A. Lukašonokas, G. Šarauskaitė: Does a unilateral handover of construction works help and how to do it properly
The situations when the customers already using the result of the construction works fulfilled by the contractor, for some reason refuse to accept the construction works are common in law practice. In such circumstances, the contractor acquires the right to unilaterally handover the construction works to the customer. However, such handover of works must be performed in accordance with the provisions established in the Articles 6.662 and 6.694 of the Civil Code of the Republic of Lithuania (hereinafter – the Civil Code), as well as in compliance with the rules formulated by the Supreme Court of Lithuania. Following such procedure, the contractor’s ability to recover the agreed remuneration from the customer will undoubtedly increase. There are some guidelines that must be followed to properly exercise such a contractor’s right, as follows.
- Informing the customer about the readiness to handover the result of construction works. After fulfilling the agreed works, the contractor must notify the customer about the readiness to handover the result of the works fulfilled. The best option is to give such notification in written form. The notification shall indicate the specific date of transmission. According to the Article 6.694 Part 1 of the Civil Code, the customer must start accepting the works immediately as soon as the contractor’s notification is received. However, it is strongly recommended to evaluate the provisions of the contract, which should definitely establish the deadline within which the customer must accept the result of the works. Such a deadline also has to be followed by the parties when notifying the completion of the works.
- The customer completely ignores the contractor’s notification. In the event where the customer completely ignores the notification and the invitation to accept the works provided by the contractor, the only possibility to the contractor is handing over the works by signing a unilateral act. In the act of unilateral handover of works, the contractor must indicate that the customer did not arrive at the scheduled handover. It is particularly important to follow the deadline mentioned in the first point and to organize the handover of the works without violating the deadlines, established in the contract. If the previous behavior of the customer shows that the prescribed handover procedure will not be met, it is advisable for a contractor to invite a bailiff to the process of unilateral handover of works. The bailiff could record the fact that the customer did not arrive at the set time of the handover of works.
- The customer arrives but refuses to sign the act of handover. The Civil Code provides an exhaustive list of cases of the customer’s right to refuse to accept work: in the event of the violation of the ending time-limits of the fulfillment of the whole work under the independent work contract (Article 6.652 Part 4 of the Civil Code); when the results of preliminary testing and control measurements required by law, contract or the nature of the work are negative (Article 6.694 Part 5 of the Civil Code); in the event of a discovery of defects which render it impossible to be used for the purposes established in the contract of construction independent work and cannot be eliminated by the customer or independent work contractor (Article 6.694 Part 6 of the Civil Code). If the customer’s refusal cannot be attributed to any of the above-mentioned exceptions, but the customer still refuses to sign the act, the contractor acquires the right to sign such an act unilaterally. In this case, the act must indicate that the customer refused to sign it. Subsequently, during the court proceedings, the burden of proof on the existed right to refuse to accept the work lays on the customer.
- Legal significance and consequences of a unilateral act of handover of works. According to the case-law of the Supreme Court of Lithuania, an act signed unilaterally has the same legal force as an act signed by both parties. Such an act shall remain in force until it is declared annulled and void by a court. As a result, the non-signatory party bears the consequences of the act, i.e., those rights and obligations which could arise from signing such act by both parties. The contractor who signed the unilateral act of handover of works also acquires the right to initiate the court proceedings against the customer and claim the remuneration of the works done.
Commentary by PRIMUS Dispute Resolution Practice Group:
Associate Partner, Attorney at Law