Limitation periods in a contract for a specific work
23.02.2023 litigation, contract
The statute of limitations for claims arising from a contract for a specific work is regulated differently from the general rules. Pursuant to Civil Code Art. 646, these claims become time-barred two years after the work is delivered, or if the work has not been delivered, two years after it was supposed to be delivered under the contract. This is a short timeframe, and requires great care to avoid forfeiting claims—especially as the way it is counted can raise practical questions, and in some cases a three-year term is used.
The investor’s lack of cooperation and rescission of a construction contract
09.02.2023 real estate, litigation
Cooperation between the parties is essential to implement many contracts. This is particularly so in the case of a construction contract or a contract to produce a specific work, where the purpose of the contract is achieved over the course of a fairly complex process and comprises many elements. The Polish parliament has recognised this strong dependence and has provided a far-reaching solution applicable when the necessary cooperation is lacking. Such a situation may even lead to rescission of the contract.
Settlement before the first hearing may allow for recovery of the entire court fee
Settlement is a popular and safe way of resolving civil disputes. By making concessions to each other, the parties autonomously frame the legal relationship between them and allocate the rights and obligations acceptable to them. The law in Poland also promotes this model, providing advantageous rules for parties to court proceedings allowing for return of the court fee on claims if a settlement is reached. The earlier a settlement is reached, the more of the fee can be recovered. In some cases, even the entire fee may be refunded.
Claim for a guarantee of payment for construction works: Practical problems
03.11.2022 banking & finance, litigation
A request for a payment guarantee may appear on an investor’s desk suddenly, causing numerous complications. Sometimes, contractors make such a demand to have an excuse to withdraw from the contract. Then a race against the clock begins, not to give them that excuse. But in advance, the investor can also arrange a commercial solution to the problem, i.e. a bank guarantee facility in the loan agreement.
Acknowledgement of debt: What does the debtor’s behaviour mean?
14.07.2022 litigation, Supreme Court, creditor protection
Recently, the Supreme Court of Poland commented on the subject of acknowledgement of debt, and at the same time gave some general guidance on how to interpret a debtor’s statements and behaviour. This is a key practical issue, as action by the debtor can cause interruption of running of the statute of limitations on the claim. Therefore, debtors should be cautious about what they state to creditors. Conversely, in many cases, creditors can take advantage of the debtor’s behaviour to improve their legal position.
What conditions can be imposed on the obligation to pay a fee to a construction contractor?
14.07.2022 litigation, Supreme Court
In its judgment of 2 June 2021 (case no. II CSKP 7/21), the Supreme Court of Poland ruled on whether payment of the fee to a contractor for construction works can be conditional. This ruling is of great practical importance, as it comments on which contractual provisions regarding the fee are permissible and which are prohibited and thus invalid. This is essential reading for contractors and investors alike, providing valuable tips on how to frame construction contracts to ensure compliance with the regulations while affording proper legal protection.
Can a contractual penalty be cut by 99%? When?
21.04.2022 contract, litigation
Contractual penalties are a common instrument for sanctioning failures to perform non-monetary obligations (e.g. completing construction on time). Contractual penalties can be cut by the courts, but generally the Polish Civil Code indicates only the grounds for mitigating a contractual penalty. The details must be sought in the legal literature and the case law. Indeed, the regulations do not even provide guidance on how much contractual penalties can be reduced. Thus each case should be treated individually, guided by the principles discussed below.
Will high court fees for conciliation be cut?
Increased court fees for an application for a summons to conciliation have been in effect since August 2019. They were intended to prevent the use of settlement proceedings solely to interrupt the running of the limitations period. Has this effect been achieved?
Construction market when there is a war abroad
07.04.2022 contract, public procurement
The construction market is facing more challenges. After many problems associated with the pandemic, other major difficulties have arisen due to Russia’s war on Ukraine. This presents the second recent case of force majeure affecting the economy. Although the construction sector did well in the pandemic crisis, this time the outlook is much more pessimistic. Thus the new reality requires a rapid response and search for solutions to mitigate numerous risks.
Defects and payment: Handover dilemmas
10.02.2022 litigation, Supreme Court
When is the investor required to pay for the performance of work? How do identified defects relate to this obligation, and when can handover be refused? These questions cause many difficulties in practice and are the basis for numerous, often very complex and long-running disputes. Recently, this issue was addressed by the Supreme Court of Poland. The interpretive direction it affirmed may help market players, including construction contractors, to whom these findings may apply by analogy.
Liquidated damages in construction contracts not only for works: New resolution of the Supreme Court
27.01.2022 contract, Supreme Court
On 9 December 2021, the Supreme Court of Poland issued a resolution (case no. III CZP 26/21) examining liquidated damages in construction contracts. In construction, liquidated damages are particularly common, generating serious disputes even threatening the completion of projects. In practice, this instrument is mainly used by investors, and the problem usually affects general contractors and subcontractors.
Problems with justifications for rulings: How to proceed properly?
Recent amendments to civil procedure in Poland (especially the one dated July 2019) have raised numerous doubts on how to interpret the Civil Procedure Code, in particular provisions on service of court documents, justifications for rulings, and appeals. Some of these ambiguities have caused lots of problems for parties and their counsel, as incorrect application of these regulations can have severe consequences and even result in losing the case on procedural grounds. Some of the doubts concerning justifications for rulings were recently clarified by the Supreme Court of Poland.