What risks do construction contracts hide? The top 5 clauses you need to know!📌

In the construction sector, works contract agreements form the foundation of the legal relationship between the beneficiary and the contractor.

However, beyond the appearance of a well-drafted agreement, many legal risks can arise that, if overlooked, may lead to costly litigation, delays, or significant financial losses.

In the context of Romanian legislation, construction works contracts are primarily governed by the Civil Code, but also influenced by related legislation on urban planning, building permits, and consumer protection.

Here are the top 5 clauses that any party involved in a construction contract should review and analyze thoroughly:

1. Execution deadline and delay penalty clause

Completion deadlines must be clearly defined, firm, and aligned with the actual technical requirements of the project. Any ambiguity can allow the contractor to claim unexpected circumstances to justify delays.

Include proportionate and effective penalties for delays to enforce adherence to the work schedule, while avoiding making them abusive clauses.

2. Price clause and adjustment mechanisms

In a market with volatile construction material prices, the lack of a clear price adjustment clause can lead to significant losses for one party.

We recommend including indexing or price renegotiation mechanisms based on economic indicators or the cost of materials, ensuring that the contract remains fair for both parties.

3. Work guarantee clause

The guarantee is a legal obligation of the contractor, meant to cover any defects in the work.

Explicitly state the guarantee period (according to the law – between 3 and 10 years, depending on the nature of the work) and the procedure for notifying and remedying defects.

4. Force majeure and fortuitous event clause

Events such as pandemics, armed conflicts, or economic crises can affect contract performance.

Introduce a clear clause defining what constitutes force majeure and fortuitous events, including the notification process and the effects on contractual obligations.

5. Termination and dispute resolution clause

In the absence of clear provisions, contract termination can become complicated and lead to additional damages.

Explicitly provide for conditions for unilateral termination, post-termination obligations, and dispute resolution methods (competent court, arbitration, etc.).

A solid construction contract tailored to the specifics of the project is the key to a successful partnership. Seeking the advice of a lawyer specializing in construction law is essential to prevent disputes and secure a balanced legal framework.

If you are a beneficiary, developer, or contractor and need help drafting, reviewing, or negotiating a construction contract, don’t hesitate to contact us. We’re here to protect your interests.