My subcontractor has breached their obligations: how to terminate without risk

Repeated delays, non-conforming deliverables, GDPR breaches, quality incidents… Terminating a subcontractor too quickly exposes you to expensive litigation. Conversely, waiting can worsen losses and block projects. Here is a practical, secure method for ending a subcontract in France, step by step.

The legal framework to know

• Remedies for non-performance: the creditor may seek compulsory performance, a price reduction, termination for non-performance (résolution), or damages (Civil Code, art. 1217).
• Methods of termination: through a termination clause, unilateral notice for sufficiently serious non-performance, or by the court (Civil Code, art. 1224).
• Regulated subcontracting: Law no. 75‑1334 organises the subcontracting chain, particularly for construction contracts (approval, direct payment of an accepted subcontractor): Law of 31 December 1975.
• Formal demand: in practice, sending a prior registered letter with acknowledgment of receipt (LRAR) is almost essential to allow a reasonable remedy period; see procedural reminders on Service‑Public Pro — business guidance.
• Public procurement: terminating and replacing a subcontractor is possible under certain conditions (exclusions, serious breaches) within the European public procurement framework (EUR‑Lex, Directive 2014/24/UE).
• GDPR: if the subcontractor processes personal data, the contract (DPA) must provide for obligations and data return/deletion; see guidance from CNIL — French data protection authority.
• Construction and safety: specific prevention and coordination obligations apply to subcontracting (C. travail, art. L4531‑1).

Without a clear clause, rely on general contract law (Legifrance — French legislation portal): sufficiently serious non-performance, a formal demand and a duly reasoned termination decision.

When is termination justified?

“Sufficiently serious” breaches

• Repeated delays blocking the project (essential milestones missed despite warnings).
• Major non-conformity of deliverables (quality, security, standards).
• Breach of confidentiality, a security incident or GDPR infringement attributable to the subcontractor.
• Persistent refusal to apply the quality plan/SLA or remedy defects within the deadline.
• Failure to comply with HSE standards in construction, creating operational or legal risk.

Conversely, minor, isolated irregularities are insufficient. The assessment turns on economic, technical and regulatory impact and repeated breaches.

Step-by-step procedure for terminating without risk

1) Reread the contract and map the key clauses

• Termination clause (defines breaches and termination formalities).
• SLA / penalties / limitation of liability and seriousness thresholds.
• Intellectual property, exit arrangements, return of code/source materials.
• GDPR/DPA (security, assistance, erasure/portability).

If starting from scratch, review our good practice for a properly structured subcontract and, for IT, managing technical SaaS subcontractors.

2) Consolidate the evidence

• Acceptance/rejection records, QA reports, tickets, incident logs.
• Warning emails, project committee minutes, judicial officer reports if needed.
• Calculation of additional costs/delays attributable to the subcontractor.

3) Send a formal demand by registered post

Set out the breaches, cite applicable clauses, set a reasonable period (often 8–15 days in practice, depending on seriousness) and announce termination if the breaches are not remedied. Our practical guide details the method: effective formal demands and response periods.

4) Terminate correctly if the breach persists

• With a termination clause: give notice of termination, recording the non-performance covered by the clause (contractual form and time limits).
• Without a clause: unilateral termination for sufficiently serious non-performance based on art. 1217, after an unsuccessful formal demand. If the position is not clear, prefer judicial termination (art. 1224).
• Notice period: unnecessary for a serious breach. Otherwise, observe contractual notice (beware of abrupt termination of an established commercial relationship where there is no breach).

When drafting the notice, remain factual, list the documents and set out the chronology of reminders and the formal demand.

5) Secure the aftermath

• Exit and handover: recover deliverables, code repositories, access, documentation, keys/APIs.
• Personal data: export/deletion plan and deletion certificate under the DPA and CNIL recommendations.
• Continuity: switch to a replacement, transfer knowledge, include an exit cooperation clause.
• Financial matters: settle amounts due for useful services and reserve your right to damages.

6) If termination is disputed

• Interim proceedings (référé) for urgent measures (environment access, code return, continuity) or an interim payment.
• Order for payment for clear unpaid debts: see the fast procedure.
• Proceedings on the merits for judicial termination and compensation.

Useful wording examples

In the formal demand

• “We formally require you to remedy the following breaches within 10 days: [detailed list/DOCUMENTS]. Failing this, we will terminate the contract for serious non-performance.”
• “Under clause [X] (SLA), any further P1 incident constitutes a serious breach leading to termination.”

In the termination letter

• “We note that, despite the formal demand of [date], non-performance persists. Under termination clause [X], the contract is terminated with effect from [date].”
• “Under Article 1217 of the Civil Code, we terminate for sufficiently serious non-performance, reserving all rights to damages.”

Common mistakes to avoid

• Terminating in the heat of the moment without a formal demand (except in manifest danger), risking wrongful termination.
• Relying on minor delays without demonstrating impact or repetition.
• Forgetting exit and handover (access, data, IP), creating additional GDPR and operational risk.
• Neglecting HSE obligations in construction (see L4531‑1), or subcontractor approval/payment (1975 law).
• Ignoring litigation strategy: poorly organised evidence, imprecise notices, unclear timetable.

Special cases

Public procurement

Termination for serious breach and replacement of a subcontractor are governed by public procurement law (exclusion grounds, integrity, irregular subcontracting): see the European framework on EUR‑Lex — EU law portal and the 1975 law. Document the breach carefully and follow notification formalities.

SaaS, data and security

Include a CNIL-compliant DPA (security, assistance, subprocessors, exit arrangements) and an SLA. On exit, require a deletion certificate and delivery of audit logs. To structure these dependencies, see our advice on technical SaaS subcontractors.

Intellectual property

In France, rights belong to the author by default; a written assignment is essential to secure code, deliverables and their source materials (good practice: INPI — French industrial property office). Plan the return of repositories (Git), access and documentation in an exit clause.

Operational checklist

• Reread the contract: termination clause, SLA, DPA, IP, notice.
• Assess seriousness: quality/timing/compliance impact, repetition.
• Gather evidence and quantify losses.
• Send a formal demand by registered post with a remediation plan and deadline.
• Notify termination (clause or art. 1217) if remediation fails.
• Organise handover, GDPR deletion and transition.
• Settle amounts for useful services and reserve compensation rights.
• Prepare the defence / court action (art. 1224) if disputed.