Construction

In a construction contract, the employer (client) may withhold payment if the contractor has made errors, is delayed, or the employer has another justified claim. The withholding must be reasonable and limited to what is necessary, while the remainder of the invoice should be paid as normal. If the employer withholds funds without good cause, the contractor may, under the NS standards, claim interest, suspend the works, or, in the extreme, terminate the contract.

Bull’s construction law attorneys can assist both employers and contractors in assessing lawful withholding in construction and civil engineering contracts.

The choice of the appropriate construction contract depends on the delivery model and how responsibility is allocated between the employer (client) and the contractor. Broadly, we distinguish between four types of contracts:

1. Execution contracts. The employer designs, calculates, and drafts – the contractor executes.
   - NS 8405, NS 8406 (for smaller/simpler projects), NS 8415 (subcontract agreements).
2. Turnkey contracts. The employer sets functional requirements – the contractor designs, calculates, drafts, and executes).
   - NS 8407 or NS 8417 (subcontract agreements).
3. Consultancy contracts. The employer/contractor engages a consultant to design, calculate, draft, or follow up the project.
   - NS 8401 (lump-sum contract), NS 8402 (time-based remuneration), or NS 8403 (construction management contract).
4. Purchase contracts. The employer/contractor purchases products from a supplier.
   - NS 8411 (purchase of off-the-shelf goods) or NS 8412 (purchase of specially manufactured goods).

When using the standard contracts in the field of construction law, you encounter deadlines to take action “without undue delay.” How long is this deadline, really?

The basic principle is clear: unless you have good reason to wait, you must respond immediately!

Although the assessment must be made on a case-by-case basis, case law indicates that
two weeks is at the outer limit of what is accepted if there is no reason to wait.

In construction contracts, there are several deadlines you should keep track of. Failure to meet deadlines can result in the loss of otherwise valid claims and thus have significant financial consequences for the party in default.

The most important deadlines are:

• Limitation period for disputed claims to be brought before the courts:
  8 months from takeover, cf. NS 8405 clause 26.3 / NS 8407 clause 35.2.
• Deadline for submitting the final account:
  2 months from takeover, cf. NS 8405 clause 33.1 / NS 8407 clause 39.1.
• Deadline for objections to the final account:
  2 months from receipt of the final account, cf. NS 8405 clause 33.2 / NS 8407 clause 39.2.
• Deadlines for notifications/claims for defects:
  At takeover or without undue delay after the defect was or should have been discovered, but no later than 5 years from takeover, cf. NS 8405 clauses 36.6 and 36.7 / NS 8407 clauses 42.2.1 and 42.2.2.
• Statute of limitations: the Limitation Act.

The deadlines in the standard contracts apply unless otherwise agreed between the parties in the specific contract.