Principles of Concluding a Contract
A contract for work is an agreement in which one party (the contractor) undertakes to perform a certain task at their own risk, in accordance with the instructions of the other party (the client), and to deliver the result of that work to the client. The client, in turn, agrees to accept the completed work and pay for it. No subordination or dependency relationship exists between the contractor and the client.
Conclusion of the Contract for Work
The contract is concluded to produce or deliver a certain result or to perform other tasks, the outcome of which is transferred to the client.
Before entering into the contract, the contractor is required to:
- provide the client with all necessary information related to the performance of the work,
- provide details on materials required for the task,
- indicate the estimated time required for the work.
If the contract is made to manufacture an item, the contractor must also transfer the rights to that item along with the completed work.
Unless otherwise specified, the contractor performs the work at their own risk and independently determines how to fulfill the client’s assignment.
If the nature and value of the performed work are minor compared to the value of the produced, purchased, or processed object, the contract is considered a sale-purchase agreement rather than a contract for work.
The contractor must perform the agreed work using their own materials, tools, and labor, unless stated otherwise in the contract. If the contractor uses their own materials, they are liable for any poor quality of those materials.
Materials Provided by the Client
If the client supplies materials to the contractor, they must also provide documentation confirming the materials’ compliance. If the materials are unsuitable or have defects that the contractor should reasonably notice, the contractor must immediately inform the client.
If the work is carried out wholly or partially using the client’s materials, the contractor is responsible for their improper use. The contractor must submit a report on material usage and return the remaining materials or, with the client’s consent, reduce the price of the work, taking into account the value of the unused materials.
If the contractor fails to achieve the agreed result or if the result is defective to the extent that the object cannot be used as intended (according to the contract or its usual purpose), due to the client’s defective materials — the contractor is entitled to payment only if they can prove that the defects could not have been detected when accepting the materials.
Divisibility of the Obligation
If the obligation is indivisible and the work is performed by two or more individuals, all of them have joint and several rights and obligations (as debtors and creditors) towards the client.
If the obligation is divisible, each person’s rights and obligations apply only to their share (a partial obligation), unless otherwise agreed in the contract.
If the contractor’s actual expenses are lower than expected when setting the contract price, the contractor retains the right to receive the full agreed payment — unless the client proves that the cost savings negatively affected the quality of the work defined in the contract.
Client Fails to Pay
If the client fails to fulfill their payment obligation (either the fee set in the contract or another agreed amount), the contractor has the right to recover the owed amount from the client’s equipment, leftover materials, or other property owned by the client or retain the result of the work until full payment is made.
Right to Monitor Work Progress
The client may at any time inspect the progress and quality of the work, provided they do not interfere in the contractor’s commercial or economic activity.
If the contractor fails to start the work on time or progresses so slowly that it becomes clear the work will not be completed on time the client has the right to terminate the contract and claim damages.
If it becomes clear during the execution of the work that it will not be completed properly, the client may give the contractor a reasonable period to fix the issues and if the contractor fails to do so:
- withdraw from the contract
- and/or demand compensation or hire a third party to correct the work at the contractor’s expense.
If there are valid reasons, the client has the right to withdraw from the contract at any time before the work is completed, paying the contractor for the part already done and compensating for losses, including any savings the contractor made due to the termination.
If the work was performed in deviation from the contract terms, resulting in the outcome not being usable for the intended purpose specified in the contract, or if such use is significantly impaired, and if no specific purpose is stated – for its normal use, the client has the right, at their discretion, unless otherwise provided by law or contract, to demand that the contractor:
- correct the deficiencies free of charge within a reasonable time;
- reduce the contract price accordingly;
- reimburse the client for the cost of remedying the deficiencies, if the contract gives the client the right to do so themselves.
Summary
Instead of fixing the deficiencies, the contractor has the right to re-perform the work free of charge and must compensate the client for any damages caused by missing the contract deadline.
If the contractor does not remedy the deficiencies or breaches within a reasonable period, or if the deficiencies are essential and irremediable, the client may terminate the contract and claim damages.
If the work was done using the contractor’s own materials, they are liable for the quality of those materials as a seller under a sales contract.
Claims arising from deficiencies in the performed work are subject to a one-year limitation period, except as otherwise provided by law.
If the result was accepted in parts, the limitation period starts from the date of final acceptance. When a guarantee period is set by law or the contract, and a defect is reported within that period, the limitation period begins on the date the defect is reported.