The position of clients of construction projects

Erwin

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With effect from 1 January 2024, a number of changes have been made to the regulations on quality assurance in construction. Much has already been written about it and market players have made the necessary investments to comply with the new rules. Those rules, on the one hand, deal with the required quality of construction (public law framework), where the contractor engages a quality assurance company to ensure that the quality of the construction work complies with laws and regulations. Currently, that system applies only to consequence class I structures and is limited to new construction. Because the change in the public law framework is extensive, much has been written about it in particular. In the context of this blog, we will not go into that further now. But the Civil Code has also been amended with effect from 1 January 2024, and this is to strengthen the position of the principal in construction projects (civil law framework). The amendments cover the following aspects:

  1. Liability after completion (Section 7: 758 of the Civil Code)
  2. Introduction of a contractor’s financial information obligation (section 7:765a of the Civil Code)
  3. More concrete requirements apply to the implementation of the contractor’s duty to warn (section 7:754 of the Civil Code)
  4. Introduction of a consumer file (Section 7:757a of the Civil Code)
  5. The conditions surrounding the right of suspension (5% rule) have changed (section 7:768 of the Civil Code)

 In this blog, we address the changes in the liability regime (point 1 above), as we find in practice that many contractors/SMEs are still unfamiliar with the changes that have taken place.

Liability after completion

Liability after completion is governed by Section 1 of Title 12 Book & Civil Code (contracting work in general). Section 7:758 BW stipulates the following:

  1. If the contractor has given notice that the work is ready to be delivered and the client does not inspect the work within a reasonable period and accepts it with or without reservation or refuses to accept it with indication of defects, the client is deemed to have tacitly accepted the work. After acceptance, the work shall be considered delivered.
  2. After delivery, the work is at the client’s risk. Consequently, he remains liable for the price, regardless of any destruction or deterioration of the work due to a cause not attributable to the contractor.
  3. The contractor is released from liability for defects that the client should reasonably have discovered at the time of delivery.
  4. Notwithstanding the third paragraph, in the case of building contracts, the contractor shall be liable for defects that were not discovered when the work was delivered, unless such defects cannot be attributed to the contractor. This paragraph may not be derogated from to the detriment of the client to the extent that the client is a natural person not acting in the exercise of a profession or business. In other cases, this paragraph can only be deviated from to the detriment of the principal if this is explicitly included in the agreement.

Importantly, construction works (paragraph 4) are thus just subject to a different rule from the main rule set out in paragraph 3. For construction works, the contractor remains liable for defects not discovered at the time of delivery (paragraph 4). This can only be different if the defects cannot be attributed to the contractor. Suppose a contractor finds that the defects were caused by an expert hired by the client, the contractor can argue that the defect is not imputable to him.

With regard to this construction liability regime, the following is important:

  • A construction contract for the construction of structures between professional parties may deviate from this liability regime. Deviation from the scheme must be done in the contracting agreement itself. Referring to general terms and conditions is not sufficient. Incidentally, the standard terms and conditions commonly used in the construction industry, such as the UAV 2012 and the Model Basic Agreement with UAV-GC 2005, have not yet been adapted to the new liability scheme at this time. This means that if you declare these terms and conditions applicable and do not include an explicit deviation from section 7:758(4) of the Civil Code in the agreement itself, the liability scheme from the standard terms and conditions is voidable under section 3:40(2) of the Civil Code. After all, the liability scheme from the standard terms and conditions is intended to protect only one of the parties. Since the main agreement does not explicitly deviate from Section 7:758(4) of the Civil Code, the contractor’s contracting party can in such a case invoke the voidability of the liability scheme in the standard terms and conditions.
  • In a contract of hire with a private client, this statutory regulation may not be deviated from. This gives the private client (consumer) extra protection against defects that were not discovered at the time of delivery.
  • Small entrepreneurs are not equated with private individuals and therefore simply fall under the rules for professional parties. The legislator did not want to make an exception for small entrepreneurs, such as greengrocers, ZZP-er or GPs. Although these parties are much like private contractors, they are classified as professional parties. The small entrepreneur should therefore take extra care when concluding a building contract to see what agreements one wants to make regarding liability for defects.

Finally, it is important to note that – insofar as it concerns construction works to which the ‘system of quality assurance’ applies from 1 January 2024 (consequence class I/new construction), in the event of financial damage on the basis of the liability scheme, the contractor can also consider whether this damage or part of it was not caused by the quality assurance officer being (partly) liable for the damage. The task of the quality assurance officer is to check for shortcomings with regard to the building regulations in the Building Works Decree for the living environment. To this end, he applies quality assurance instruments. The moment the quality assurance officer makes mistakes in this and therefore fails to notice a defect, for example, he may have wrongly issued a statement (that the building is in accordance with the rules), causing damage. In such a case, the contractor – who is himself liable for damage from defects in any case – may be able to recover part of the damage from the quality assurance officer. How much exactly will depend, among other things, on what has been contractually agreed between the contractor and the quality certifier.

Do you have any questions or would you like us to review your contracts? Please contact Erwin den Hartog or Petra Lindhout from our office.

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