Construction contract: which arrangements are included in the agreement and what should you pay attention to?

A construction contract is concluded between the contractor and the client. The agreement is drawn up to record the arrangements regarding, among other things, the execution of the works and their completion. In the news blog below, we highlight a number of important points of attention that you, as a consumer, should consider when entering into such an agreement.

The price

In B2C agreements, in most cases the contractor will determine how the price is set. It goes without saying that it is important to pay the necessary attention to the pricing method proposed by the contractor, so that you are not faced with unpleasant surprises afterwards. 

 With regard to pricing, there are several possibilities:

• Contracting at a fixed price: here, a distinction must be made between contracting at an absolutely fixed price and contracting at a relatively fixed price.  In contracts at an absolutely fixed price, the contractor undertakes to carry out the works at a price that is absolutely fixed, even if it turns out that ultimately more time is needed to perform the works. This implies that the contractor cannot, under any circumstances, invoice additional works. This cuts both ways, since the client, if the works are carried out more quickly than expected, will not be able to request a price reduction either. With a relatively fixed price, the contractor reserves the right to invoice any additional works required to carry out the works separately. For that reason, a price list is always attached to the agreement stating the quantities and unit prices. This list serves for the settlement of changes and additional works requested or required during the performance of the assignment.
• Unit-price contracting (contracting based on specifications): in this case, the quantities for certain items have not yet been fixed, but the price per unit has. That last point is important as protection for the client: the unit price must be fixed in advance, separately for each item.
• Cost-plus contracting: this means that you are willing to pay a price that is determined unilaterally by the contractor (afterwards), based on the hours worked and the materials used. A maximum price or an hourly rate may optionally be laid down contractually. This method is only suitable for carrying out small works, such as demolition works, minor painting works, expanding a sanitary area, etc.

 

 When estimating the price, the contractor must of course take into account the relevant consumer protection rules. For example, Article III.76 of the Code of Economic Law provides that every business must provide information about the price applied. If the exact price cannot be given, the method by which the price is calculated must be communicated, or a sufficiently detailed cost estimate must be made available.

 The contractor is obliged to provide this information before the conclusion of any agreement. The burden of proof that this information obligation has been complied with rests on the contractor. It is important to note that this information obligation only applies if you expressly request it from the contractor.

The execution period

Carefully verify whether your construction contract specifies a deadline within which the works must be completed. If the contract does not contain a deadline, the services must be performed within a ‘reasonable period’. This notion of a ‘reasonable period’ depends on the nature and scope of the works, the degree of difficulty, the location, and the circumstances in which the works must be carried out. It is therefore determined in concreto. 

The construction contract may also contain a pre-agreed performance period. This period may be expressed in different ways:

• By means of a final completion date;
• By means of a number of calendar days;
• By means of a number of working days.

If you want the works to be completed by a specific time, you should have a predetermined performance period included in the construction contract. In that way, the contractor is required, except in cases of proven force majeure, to carry out the works within this agreed period. 

We also recommend including a damages clause in the contract. In such a clause, the contractor undertakes to pay an agreed compensation in the event of non-compliance (per day of delay).

Acceptance of the works

Acceptance of the works is a crucial milestone in the construction contract. Upon acceptance, the contractor concerned states that, in his view, the works to be carried out have been completed and delivered in accordance with the standards of proper workmanship. 

If you accept the works upon acceptance, you are deemed to agree with the manner in which the works were carried out and therefore to have accepted all visible defects.

It is therefore very important to pay the necessary attention to the way in which acceptance takes place. Should there be a joint inspection between the parties? Is simple commissioning sufficient to be regarded as acceptance? How many days do you, as the client, have to formulate comments, etc.?

 

Conclusion

When drafting a construction contract, many important agreements are laid down. Large sums are often at stake. It is therefore always prudent to have a lawyer review the agreement before concluding it: he or she can assess whether the correct provisions have been included in the contract.

Reyns Advocaten has extensive expertise in contract law and construction law. You can always turn to us for the drafting or review of your construction contracts.

Ook voor gespecialiseerde bijstand bij aannemingsgeschillen kan u vertrouwen op Reyns Advocaten.

Carl DIERCKX