Subcontractor agreements and donation agreements: two contracts that are often skipped and shouldn't be

A subcontractor agreement flows obligations from your main contract down the supply chain. A donation agreement formalises a gift and protects both the donor and the recipient. Here is what each needs.

Subcontractor agreements and donation agreements

These two contract types look nothing alike, but they share one characteristic: they are frequently skipped — subcontractor agreements because the main contract is already signed, donation agreements because the gift “feels informal.” Both omissions create problems that are entirely avoidable.

Subcontractor agreement

When you are the main contractor on a project and you hire another company to do part of the work, you are still fully responsible to your client for the entire delivery. A subcontractor agreement protects you by flowing the key obligations from your main contract down to the subcontractor — a structure called a back-to-back arrangement.

Why verbal agreements with subcontractors fail

The main contractor’s exposure to the client is fixed by the main contract. If the subcontractor:

Misses a deadline, you miss your client deadline.
Delivers poor quality, you bear the defect liability.
Breaches confidentiality, you may be in breach of your NDA with the client.
Goes bankrupt mid-project, you still owe the client the deliverable.

None of these risks disappear without a written subcontractor agreement. They just fall entirely on you.

The back-to-back principle

A back-to-back subcontractor agreement mirrors the obligations from your main contract:

SLA and quality standards: if your client contract requires 99.9 % uptime, your subcontractor commits to the same.
Confidentiality: the same NDA protections you gave your client flow to the subcontractor.
Intellectual property: work product created by the subcontractor becomes owned by you (and passes to your client as required).
Liability: the subcontractor’s liability cap aligns with the risks they are taking on.
Penalties and liquidated damages: if your main contract has delay penalties, your subcontractor agreement should contain matching provisions.

What a subcontractor agreement must contain

Scope of work — the specific portion of the main project being subcontracted. Reference the main contract deliverables.
Timeline and milestones — must be earlier than the main contract deadlines to give you a buffer.
Payment terms — the fee, payment schedule, and optionally a pay-when-paid clause (you pay the subcontractor after receiving payment from the client).
IP ownership and assignment — all work product belongs to you and is assigned to the main client as required.
Confidentiality — at least as strong as your main contract NDA.
Compliance with main contract — the subcontractor acknowledges the relevant provisions of the main contract and agrees to comply with them.
Client consent — confirmation that your client has approved (or does not need to approve) the subcontracting arrangement.
Insurance — the subcontractor must carry professional indemnity and general liability insurance at specified minimums.
Termination — mirrors your main contract: you can terminate the subcontractor if the client terminates you, or if the subcontractor breaches.
Step-in rights — the right to take over the subcontractor’s work if they fail to perform, typically at the subcontractor’s cost.

Pay-when-paid clauses

These clauses tie your payment obligation to the subcontractor to receipt of payment from the client. They are commercially common but must be drafted carefully. In some EU jurisdictions, a clause that completely conditions payment on client payment (rather than merely timing it) can be struck down as an unfair commercial practice. Consider using “pay-when-paid” for timing only, with a long-stop date after which payment is due regardless.

Donation agreement

A donation agreement (deed of gift) is a written contract by which the donor transfers ownership of money, property or other assets to the donee without receiving anything in return (or in exchange for a specified condition).

When you need a donation agreement

A company makes a cash donation to a charity or non-profit — the donation agreement is needed for the tax deduction.
Equipment, vehicles or property is gifted — the agreement documents the transfer of title.
A conditional donation is made (e.g. “this money must be used for the new library wing”) — the condition is only enforceable if documented.
A donor wants to retain the right to revoke the gift if conditions are not met.
Family members transfer assets between generations — a donation agreement is cleaner and less ambiguous than an oral arrangement.

What a donation agreement must contain

Identification of parties — full legal names, addresses, company numbers for corporate donors.
Description of the gift — for cash: amount and currency; for property: full legal description; for equipment: make, model, serial number; for IP: specific rights being donated.
Conditions (if any) — any restriction on how the gift must be used. Conditions must be specific and measurable to be enforceable.
Transfer mechanics — how and when the gift physically transfers (wire transfer, notarial deed for real estate, delivery for movables).
Acceptance — the donee’s explicit acceptance. Without acceptance, no donation agreement exists.
Revocation rights — circumstances under which the donor can reclaim the gift (breach of condition, gross ingratitude). Revocation rights must be exercised within a statutory time limit.
Tax treatment — who is responsible for any gift or transfer tax; whether the donation qualifies for a deduction under applicable tax law.
Warranties — the donor warrants they own the donated asset free of encumbrances.

Tax note for corporate donors

In Slovakia and most EU countries, corporate cash donations to registered charitable organisations are deductible from taxable income up to a statutory cap (typically 1–2 % of tax base). The donation agreement serves as the primary documentation for the deduction. Donations of assets are treated as a disposal at fair market value, which may create a taxable gain for the donor.

zipzipdoc generates subcontractor agreements and donation agreements. Describe the project structure or the nature of the gift — the AI produces a complete, enforceable document.

Related contract types: Subcontractor agreement · Donation agreement · Contractor agreement (B2B)

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