Partial withdrawal from the construction contract – erstwhile and how can it be used?

Works contracts frequently lead to disputes between the parties. A complex investment process, unforeseen circumstances and advanced costs may consequence in conflicts and, in utmost cases, unilateral withdrawal from the contract. However, can only part of the commitments be waived? What are the consequences of specified a solution?

The withdrawal from the works contract consists of a unilateral message by 1 of the parties – most frequently the investor or contractor – to terminate the contractual relationship. This may apply to the full or only part of the contract, depending on the situation. In practice, there are 2 types of withdrawal:

• ex tunc – retroactively (the agreement is ‘restricted’ from the beginning and the parties gotta pay their benefits),
• ex nunc – with effect for the future (current accounts stay valid and the agreement expires from the minute of withdrawal).

In order to effectively retreat from the contract, it is essential to indicate the legal and factual basis.

Why does partial withdrawal matter?

The anticipation of partial withdrawal is peculiarly crucial for investors who lose assurance in the contractor, for example due to delays or defective implementation. This allows them to complete their cooperation without nullifying the full agreement, but only to suspend further payments for unexecuted robots.

The contractor retains the right to pay for works already completed, even if the investment is not completed. However, it is crucial that the contract is decently formulated – it should contain provisions on implementation stages, settlement rules and cases justifying withdrawal.

Indivisible consequence but divisible benefit

The ultimate Court in its case-law emphasises that the building is indivisible benefitbecause the intent of the agreement is to complete its implementation. However, the performance of the contractor itself may be divisible, if the contract provides for a staged execution and settlement of works.

Thanks to this construction, it is possible to settle the work already done, even if further cooperation is broken.

Partial withdrawal – erstwhile is it worth using?

Partial withdrawal from the construction contract means that the termination of the legal relation concerns only benefits not yet provided, whereas the work already carried out is usually settled. This is peculiarly useful when:

• the investor does not want to proceed working with the contractor, but the work done so far is correct,
• there are delays or doubts as to the quality of further works,
• the parties want to avoid a costly dispute over the cancellation of the full agreement.

Summary

Although the civilian Code does not regulate expressis verbis partial withdrawal from the construction contract, this institution is based on jurisprudence and the concept of divisive benefits. It is simply a applicable tool to defend the interests of the parties, allowing them to complete their cooperation without having to competition the full agreement.

Remember: If the work done does not rise objections, it may be better to resign for the future than to cancel the contract completely.

The information on the website is simply a description of the legal position at the date of publication and is not a legal advice on an individual case. The legal position of publication may change. The law firm is not liable for utilizing an alert to solve legal problems.

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