日本語
If you’re considering system development, you might be unsure whether to choose a quasi-delegation (jun'nin) contract or a contract for work (ukeoi). This article clearly explains the differences between these two contract types, key points when concluding them, and things to watch out for. In the second half, we also introduce specific scenarios where quasi-delegation contracts are appropriate.
"I don’t know whether I should sign a quasi-delegation contract when outsourcing system development."
"I plan to use a quasi-delegation contract, but I feel uncertain about the contract terms."
If these concerns sound familiar, we encourage you to use this article as a helpful reference.
Akira Shimazoe
CEO of Solashi Japan LLC. Engaged in the development and operation of internal systems at Suntory. Founded Yper Inc., serving as CTO and CPO, contributing to product launch and growth.
What Is a Quasi-Delegation Contract in System Development?
Let’s first understand the basics of a quasi-delegation contract in the context of system development. We’ll explain it from the following perspectives:
- A quasi-delegation contract is a type of outsourcing agreement
- Types of outsourcing contract formats
- Differences between quasi-delegation and contract for work
A Quasi-Delegation Contract Is a Type of Outsourcing Agreement
A quasi-delegation contract is a type of outsourcing agreement. It is used when part of your in-house operations are delegated to an external party. The term "quasi-delegation" (jun'nin) is used instead of "delegation" (nin'i) to differentiate from legal representation or agency work. In a quasi-delegation contract, only factual tasks—such as administrative or operational work—can be outsourced, not legal actions.
Types of Outsourcing Contracts
Here is an overview of outsourcing contract types. Below is where the quasi-delegation contract fits within these categories.
| Contract Type | Compensation Basis | Scope of Work | |
| Outsourcing Agreement | Contract for Work | Deliverable Submission | Deliverable Submission |
| Delegation Contract | Task Execution or Deliverable Submission | Legal Acts | |
| Quasi-Delegation Contract | Non-Legal Acts | ||
| Dispatch Contract | Labor Power | Depends on the Contract | |
Contract for Work
A contract for work is centered around the delivery of a specific result or product. Because compensation is based on the final deliverable, the development company has greater freedom regarding how the work is done. However, the company is responsible for the final outcome.
Delegation & Quasi-Delegation Contracts
If the contractor performs legal acts, it's a "delegation contract." If the contractor performs non-legal tasks, it's a "quasi-delegation contract." In both types, the focus is not on deliverables but rather on the process and performance of the tasks themselves.
In system development, quasi-delegation contracts are often used for lab-based development models or SES (System Engineering Services).
Dispatch Contract
In a dispatch contract, employees from a staffing company are temporarily sent to the ordering company, where they perform tasks under the client’s supervision. These are often used for work requiring specialized skills or to manage short-term spikes in workload. They are also common in system development.
Differences Between Quasi-Delegation and Contract for Work
When outsourcing system development, you generally choose between a quasi-delegation contract or a contract for work. The key difference lies in whether the developer is responsible for "performing tasks" or "delivering completed work."
In a contract for work, the completion of the task is a must. The product or result is the basis for payment, and the development company is held accountable for the final output.
In contrast, a quasi-delegation contract is based on the performance of tasks, and compensation is provided for executing those tasks. There are also cases where deliverables are involved, and payment is made upon delivery even in quasi-delegation contracts.
However, since the core of the agreement lies in the task execution, there is room for flexibility in specifications or feature additions. This is fundamentally different from a contract for work, where specific deliverables must be completed by an agreed deadline. If you require guaranteed deliverables by a fixed date, a contract for work is more appropriate. On the other hand, if flexibility is important, a quasi-delegation contract is recommended.
Types of Quasi-Delegation Contracts in System Development
Quasi-delegation contracts can be broadly divided into two types:
- Proportional Completion Type
- Deliverable Completion Type (Performance-Based)
| Type | Payment Timing | Completion Obligation | |
| Outsourcing Agreement | Proportional Completion Type | After Task Execution | None |
| Deliverable Completion Type | After Deliverable Submission | None |
The proportional completion type compensates based on time or resources used. The deliverable completion type compensates upon delivery of a finished product. In both cases, since the contract is based on "executing tasks," there is no obligation to complete a specific result. We’ll explain each type in more detail below.
Proportional Completion Type
The proportional completion type is a quasi-delegation contract where compensation is provided for the execution of tasks. Regardless of the presence or timing of deliverables, payment is made based on the personnel and hours provided.
Deliverable Completion Type (Performance-Based)
This refers to a quasi-delegation contract where payment is made when a deliverable is submitted. It is also called a performance-based model. Although similar to a contract for work in that payment is made upon delivery of the deliverable, a quasi-delegation contract of the deliverable completion type does not impose a completion obligation.
Three Advantages of Quasi-Delegation Contracts in System Development
Let’s now look at the advantages of entering into a quasi-delegation contract for system development.
- Flexible response to specification changes
- Ability to secure necessary resources
- Possible to outsource tasks that don't result in deliverables
1. Flexible Response to Specification Changes
In a quasi-delegation contract, it is possible to respond flexibly even if there are specification changes.
For example, in a contract for work, the scope and due date of deliverables are clearly defined. Therefore, once the contract is concluded, changes during the development process cannot be made. In contrast, a quasi-delegation contract is based on the execution of tasks, allowing for flexibility even during development.
2. Ability to Secure Necessary Resources
Quasi-delegation contracts are also suitable for securing the resources needed for a project. Since payment is determined based on the duration and hours worked, it's possible to secure manpower only during busy periods. By utilizing external resources, there’s no need to hire full-time employees. If used effectively, it can also lead to cost savings.
3. Possible to Outsource Tasks That Don’t Result in Deliverables
It is possible to outsource work that doesn’t produce tangible deliverables. For example, system maintenance and operations are tasks that are difficult to evaluate with concrete outcomes. However, under the proportional completion type of quasi-delegation contract, such work can still be flexibly outsourced.
Three Disadvantages of Quasi-Delegation Contracts in System Development
While quasi-delegation contracts offer many advantages, it’s important to understand the disadvantages before entering into one.
- There is a possibility of schedule delays
- Commanding the vendor directly can result in disguised subcontracting
- Risk of vague contract terms
Let’s take a closer look at each one.
1. There Is a Possibility of Schedule Delays
When outsourcing development under a quasi-delegation contract, there is a potential risk of schedule delays. In such contracts, the developer is not obligated to complete the work. Therefore, even if the scheduled delivery date is missed, the client cannot hold the vendor accountable.
Therefore, this contract type is not suitable for short-term system development projects or those where schedule delays are unacceptable. However, this disadvantage is also a trade-off for the high level of flexibility it offers. Depending on the content and situation of the project, clarify your priorities and consider the most appropriate contract form.
2. Direct Orders from the Client Can Constitute Disguised Subcontracting
It's important to note that in a quasi-delegation contract, the client cannot give direct orders. A direct order refers to the right to supervise and instruct workers on matters related to their work.
For example, cases where the client instructs the development company or on-site personnel on how, where, or when to work. If the client gives such directions, it may be deemed disguised subcontracting.
3. Risk of Ambiguous Contract Terms
Unlike a contract for work, a quasi-delegation contract does not strictly evaluate deliverables. Therefore, there is a risk that the contract terms may become ambiguous.
If a contract is entered into with unclear content, there is a possibility of misunderstandings with the development company. This could lead to project delays or disputes over payment. It is important to carefully review the terms before signing. In particular, the following points should be clearly defined when entering into a contract:
- Tasks subject to compensation
- Contract validity period
When Quasi-Delegation Contracts Are Suitable in System Development
In what situations are quasi-delegation contracts chosen? Here are some recommended cases for using such contracts in system development.
- When outsourcing multiple projects
- For small to medium-sized projects
- When specification changes are likely
Let’s go through each one in more detail.
When Outsourcing Multiple Projects
Quasi-delegation contracts are suitable when outsourcing multiple projects. During the contract period, the external personnel can participate as if they were members of your own project team. Especially with the proportional completion type, which bases compensation on workload, it’s easier to handle multiple projects.
For Small to Medium-Sized Projects
Quasi-delegation contracts are also well-suited for small to medium-sized projects. Large-scale projects with significant budgets are typically handled under contracts for work that evaluate deliverables.
However, for small to medium-sized projects, it may be difficult to raise the initial funds needed for a contract for work. With a quasi-delegation contract, it’s possible to start small and add functions or change specifications gradually, enabling cost-effective development.
When Specification Changes Are Likely
If specification changes are expected during development, it may be difficult to proceed with a project under a contract for work. With a contract for work, the deliverables are fixed at the contract stage. If changes to the specifications are required, a separate contract must be arranged.
On the other hand, a quasi-delegation contract allows for flexible responses to specification changes. For example, if you plan to release a prototype first and then make quality improvements or add new features, a quasi-delegation contract is recommended.
3 Key Points When Concluding a Quasi-Delegation Contract for System Development
Here are the key points to keep in mind when entering into a quasi-delegation contract for system development.
- Check for any missing required items
- Align expectations with the development company
- Make use of templates
Let’s go over each point in more detail.
1. Check for Any Missing Required Items
Be sure to confirm that there are no missing required items. If terms related to compensation or the scope of work are not clearly documented, it may lead to disputes later on.
Ensure the contents are easy to understand even for third parties, and finalize the contract with appropriate and clear terms.
<Examples of items to check>
- Purpose and scope of the work
- Method of executing the work
- Contract period
- Compensation amount
- Payment terms
- Prohibited actions
- Details of confidentiality obligations
- Ownership of intellectual property
- Whether or not damages are covered
- Notification method and conditions for contract termination
Align Expectations with the Development Company
Even if the contract content is clearly defined, problems may arise if the development company’s members do not fully understand the contract. Be sure to set up a discussion with the development company to clarify any unclear points and address concerns before signing the agreement.
Make Use of Templates
Creating a quasi-delegation contract from scratch is time-consuming and increases the risk of missing essential items. If you don’t have specific preferences, consider using existing templates. Many free templates are available online, so feel free to take advantage of them. If your company lacks legal expertise, it’s also a good idea to consult legal professionals.
Important Points to Note with Quasi-Delegation Contracts in System Development
The most important thing to watch out for in quasi-delegation contracts for system development is disguised dispatching. Disguised dispatching refers to cases where a consignment contract is in place, but the actual working conditions are similar to a worker dispatch arrangement. This is often done to avoid compliance with the Worker Dispatch Law, which mandates certain protections for dispatched workers.
However, in the case of disguised dispatching, the workers do not receive those protections. For this reason, penalties are imposed for engaging in disguised dispatching. If your arrangement is deemed to fall into this category, you risk facing legal penalties. Be extremely cautious.
For Quasi-Delegation Contracts in System Development, Trust Solashi
If you are looking for system development services, trust Solashi Co., Ltd, a cost-effective Vietnamese system development company. We provide high-quality system development while keeping costs low. We support lab-type development and agile development under quasi-delegation contracts, offering the best solutions for clients seeking flexibility in their development process.
We also have several Japanese project managers with experience in launching businesses and handling startup projects. Even if it’s your first time outsourcing overseas development, you can rest assured knowing we provide full support from the initial stages.
Many of our engineers have expertise in cutting-edge technologies such as blockchain and AI, and we handle a wide range of fields, from B2B to B2C.
If your current outsourcing efforts are not going well, don’t hesitate to reach out to Solashi Co., Ltd for consultation.
Akira Shimazoe
Representative of Solashi Japan LLC. Born in April 1989 in Fukuoka Prefecture. Graduated from the Graduate School of Information and Mathematical Sciences at Osaka Prefecture University. Joined Suntory System Technology Co., Ltd., an IT subsidiary of Suntory Holdings, in 2014. Broadly responsible for the development, operation, and implementation of vending machine delivery management, efficiency improvements, and sales management systems. Founded Yper Inc. in 2017, serving as CTO and CPO. Contributed to the launch and growth of the app-linked delivery bag "OKIPPA." Selected for Toyo Keizai's prestigious "Amazing Venture 100" and Forbes' "Forbes 30 Under 30 Asia 2019."
