Subcontractor Agreement (Nigeria)
SUBCONTRACTOR AGREEMENT
This Agreement is made on [Agreement Date] between:
(1) [Main Contractor Name] of [Main Contractor Address] ("the Main Contractor"); AND
(2) [Subcontractor Name] of [Subcontractor Address] ("the Subcontractor").
1. SUBCONTRACT WORKS
1.1 Main Contract Reference: [Main Contract Ref]
1.2 Employer: [Employer Name]
1.3 The Subcontractor shall carry out and complete the following subcontract works: [Subcontract Scope]
1.4 Subcontract Price: [Subcontract Price]
1.5 Commencement Date: [Commencement Date]
1.6 Completion Date: [Completion Date]
2. PAYMENT
2.1 Payment Terms: [Payment Terms]
2.2 Retention: [Retention Percent] shall be retained from each interim payment. Retention shall be released 50% on practical completion of the subcontract works and the balance upon expiry of the defects liability period (12 months after completion).
2.3 The Main Contractor shall deduct withholding tax at the applicable rate under the Companies Income Tax Act and remit to the Federal Inland Revenue Service (FIRS).
3. DELAY AND LIQUIDATED DAMAGES
3.1 If the Subcontractor fails to complete the subcontract works by the completion date, the Subcontractor shall pay liquidated and ascertained damages to the Main Contractor at the rate of [Liquidated Damages].
3.2 The Main Contractor shall be entitled to deduct liquidated damages from any monies otherwise due to the Subcontractor.
4. BACK-TO-BACK PROVISIONS
4.1 The Subcontractor agrees to be bound by and to observe all the terms, conditions, and obligations of the Main Contractor under the Main Contract ([Main Contract Ref]) to the extent applicable to the subcontract works.
4.2 The Subcontractor shall comply with all applicable Nigerian Content requirements under the Nigerian Oil and Gas Industry Content Development Act 2010 (where applicable) and with all statutory requirements including health and safety obligations under the Factories Act (Cap F1, LFN 2004) and the Employees' Compensation Act 2010.
5. GOVERNING LAW AND DISPUTES
5.1 This Agreement is governed by the laws of Nigeria. Disputes shall be resolved as follows: [Governing State]
Main Contractor
________________
Signature
Subcontractor
________________
Signature
What Is a Subcontractor Agreement (Nigeria)?
A Subcontractor Agreement in Nigeria records the obligations, timelines and payment owed between the client and the service provider.
Subcontractor agreements in Nigeria are particularly prevalent in the construction sector, where the Joint Building Committee (JBC) and the Nigerian Institute of Building (NIOB) publish standard forms of building contract — including the JBC Subcontract Form — used in government and private construction projects. In the oil and gas sector, subcontracting arrangements are common under the Nigerian Content Development and Monitoring Board (NCDMB) framework established by the Nigerian Oil and Gas Industry Content Development Act 2010 (Nigerian Content Act), which mandates minimum Nigerian content requirements in upstream petroleum contracts and requires main contractors to subcontract specified categories of work to Nigerian-owned companies.
A Subcontractor Agreement must be carefully distinguished from the main contract between the contractor and the employer: the subcontractor has no direct contractual relationship with the employer (there is no privity of contract) unless a collateral warranty or novation agreement is specifically executed. This means the subcontractor's rights to payment run only against the main contractor, not directly against the employer. Nigerian courts have applied the privity of contract rule strictly — the subcontractor cannot sue the employer for payment under the main contract unless there is a direct agreement between them.
In government construction projects procured under the Public Procurement Act 2007, the Bureau of Public Procurement (BPP) imposes requirements on the subcontracting of government contracts, including that subcontracting must be disclosed and approved by the procuring entity and that the main contractor remains fully responsible for the subcontractor's performance.
The legal framework governing the Subcontractor Agreement (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Subcontractor Agreement (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.
When Do You Need a Subcontractor Agreement (Nigeria)?
A Subcontractor Agreement is required in Nigeria whenever a main contractor delegates performance of part of the contracted works to a specialist or trade subcontractor.
A Subcontractor Agreement is required when a main contractor on a Nigerian construction project engages specialist trade contractors — such as electrical installers, mechanical and engineering (M&E) contractors, plumbing subcontractors, or finishing trades — to perform work within their area of specialisation, and the parties need a formal contract defining scope, programme, payment terms, and liability allocation.
A Subcontractor Agreement is needed when a Nigerian oil and gas services company holding a Petroleum Upstream Services Contract under the Petroleum Industry Act 2021 subcontracts portions of the services — such as well completion, pipeline inspection, or environmental remediation — to a specialist Nigerian-owned company to comply with the Nigerian Content Act 2010's mandatory local content requirements.
A Subcontractor Agreement is required when a technology systems integrator or ICT company that has been awarded a government IT contract under the Public Procurement Act 2007 engages specialist software developers, hardware suppliers, or installation teams to execute specific components of the project.
A Subcontractor Agreement is needed when a facilities management company managing a large commercial or residential estate in Lagos, Abuja, or Port Harcourt subcontracts specific maintenance services — such as generator maintenance, lift servicing, security services, or cleaning — to specialist service providers under defined service level agreements.
A Subcontractor Agreement is required when a federal or state government road construction contract holder under the Federal Roads Maintenance Agency (FERMA) or State Public Works departments subcontracts earthworks, drainage, or bridge construction to specialist civil engineering firms and must document the subcontracting arrangement for BPP compliance purposes.
Parties in Nigeria should prepare a Subcontractor Agreement (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Subcontractor Agreement (Nigeria)
A complete Subcontractor Agreement in Nigeria must contain the following essential elements.
Parties: Full legal names, CAC registration numbers under the Companies and Allied Matters Act 2020, registered addresses, and Tax Identification Numbers (TINs) of the main contractor and the subcontractor. The authorised signatories of each party must be identified.
Scope of Subcontract Works: A precise description of the works or services to be performed by the subcontractor — specifically defining the boundaries between the subcontract scope and the work retained by the main contractor. The scope should reference the main contract drawings, specifications, and bills of quantities applicable to the subcontract works.
Main Contract Reference: Identification of the main contract between the contractor and the employer — including the employer's name, the main contract number, and the project name — and confirmation that the subcontractor has had the opportunity to review and is bound by the relevant conditions of the main contract (back-to-back provisions) to the extent applicable.
Subcontract Price and Payment: The subcontract price (lump sum, remeasured, or cost-plus), payment milestones or valuations schedule, retention percentage (typically 5–10% of each payment), and the period for payment of interim certificates. Payment terms must comply with the general law of contract and any sector-specific payment rules.
Programme and Completion: The commencement date, programme of works, completion date, and the subcontractor's obligation to comply with the main contract programme and the main contractor's site instructions. Liquidated and ascertained damages (LADs) payable by the subcontractor for delay should be specified.
Insurance and Nigerian Content: The subcontractor's obligation to maintain public liability insurance, employers' liability insurance under the Employees' Compensation Act 2010, and (in the oil and gas sector) compliance with the Nigerian Oil and Gas Industry Content Development Act 2010. The minimum Nigerian content percentage applicable to the subcontract works must be stated.
Dispute Resolution: A tiered dispute resolution clause providing for negotiation between the parties' project managers, followed by referral to adjudication or arbitration under the Arbitration and Conciliation Act (Cap A18, LFN 2004) at the Lagos Court of Arbitration or the Lagos Multi-Door Courthouse (LMDC), with the governing law being the laws of Nigeria.
Additional compliance elements for a Subcontractor Agreement (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Subcontractor Agreement (Nigeria) (Nigeria) [Legal document template]. Forms Legal. https://forms-legal.com/nigeria/business/services/subcontractor-agreement-nigeria
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author = {{Forms Legal}},
title = {Subcontractor Agreement (Nigeria) (Nigeria)},
year = {2026},
howpublished = {\url{https://forms-legal.com/nigeria/business/services/subcontractor-agreement-nigeria}},
note = {Free legal document template. Based on Companies and Allied Matters Act (CAMA) 2020}
}
Frequently Asked Questions
A subcontractor in Nigeria generally cannot sue the employer (the project owner) directly for payment under the main contract because there is no direct contract between the subcontractor and the employer — the doctrine of privity of contract under Nigerian common law (as applied by the Supreme Court of Nigeria) restricts contract rights to the parties who entered the contract. The subcontractor's right to payment runs only against the main contractor. However, a subcontractor can sue the employer directly if: a direct payment agreement or collateral warranty has been executed between the subcontractor and the employer creating a direct legal relationship; the employer has made a direct payment undertaking to the subcontractor in writing; or the employer has been unjustly enriched at the subcontractor's expense, giving rise to a claim in restitution or quasi-contract. In oil and gas projects governed by the Petroleum Industry Act 2021, the Nigerian Content Act 2010, and NCDMB contracts, specific provisions may create direct obligations between the employer and Nigerian subcontractors in defined circumstances.
The Nigerian Oil and Gas Industry Content Development Act 2010 (Nigerian Content Act) imposes mandatory local content requirements on all subcontracts in the upstream petroleum sector. Under Section 10 of the Act, all operators, contractors, and subcontractors must give first consideration to Nigerian indigenous service companies that demonstrate the requisite capacity and capability to perform specified services. The Nigerian Content Development and Monitoring Board (NCDMB) publishes a Nigerian Content Plan template that must be submitted with all contracting proposals above the regulatory threshold. Specific Nigerian Content targets are set for different categories of services: for example, a minimum of 70% Nigerian content for labour-intensive construction and 50% for specialist engineering services. Subcontractor agreements in the petroleum sector must include a Nigerian Content compliance clause confirming the subcontractor's commitment to meeting the applicable targets and allowing the NCDMB to audit compliance. Failure to comply with Nigerian Content requirements can result in contract voidance and regulatory sanctions under Section 68 of the Nigerian Content Act.
A verbal subcontracting arrangement in Nigeria can be legally enforceable as a matter of general contract law — Nigerian contract law, based on common law principles, does not require construction or services contracts to be in writing to be valid, except in specific categories such as contracts for the sale of land under the Statute of Frauds (as received) and contracts subject to the Conveyancing Act 1881. An oral subcontract supported by evidence of offer, acceptance, consideration, and intention to create legal relations can be upheld by Nigerian courts. However, verbal subcontracts create severe evidentiary difficulties: disputes about scope, price, programme, and payment terms are impossible to resolve definitively without contemporaneous documentary evidence such as emails, site meeting minutes, purchase orders, or delivery notes. Nigerian courts — including in Owolabi v Stationery and Production Unit [2005] — have consistently emphasised that parties to commercial agreements act at significant risk when relying on verbal arrangements. For contracts above NGN 5,000,000 involving significant scope of work, a written subcontractor agreement is strongly recommended.
Payment terms in Nigerian subcontractor agreements in the construction sector typically follow a monthly interim payment valuation cycle, where the main contractor values the subcontractor's work completed during the month (assessed against the agreed scope and bill of quantities), issues an interim certificate, and makes payment within 14 to 28 days of certification. A retention of 5% to 10% of each interim payment is typically withheld by the main contractor and released in two tranches — 50% on practical completion of the subcontract works and the balance at the end of the defects liability period (typically 12 months after completion). Back-to-back payment terms — where the main contractor's obligation to pay the subcontractor is conditional on the main contractor first receiving payment from the employer (pay-when-paid clauses) — are common in Nigerian subcontract practice. However, Nigerian courts have scrutinised such clauses strictly, and a pay-when-paid clause may be treated as unenforceable if it is unclear or if the employer's insolvency causes indefinite non-payment, as this would deprive the subcontractor of any remedy.
Subcontract disputes in Nigeria are typically resolved through a tiered dispute resolution process: firstly, negotiation between the parties' senior representatives or project managers; secondly, adjudication (a rapid binding determination within 28 days, increasingly used in construction disputes following the introduction of adjudication clauses in NEC4 and FIDIC contracts adopted in Nigeria); and thirdly, arbitration under the Arbitration and Conciliation Act (Cap A18, LFN 2004) or litigation before the State High Court or Federal High Court. The Lagos Court of Arbitration (LCA) and the Lagos Multi-Door Courthouse (LMDC) are the leading arbitral institutions in Nigeria for construction and commercial disputes. The Chartered Institute of Arbitrators (CIArb) Nigeria Branch and the Nigerian Institute of Chartered Arbitrators (NiCArb) support arbitration practice in Nigeria. Many Nigerian subcontractor agreements in the oil and gas sector specify arbitration under LCIA or ICC rules with a Nigerian seat, while government construction contracts under the Public Procurement Act 2007 typically specify arbitration under the Lagos Court of Arbitration Rules or the Federal High Court proceedings.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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