Most of the building contracts are based on the Rakennustieto standard agreement RT 80260, which is based on the General Conditions for Building Contracts YSE 1998. These YSE conditions define various obligations and rights for the client and the contractor.

When agreeing on a building contract, it is important that the content of the contract and the obligations and rights of the parties are set out in the contract and other related documents (tender, reply, negotiation notes and e-mails between the parties, etc.).

Modifications and additional work must be agreed in writing. An exception is made for small and urgent modifications which may be ordered by a person duly authorised by the client. Such an order must be entered in the site diary and the effects on the contract price must be agreed as soon as possible. Additional work must always be agreed in writing.

Clients rigths and obligations

The most important of the client’s responsibilities is to pay the contract price on time. Contractors often use an payment schedule, whereby a certain proportion of the contract price is paid according to the completion of the works. If no such schedule is included in the contract, the client must pay the contractor’s invoices that are proportionate to the contract price and the work carried out.

However, the contracting authority has the right to withhold payment, for example because of an error made by the contractor, until the error has been repaired. However, the amount withheld may not exceed the amount of the costs that can be expected to be incurred in repairing the error.

Another important obligation for the client is the obligation to collaborate. This obligation mainly consists of the responsibility of the client for obtaining the necessary permits from the authorities and for the costs incurred. Such permits are, for example, building permits or demolition permits. In addition, the client must draw up, together with the contractor, a timetable for the works and ensure that the plans are delivered to the contractor in accordance with the timetable.

Failure to comply with the obligation to collaborate may entitle the contractor to an extension of the construction period. In some cases, the contractor may also be entitled to terminate the entire contract due to the client’s neglect.

The client’s obligations may be otherwise agreed in the contract.

Contractor’s rigths and obligations

The contractor’s main obligation is to carry out the work agreed in the contract in accordance with the plans, the building regulations in force and good construction practice. As a general rule, the contractor is also responsible for the supply of construction equipment, sorting and removal of waste and site services. Site services include the construction and maintenance of access roads, heating and general lighting, etc. The contractor is also responsible for the work of the subcontractors they use.

The main contractor is also responsible for the management of the site, such as the administration and general management of the site, scheduling, organisation and coordination of the works.

According to the Tax Procedure Act (1558/1995), the main contractor must provide the Tax Administration with monthly information on the number of workers employed on the site.

The contractor’s obligations may also be otherwise agreed in the contract.

Handover inspection

The completion of the works and the handover to the client involve two important events in terms of the rights and obligations of the parties.

The first is the handover inspection, which both the contractor and the client may demand to take place when the works are ready for completion before the inspection. The handover inspection must be requested in writing and must begin within 14 days of the date of notification of the request. If a date for the handoverinspection cannot be agreed, the contractor shall specify a date for the handover inspection.

Before the handover inspection, the contractor must ensure that the construction work is complete and meets the requirements of the contract. A record of the handover inspection shall be drawn up, in which it shall be noted whether or to what extent any obligations under the contract have not been performed or have not been performed in accordance with the contract. In addition, each contracting party should also present the demands against the other at the acceptance inspection.

Final settlement of accounts

Another important event for the completion of the project is the final settlement of accounts, during which the parties must disclose the amounts of their demands against each other, otherwise they risk fofeiting their right to be heard on them in the future.

Minutes shall be kept of the final  settlement of accounts, in which the final account drawn up by the contractor and the client’s reply thereto shall be recorded, together with the amounts of the client’s claims and any other matters affecting the financial relations. The minutes of the handover inspection and of the final settlement of accounts and the claims and possible comments recorded therein are of great legal importance. If claims and observations are not recorded, errors cannot be invoked later, for example in court proceedings.

Finally

AASA-LAW’s staff has extensive experience in a wide range of contract and building work disputes, from the renovation of residential apartments costing a few tens of thousands of euros to the construction of multi-million euro manufacturing plants.

Attorney at law Simo Ellilä and Bachelor of Laws Joonas Lahti are specialized in construction related disputes.

Contact details

If you need help with construction-related matters, you can find.
contact details for our office from the link below.

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