Contractor agreement

The lawyers of the Registration Service Company draft contractor agreements taking into account any needs of the client.

Below is some general information about the contractor agreement.

Under a contractor agreement, one party (the contractor) undertakes to perform certain work at its own risk on behalf of the other party (the client), and the client undertakes to accept and pay for the work performed.

Such an agreement is often entered into in the construction industry. The law regulates only a part of the obligations and rights of the parties to the contractor agreement, and therefore it should be drafted by an experienced contract lawyer.

Let's focus on some of the conditions from the extensive list that require careful negotiation by the parties:

• The contractor's right to engage additional subcontractors (Article 838 of the Civil Code);
• materials from which the order will be fulfilled;
• reimbursement of expenses in case of withdrawal from the contract by the customer;
• regulation of the timeframe for completion of the work, as the customer can only determine the "slowness" of the work based on its own judgment, which entails the customer's right to withdraw from the contract and claim damages;
• conditions for making changes to the design and estimate documentation that provide for a change in the cost of the order by more than ten percent;
• peculiarities of aging of the construction object or complex of works.

The Higher Commercial Court considered some controversial issues related to construction contracts in the newsletter "On the Practice of Dispute Resolution Related to Performance of Construction Contracts (Based on Cases Considered in Cassation by the Higher Commercial Court of Ukraine)".

It is worth noting that the contractor agreement may be concluded even by transferring the transfer and acceptance certificates (see the Resolution of the High Commercial Court of Ukraine No. 21/5005/14068/2011 dated May 11, 2012).

In our opinion, it seems to be a rather controversial practice to consider acts as a contract, since any other documents (correspondence, orders, etc.) that indicate the will of the parties to the contractor agreement should be used as evidence of the contract.

The contractor agreement may be terminated pursuant to Article 849(4) of the Civil Code of Ukraine at the request of the customer before the completion of the work with payment to the contractor for the work performed and compensation for damages caused by the contract.

This particular provision of the law has extremely important consequences for both the employer and the contractor.

In the event of any circumstances that may affect the performance of the contract, the parties should carefully specify the amount of the contractor's losses.

The HCCU also focused on problematic issues of contract termination.

When a claim is sent (in accordance with Article 188 of the Commercial Code), it is a proposal to terminate the contract, not a withdrawal from the contract (see Resolution of the High Commercial Court of Ukraine No. 21/045-12 dated September 5, 2012).

It is not uncommon for state-owned or municipal enterprises to delay payment due to lack of funds in the state budget.

The HCCU recognized such a refusal as groundless in view of the customer's right to withdraw from the contract

Thus, the conclusion of a contractor agreement requires careful consideration of all the circumstances and wishes of the parties to the agreement, as the law and court practice have ambiguous application on the same issues.

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