A Practical Guide to Dutch Building Contracts

A Practical Guide to Dutch Building Contracts

A Practical Guide to Dutch Building Contracts M.A.B. Chao-Duivis A.Z.R. Koning A.M. Ubink 3 rd edition s-gravenhage - 2013

3 rd edtion ISBN 978-90-78066-76-7 NUR 822 2013, Stichting Instituut voor Bouwrecht Alle rechten voorbehouden. Niets uit deze uitgave mag worden verveelvoudigd, opgeslagen in een geautomatiseerd gegevensbestand, of openbaar gemaakt, in enige vorm of op enige wijze, hetzij elektronisch, mechanisch, door fotokopieën, opnamen of enige andere manier, zonder voorafgaande schriftelijke toestemming van de uitgeverij. Voor zover het maken van kopieën uit deze uitgave is toegestaan op grond van artikel 16h tot en met 16m Auteurswet 1912 jo. het Besluit van 27 november 2002, Stb. 2002, 575, dient men de daarvoor wettelijk verschuldigde vergoedingen te voldoen aan de Stichting Reprorecht (Postbus 3060, 2130 KB Hoofddorp). Voor het overnemen van gedeelte(n) uit deze uitgave in bloemlezingen, readers en andere compilatiewerken dient men zich tot de Stichting Instituut voor Bouwrecht te wenden. No part of this book may be reproduced in any form, by print, photo print, microfilm or any other means without written permission from the publisher.

Foreword When registering for a technical education learning to design or to execute building activities, one does not realise that the law plays a great part in this. However this is the case. Parties will have to agree on how to shape their legal relationship. Does the employer want to be involved or not? Does the designer want to stick to his copyright or is he willing to transfer this (partly) to the employer? Does the contractor want to take care of part of the design works or not? Do the parties want to form a completely new (legal) entity (an alliance) to take care of all the activities needed for realising a new building or not? These are just a few questions needed to be answered in the same manner as so many questions of a technical and management nature need to be answered beforehand. It is important to realise that when non legally trained persons are better aware of these questions they will be able to decide themselves on the answers to these questions and they will be less dependent upon lawyers. The parties themselves will know better than anyone what the preferred answers are supposed to be. On top of that knowledge of the law will prevent conflicts. Therefore it is a good thing that this book written for students of technology and construction management is available. Aware of traps one is less likely to walk into them. As professor in Construction management I am particularly interested in building projects taking place without conflicts, I hope this book is instrumental in this. Prof. J.W.F. Wamelink Chairman Department Real Estate and Housing, Delft University of Technology v

Table of Contents Foreword v 1. The Practice of Contracting 1 M.A.B. Chao-Duivis 1.1 Principles of Contract Law 1 1.1.1 The contract 1 1.1.2 Freedom of contract 2 1.1.3 Binding force of agreements 2 1.1.4 No prescribed form 3 1.2 Requirements to be met by contracting parties 3 1.2.1 Incapacity 3 1.2.2 Disqualification 4 1.2.3 Representation 4 1.3 Requirements for the creation of a legally valid and inviolable contract 6 1.4 Creation of a contract, pre-contractual negotiations 9 1.5 General Terms and Conditions 9 1.6 Rights in the event of non-fulfilment of an obligation 17 1.6.1 Failure 17 1.6.2 Default 19 1.6.3 Notice of default 20 1.6.4 Rescission 21 1.7 Unforeseen circumstances 24 1.8 Special agreements 24 1.9 Building contract models 25 2. The Contract with a Consultant (The New Rules 2011) 29 A.M. Ubink 2.1 Introduction 29 2.2 Components of the contract 31 2.3 The client s obligations 32 2.3.1 The duty to cooperate 32 2.3.2 Duty to warn 33 2.3.3 Payment 33 2.4 The consultant s obligations 33 2.4.1 Acting as a good and careful contractor 33 2.4.2 State of the art 34 2.4.3 Legally practicable design 34 2.4.4 Duty to inform and duty to warn 34 2.4.5 Schedule 35 vii

Table of Contents 2.4.6 Compulsory insurance 35 2.5 The consultant s liability 36 2.5.1 Liability criteria 36 2.5.2 Limitations of liability 38 2.6 Contract-specific matters 44 2.6.1 Remuneration 44 2.6.2 Power of representation 45 2.6.3 Ownership and copyright 45 2.7 End of the contract 46 2.7.1 Termination 46 2.7.2 Rescission 49 3. The Building Contract (UAC 2012) 51 M.A.B. Chao-Duivis 3.1 Introduction 51 3.2 Components of the contract 52 3.2.1 The UAC 2012 and the building contract 52 3.2.2 The specification 52 3.2.3 The UAC 2012 and the specification: order of precedence 52 3.3 The client s obligations 53 3.3.1 Payment 53 3.3.2 Responsibilities for design and execution 54 3.3.3 Enabling execution to take place 57 3.3.4 Supervision 58 3.4 The contractor s obligations 61 3.4.1 Execution of the works 62 3.4.2 Duty to warn 62 3.4.3 Final completion of the works on time 64 3.5 Liability following final completion 69 3.5.1 Defects liability period 69 3.5.2 The contractor s liability following final completion 70 3.6 Contract-specific subjects 73 3.6.1 Additions and omissions 73 3.6.2 Changes in the specification 73 3.6.3 Quantities 76 3.6.4 Unforeseen cost-increasing circumstances 77 3.6.5 Building materials and supplies 78 3.7 End of the contract 80 4. The Design Team 83 A.Z.R. Koning 4.1 Introduction 83 4.2 Contracts within the design team 86 4.2.1 The coordination agreement 86 viii

Table of Contents 4.2.2 Overview of contracts between the client and the various parties 86 4.2.3 The contract with the architect/consulting engineer 86 4.2.4 The contract with the co-designing contractor 87 4.3 The client s role 88 4.4 The design team contractor s role 89 4.5 Duty to warn 90 4.6 The design team members liabilities 91 4.7 The design team contractor s liability 93 4.7.1 Liability for advice and designs 93 4.7.2 Limitation of liability 93 4.8 Quotations, price negotiations and the contract for works 94 4.8.1 Legally binding nature 96 4.8.2 Agreement on price 97 4.9 End of the contract 98 5. Integrated Contracts (UAC-IC 2005) 99 A.Z.R. Koning 5.1 Introduction 99 5.1.1 General Terms and Conditions 100 5.2 Components of the contract 100 5.3 The client s role 102 5.3.1 Passive and active involvement on the part of the client 102 5.3.2 The duty to cooperate 103 5.3.3 Independent auxiliary persons 105 5.3.4 Payment terms and penalties/bonuses 107 5.3.5 Representation 108 5.3.6 The client s liability under the UAC-IC 2005 110 5.4 The contractor s role 110 5.4.1 Compliance with the requirements 111 5.4.2 Duty to warn 114 5.4.3 Representation 114 5.5 Liability 114 5.5.1 Liability for defects following completion 115 5.5.2 Liability for damage 116 5.6 Contract-specific matters 117 5.6.1 Permits and licences, exemptions, decisions, authorisations and statutory requirements 117 5.6.2 Soil conditions 120 5.6.3 Variations 124 5.6.4 Quality assurance 124 5.6.5 Reimbursement of costs and extension 129 5.6.6 Intellectual property rights 132 5.7 End of the contract 132 5.7.1 Suspension 133 5.7.2 Rescission and termination 133 ix

Table of Contents 6. Procurement Law 135 M.A.B. Chao-Duivis 6.1 Introduction 135 6.2 Sources of procurement law 135 6.3 Contracting authorities 137 6.4 Contracts that must be put out to tender 138 6.5 Tendering procedures 139 6.6 How a procedure works 141 6.6.1 Open procedure 142 6.6.2 Restricted procedure 142 6.7 Criteria 143 6.8 The tenderer 145 6.9 The tender 145 6.10 Judicial protection 146 About the authors 149 Further reading 151 Website recommendations 153 Company Profiles 155 x