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Construction works contract

What is a construction works contract?

Issues related to a construction works contract are regulated in Articles 647 - 658 of the Act of 23 April 1964 - the Civil Code (Official Journal of Laws of 1964, No 16, Item 93, as amended). A contractor should conclude with an investor a contract under which the contractor assumes an obligation to complete the facility specified in the contract, erected in accordance with the design and principles of technical knowledge, and the investor undertakes to perform actions with respect to the works, required by the relevant regulation, in particular, to provide the construction site and design, as well as to accept the facility and pay the agreed remuneration.A construction works contract should be stated in writing and should specify the scope of works to be performed by the contractor in person or with the assistance of subcontractors. The construction documentation required by the relevant regulations constitutes a component part of the contract. In the case of doubt, it is deemed that the contractor has undertaken to perform all the works covered by the design which is a component part of the contract. The right of the contractor or investor to renounce the contract may be limited or excluded by specific regulations.

Subcontractors of construction works

When running a construction and renovation firm, you can perform construction works as a contractor (general contractor) or subcontractor. A contract concluded between a contractor and investor should include a clause allowing the possibility to perform construction works with the use of a subcontractor. The subcontractor is allowed to perform construction works after having concluded a contract in writing (under pain of nullity). Conclusion of a construction works contract between a contractor and a subcontractor requires a consent of an investor. If the investor does not notify in writing about any objections or reservations within 14 days upon receiving from the contractor a contract with a subcontractor or a draft contract, along with part of the documentation concerning performance of the works set forth in the contract or the draft, he is deemed to have consented to the conclusion of the contract. Please, remember that conclusion of a contract between a subcontractor and further subcontractor requires a consent of the investor and contractor (the provisions mentioned above with respect to the notification of an investor are applicable). Contrary provisions of the contracts in question are null and void. An investor and contractor who enter into a contract with a subcontractor bear joint and several liability for payment of remuneration for the construction works performed by the subcontractor.

Contractor's rights and obligations towards the investor

  • If the documentation, construction site, machines or equipment supplied by the investor are not suitable for proper performance of the works or if other circumstances occur which may hinder the proper performance of the works, the contractor should immediately notify the investor about the fact. It is worth knowing that, in the case where the contractor takes over the construction site from the investor on the base of an acceptance certificate, he is liable on general terms for any damage caused on the site until the facility is handed over.
  • Unless otherwise stipulated in the contract, the investor is required to accept, on the contractor's demand, works performed partially, as they are completed, and to pay an appropriate part of the remuneration.
  • If an erected facility is destroyed or damaged, as a result of defects of the materials, machines or equipment supplied by the investor or as a result of performing works in accordance with the investor's instructions, the contractor may demand the agreed remuneration or an appropriate part thereof if he warned the investor of the risk of destruction of or damage to the facility or if, despite exercising due diligence, he could not have found the defects of the materials, machines or equipment supplied by the investor.
  • The provisions on contract for specific work apply accordingly to the effects of any delay by the contractor in beginning the works or completing the facility or performance of the works by the contractor in a defective manner or contrary to the contract, to warranty for defects in the constructed facility, and to the investor's rights to renounce the contract before the facility is completed. 
  • A guarantee of payment for construction works, hereinafter referred to as the "payment guarantee," is given by an investor to a contractor (general contractor) so as to secure timely payment of the agreed remuneration for performing the construction works.  The payment guarantee is a bank or insurance guarantee, as well as a bank letter of credit or bank surety given on the investor's instructions. The parties bear documented costs of securing receivables in equal parts. The contractor's (general contractor's) right to demand a payment guarantee from the investor may not be excluded or limited by way of a legal transaction. The investor's renouncement of a contract due to the contractor's (general contractor's) demand to provide a payment guarantee is ineffective.
  • A construction works contractor (general contractor) may at any time demand a payment guarantee from an investor up to the amount of a potential claim for remuneration arising from the contract, as well as from additional or necessary works required to perform the contract, approved by the investor in writing.If the contractor (general contractor) does not receive the payment guarantee demanded within the period specified by him, not shorter than 45 days, the contractor is entitled to renounce the contract due to a fault on the investor's part, effective as of the date of renouncement. Absence of the demanded payment guarantee constitutes an obstacle to performance of the construction works for reasons attributable to the investor. An investor must not refuse to pay remuneration in spite of non-performance of the construction works if the contractor (general contractor) was ready to perform the works but encountered an obstacle due to reasons attributable to the investor. However, in such case, the investor may deduct what the contractor (general contractor) has saved by not performing the construction works. A payment guarantee given does not preclude a demand for a payment guarantee up to the total amount. The provisions on guarantee apply to contracts concluded between contractors and subcontractors.

Construction works contract and generation of waste

A producer of waste generated due to the provision of services of construction, demolition and renovation of facilities is an entity which renders the service unless a construction works contract provides otherwise. If it is stipulated in a contract that a mandator is the owner of the waste generated, then a construction works contractor is not required to keep waste inventory records (using waste cards and waste transfer cards) and to transfer the waste to a qualified entity (the further owner of waste). An investor or a contractor usually generate waste which, according to the ordinance on the catalogue of waste, is regarded as the waste of the group of code 17 that includes waste generated due to construction, renovation and demolition of facilities and road infrastructure (e.g. brick and concrete rubble, insulation materials).

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