibilities and the alternative would be to breach the contract. This is a difficult question because you don’t get a lot of context- it’s based on a similar question in the exam- but just remember subcontracting can be a solution if one party can’t fulfil their obligations in a contract. This is better than them breaching the contract. See p.89 for more information on subcontracting