Construction contract

CONSTRUCTION/RENOVATION CONTRACT

This contract for work (hereinafter the "Agreement") has been entered into in [City where the contract is signed] on [Contract date] between the following parties:

1. PARTIES

1.1 Customer:
[Customer's name/company]
Registry code / personal identification code: [Customer's registry code / personal identification code]
Address: [Customer's address]
Contact: [Customer's contact (telephone/e-mail)]
(hereinafter the "Customer")

1.2 Contractor:
[Contractor's company name]
Registry code: [Contractor's registry code]
Register of Economic Activities (MTR) registration number: [Contractor's MTR registration number]
Contact person: [Contractor's contact person]
Telephone: [Contractor's telephone]
E-mail: [Contractor's e-mail]
(hereinafter the "Contractor")

2. SITE

2.1 Construction site: [Address of the construction site]. Type of property: [Type of property]. Type of work: [Type of work].

2.2 The Customer confirms that it has the right to permit the works specified in the Agreement to be carried out at the site. The Contractor has familiarised itself with the site and with the documents submitted by the Customer and notifies the Customer without delay if it discovers errors in the documents or circumstances that prevent the proper performance of the works.

3. PROJECT BASIS

3.1 Project basis: [Project basis]. As the project is based on an oral agreement, this creates a risk of dispute — the Parties are advised to add a written specification of the works to be performed at the earliest opportunity.

3.2 If the works require a building permit or a building notice, the Customer ensures that the necessary permit or notice is in place, unless the Parties have agreed in writing that the Contractor will arrange it.

4. SCOPE OF WORKS

4.1 Description of the works: [Description of the works]. Design documents, drawings and specifications, if any, are appended to this Agreement as annexes.

4.2 Without a separate agreement, the Contractor also performs works that are not expressly provided for in the Agreement but which are customarily necessary for the proper performance of the Agreement and which inherently form part of the works.

5. MATERIALS

5.1 The materials are supplied by the Contractor. The Contractor is liable for the conformity of the materials it has chosen with the requirements, including for latent defects (Law of Obligations Act (VÕS) § 641).

5.2 The Contractor hands over to the Customer the documents certifying the conformity of the construction products it has supplied.

6. SCHEDULE

6.1 Start date: [Start date]. Completion deadline: [Completion deadline]. The consequences of delay are set out in clause 16.

6.2 The Contractor notifies the Customer without delay of any foreseeable delay and its cause. The completion deadline is extended by a reasonable time if the performance of the works is hindered by the Customer's delay in performing its obligation to cooperate, additional works ordered by the Customer or force majeure; weather conditions extend the deadline only if they were exceptional.

7. PRICE AND PAYMENT

7.1 Type of price: [Type of price]. Total cost: [Total cost (€)] euros. VAT treatment: [VAT]. The fixed price is changed only on the basis of additional works referred to in clause 8 or a written agreement of the Parties.

7.2 Payment schedule: [Payment schedule]. Advance payment: [Advance payment (%)]%.

7.3 The claim for the fee becomes collectible upon acceptance of the work or when the work is deemed accepted; where the work is delivered and priced in parts, each part is paid for upon its acceptance (VÕS § 637 (4)).

7.4 The Customer is not required to pay before it has had the opportunity to inspect the work, unless the agreed payment terms (e.g. advance payment) do not allow this (VÕS § 637 (5)). In the event of delay in payment, the Contractor may claim statutory late interest (VÕS § 113).

8. ADDITIONAL WORKS

8.1 All works outside the original scope of works (additional works) are agreed before they are performed in the following manner: [Procedure for additional works]. For the purposes of evidence, the Contractor confirms the content and price of additional work agreed orally without delay in a format which can be reproduced in writing. The price of additional works is agreed in the same manner before the works are performed.

8.2 The agreement on additional works contains at least a description of the additional works, their cost and their effect on the price of the Agreement and on the completion deadline. The Contractor is entitled to a fee for additional works only if they have been agreed in advance in the manner referred to in clause 8.1.

9. SUBCONTRACTING

9.1 Subcontracting: [Subcontracting]. The Contractor is fully liable for the work performed by subcontractors as if it had performed that work itself.

10. CONSTRUCTION REQUIREMENTS AND QUALITY

10.1 The works performed must comply with Estonian construction norms, the relevant EVS standards and good construction practice.

10.2 The Contractor confirms that it holds a registration for construction activities in the Register of Economic Activities where required by law, and documents the progress of the works to the extent required by legislation.

10.3 The Customer has the right to review the progress of the works provided that this does not materially interfere with the performance of the works. The Contractor notifies the Customer a reasonable time in advance of the covering of works that will be concealed (e.g. waterproofing, pipework) so that they can be inspected before being covered.

11. OWNER SUPERVISION

11.1 Owner supervision: [Owner supervision]. NB! Under the Building Code, owner supervision is mandatory for a building requiring a building permit with a floor area of over 60 m² or a height of 5 m (or one being extended beyond these dimensions) — the Parties must check whether this site meets that criterion.

11.2 If owner supervision has been arranged, the Contractor gives the person performing it access to the site and to the documents.

12. DELIVERY AND ACCEPTANCE

12.1 The delivery of the work is formalised by a delivery and acceptance report. The Customer inspects the result of the work and records in the report a list of defects and the deadline for remedying them. Partial acceptance is permitted if the Parties so agree.

12.2 The Customer may refuse acceptance if the work has defects, except for minor defects that do not prevent the use of the result of the work. The work is also deemed accepted if the Customer unjustifiably fails to accept the completed work within a reasonable term granted to it by the Contractor (VÕS § 638).

12.3 Together with the work, the Contractor hands over the as-built documentation, including test results, working drawings (if required) and the operating and maintenance instructions for equipment.

12.4 The Contractor bears the risk of accidental destruction of and damage to the works until the works are accepted or deemed accepted (VÕS § 640 (2)).

13. WARRANTY AND LATENT DEFECTS

13.1 Warranty period: [Warranty period (in years)] years, starting from the day following the signing of the delivery and acceptance report. If the warranty period is 0 years, no contractual warranty is given and statutory liability applies.

13.2 The contractor's warranty covers all non-conformities of the work with the terms of the contract that become evident during the warranty period (VÕS § 650 (1)). The Contractor remedies defects that become evident during the warranty period at its own expense within a reasonable time; the warranty period begins anew in respect of a remedied defect.

13.3 The warranty does not extend to defects caused by use of the building contrary to its intended purpose, by ordinary wear and tear or by failure to carry out customarily necessary maintenance. A manufacturer's warranty does not restrict the Contractor's liability for incorrect installation of equipment (VÕS § 641 (4)).

13.4 If the Customer is a consumer, a non-conformity with the terms of the contract which becomes evident within two years from the date of delivery of the work to the consumer is presumed to have existed at the time of delivery of the work, unless such presumption is incompatible with the nature of the work or the defect; any agreement derogating from this to the detriment of the consumer is void (VÕS § 642 (2¹)). This presumption applies regardless of the length of the agreed warranty period.

13.5 The Customer must notify the Contractor of discovered defects within a reasonable time after it became or should have become aware of the defect (VÕS § 644 (1)). If the Contractor does not remedy the defect within a reasonable time, the Customer may remedy it or have it remedied and claim compensation for reasonable expenses (VÕS § 646 (5)).

13.6 The limitation period for a claim arising from a contract for work due to a defect in a building is five years, and the limitation period for any other claim arising from the Agreement is three years (§ 146 (1)–(2) of the General Part of the Civil Code Act); the limitation period for a claim arising from non-conformity begins upon acceptance of the work (VÕS § 651 (1)).

14. INSURANCE

14.1 The Contractor has an obligation to take out insurance (e.g. construction all-risks insurance, liability insurance). The Contractor submits to the Customer, upon request, a document certifying the validity of the insurance.

15. SAFETY AND ACCESS TO THE SITE

15.1 The Contractor is responsible for the safety of the construction site and compliance with occupational safety requirements, as well as for the obligation to keep the site clean. Neighbours are informed of the works where appropriate.

15.2 The Contractor develops and implements the occupational safety and fire safety requirements related to the work (where necessary, a risk assessment and an emergency action plan) and ensures that scaffolding, lifting equipment and other work equipment are safe.

15.3 The Customer ensures access to the site at the agreed times. The Contractor protects the Customer's property located at the site against dust and damage and arranges for the removal of construction waste, unless the Parties have agreed otherwise.

16. CONTRACTUAL PENALTY

16.1 If the completion deadline is exceeded, a delay penalty of [Delay penalty (% of the total amount per day)]% of the total amount per day applies, but the total amount of the contractual penalty does not exceed [Cap on the contractual penalty (% of the total amount)]% of the total cost of the Agreement.

16.2 A contractual penalty may not be claimed if the delay is excused (VÕS § 160) or arises from the Customer. A contractual penalty does not preclude a claim for performance of the obligation, and damage must be compensated to the extent not covered by the contractual penalty (VÕS § 161 (2)).

17. LIABILITY

17.1 The Contractor is liable for the conformity of the result with what was agreed and for damage caused in the course of the work to the Customer's property and to third parties (including neighbours). Unless the Parties have excluded this right in this Agreement, the Contractor has the statutory right to demand the establishment of a mortgage on the Customer's immovable as security (VÕS § 654 (2)).

17.2 A Party is liable for a breach of the Agreement unless the breach is excused (VÕS § 103). Both direct patrimonial damage and loss of profit are subject to compensation.

18. TERMINATION OF THE AGREEMENT

18.1 The Customer may terminate the Agreement at any time. In that case, the Contractor has the right to claim the agreed fee less what it saved as a result of the termination of the Agreement or what it acquired or could reasonably have acquired by using its labour otherwise; this does not apply if the Customer terminated the Agreement due to a breach of the Agreement by the Contractor (VÕS § 655).

18.2 The Contractor has the right to terminate the Agreement extraordinarily for good reason, including in the event of delay in payment or impossible working conditions, or if the Customer is in delay in performing its obligation to cooperate and thereby materially breaches the Agreement (VÕS § 652 (2)). The Customer may withdraw from the Agreement if the remedying of a defect fails or the Contractor unjustifiably refuses to remedy it (VÕS § 647).

18.3 Upon termination of the Agreement, the work performed so far and unused materials are returned to the Customer in accordance with the agreement of the Parties; the volume of works performed is recorded in a report.

19. ETÜ 2013

19.1 The General Conditions of Construction Contracts (ETÜ 2013) are appended to this Agreement as an annex and apply insofar as they do not conflict with the terms of this Agreement.

20. FORCE MAJEURE

20.1 A breach of obligation is excused if a Party breached the obligation due to force majeure, i.e. a circumstance which it could not influence and, based on the principle of reasonableness, it could not be expected to take into account at the time of conclusion of the Agreement, or to avoid or overcome the consequence thereof (VÕS § 103). A Party notifies the other Party of force majeure circumstances without delay, and the deadlines are extended by the duration of their effect.

21. DISPUTE RESOLUTION

21.1 The Parties first seek to resolve any dispute by negotiation. If no agreement is reached, the dispute is resolved as follows: [Dispute resolution]. Arbitration applies on the basis of an agreement of the Parties. The law of the Republic of Estonia applies.

21.2 If the Customer is a consumer, clause 21.1 does not restrict the consumer's right to apply to the Consumer Disputes Committee.

22. FINAL PROVISIONS

22.1 Amendments to the Agreement are made in writing or in a format which can be reproduced in writing. If the Customer is a consumer, the terms of the Agreement do not restrict the consumer's statutory rights, from which it is not possible to derogate to the detriment of the consumer.

22.2 If any provision of the Agreement is or becomes invalid, this does not affect the validity of the remaining provisions. The Agreement (together with its annexes) constitutes the entire agreement between the Parties; in the event of a conflict between the Agreement and its annexes, the main text of the Agreement prevails.

23. LEGAL BASIS

23.1 This contract for work is governed by §§ 635–657 of the Law of Obligations Act, and construction activities by the Building Code.