Construction Services Contract / Contract for Work – Contract Template, Essential Elements and Role in Construction Projects
Updated: May 16
The success of a construction project often depends on the clarity and precision of the construction contracts signed by the involved parties. A well-defined construction services contract is not only a legal necessity but also ensures that the entire project progresses in the direction desired by the contracting parties, ensuring that each party involved understands the obligations and expectations of its co-contractor.
A construction services contract serves as a bridge between the architectural vision and the physical reality of the construction. It is essential in defining the parameters through which materials, labor, and expertise are mobilized to transform technical plans into durable and functional structures. By specifying each aspect of the construction in detail, the contract helps prevent delays, efficiently manage costs, and minimize conflicts that may arise between the contractor / service provider and the client.
What is the construction services contract / contract for work?
The contract for work is a type of contract regulated by the Civil Code in which one party, called the "contractor," agrees to execute work for another party, called the "beneficiary" or "client," in exchange for payment.
A characteristic of a contract for work model is that the provider / contractor is economically and operationally independent of the client who orders the work, in the sense that they are free to organize the work and execution as they see necessary. There are no subordinate relationships established between the parties involved in a construction services contract / contract for work. The provider / contractor performs the work at their own risk.
The construction services contract / contract for work is commonly used in the construction sector but can also be used in other sectors where the completion of a material work or a specific project is required. For example, in legal literature, it has been noted that "the rules related to contracts for work apply – in the absence of special regulations or in addition to them – also to intellectual works (activities) such as tutoring, professional consultations including legal ones [given by notaries, lawyers (…) except for judicial representation, which is a form of mandate" (Fr. Deak, Civil Law Contracts Special Treatise, Universul Juridic Publishing House, Bucharest, 2001, p. 292).
Main elements of a construction services contract
Purpose and objectives of the project.
It is advisable for a construction services contract to start with a clear description of the purpose and objectives of the project, including the expectations of the beneficiary and the technical specifications that the provider must execute. This ensures that all parties have a common understanding of the desired final outcome.
Details of the parties involved.
Identifying all the parties involved from investors and beneficiaries to subcontractors and suppliers, and clarifying each one's roles and responsibilities is an essential part of any contract model used. This also includes methods of communication and coordination between parties, division of responsibilities and benefits, and roles in the project.
Detailed specifications of the work.
It is advisable for a construction services contract to include detailed specifications of the construction project such as plans and technical drawings, quality standards, materials used, and technologies involved. Inserting such contractual clauses ensures that the works performed meet the technical norms and safety standards in the field, as well as the expectations of the beneficiary.
Budget and financing.
Complete details about the project budget, funding sources, cash flow planning, and financial adjustment methods in case of project changes.
Execution and delivery terms. Specifying the start and completion dates, critical stages of the project, and penalties for delays. These dates are crucial for maintaining time discipline within the project.
Performance Guarantees.
Most construction services contracts / contracts for execution of works contain clauses regarding guarantees associated with the works performed. Such guarantees can be performance guarantees, providing assurance by the contractor to the beneficiary that the work will be performed according to the contractual standards and specifications within the agreed terms. This performance guarantee protects the beneficiary against deficiencies or quality issues that may arise after the work's completion. It may be granted in the form of bank guarantees (bank guarantee letter) or insurance policies issued by insurance companies.
Risk management.
The template of the construction services contract you want to use for your business identifies potential risks and the ways to manage them. It may include risks related to weather conditions, design errors, supplier problems, or other unforeseen situations that could affect the normal course of construction. Risks in this category are extremely common in construction projects, and therefore it is advisable for parties to agree on how to resolve such issues before they occur. Using the appropriate contract model, parties can prevent conflicts typical of situations where one party suffers significant damage due to the emergence of such risks.
Conditions for amendment of the contract.
Any professional contract template should contain a section dedicated to its termination and modification. Such clauses are especially useful in complex construction projects where changes to the scope or technical details of execution may be introduced during the execution, depending on the concrete needs of the project. Among the most common situations, we mention the adjustments necessary after discovering unforeseen ground conditions.
Completion and reception procedures.
The procedures for inspection and reception of the works, the criteria for accepting the construction, and the mechanisms for resolving any non-conformities discovered in the finalization phase are elements that must be contractually regulated. The final reception of the works is an important moment that marks the completion of the construction project and the release of the provider / contractor from the main contractual obligations. Omitting to mention certain execution deficiencies at the time of the final reception report may result in the beneficiary losing the right to request subsequent repairs or damages.
Relationship between the construction services contract / contract for work and the subcontracting contract
What is a subcontract?
The subcontract is a subsequent contract to a construction services contract.
Through the subcontract, the contractor may entrust one or more subcontractors with the execution of parts or elements of the work or services to be performed according to the main contract. The subcontract template establishes the terms and conditions under which the subcontractor will perform the work specified in the main contract but without establishing a direct contractual relationship between them and the main beneficiary.
Is the approval of the main beneficiary necessary for the conclusion of a subcontracting contract?
As a general rule, the main contractor must obtain the approval of the project beneficiary before subcontracting any part of the work if the contract for executing the work between them was concluded in consideration of the contractor's capabilities. This is often the case, especially in major construction projects where awarding tenders are organized.
The beneficiary's agreement for subcontracting can be given in various forms, including through clauses in the contract model used between the beneficiary and the main contractor.
What responsibilities does the main contractor have within a subcontracting contract?
The main contractor remains responsible to the beneficiary for the entire work, including for the parts subcontracted by third parties under a subcontracting contract. They must ensure that the subcontractors respect the quality standards and deadlines established in the main contract. Also, the main contractor is responsible for managing payments to subcontractors.
In some cases, there may be direct payments between the beneficiary and contractors, including in contracts allocated following public procurement procedures between contracting authorities and contractors from the private sector.
Can a subcontractor further subcontract part of the work?
Generally, a subcontractor can subcontract part of the work to another contractor if this is contractually permitted. Each level of subcontracting must be allowed by the beneficiary of the main construction services contract.
The role of the reception report in a construction services contract
What is the final reception report of constructions?
The final reception report of constructions / works is a document signed by the parties involved – contractor / provider and beneficiary – that attests that a construction or work has been completed according to the plans and contractual specifications and that it meets all legal and safety requirements. It is drafted by a reception committee at the end of the works, which will be constituted according to the contractual provisions by representatives of the parties and, if applicable, of the public authorities involved.
What role does the final reception report play in the transfer of property?
The final reception report of constructions / works may mark the moment of property transfer over the construction from the developer / contractor to the beneficiary. The final reception report serves as evidence that the work has been satisfactorily completed, respecting the conditions from the building permit and the contractual documents of the parties. In frequent cases, the conclusion of this document allows the final release of funds from banks or other financial institutions involved in the project development.
What happens if the final reception report identifies deficiencies?
If deficiencies are identified during the final reception, the constructor is obligated to remedy them within a term established according to the provisions from the model of the construction services contract / the contract for work model used. The final reception report of constructions / works will include a list of the qualitative or quantitative deficiencies identified and the necessary corrective measures. The final reception may be conditioned by the satisfactory remediation of all issues.
How does the final reception report influence the guarantees offered by the constructor?
The final reception report marks the beginning of the legal warranty period for constructions. In Romania, constructors are required to offer a guarantee that covers major construction defects for a determined period, generally several years. The final reception report marks the beginning of this warranty period, ensuring that any subsequent problems that arise during this interval can be addressed under the protection of this guarantee.
Why is the final reception report necessary?
The final reception report of constructions / works signed according to the conditions agreed upon by the parties through the model of the construction services contract is necessary also for the use of the building / construction according to its purpose. It will be one of the documents required for connecting the building / construction to essential public services such as electricity, water, and gas.
Why order a professional construction services contract / contract for work from Docs & Deeds?
You ensure that your expectations match those of your co-contractor.
The model of the construction services contract we draft for you is well-structured and details the roles and responsibilities of each party involved - from contractor and beneficiary to subcontractors. All parties will have the same expectations regarding the project's purpose, quality and applicable standards, execution deadlines, and related costs.
You legally protect your business.
Professional contract models provide legal protection for both parties. In case of disputes, the contract serves as a basis for establishing applicable remedies. Without a clear and comprehensive contract, parties could be vulnerable to costly litigation and unfavorable court decisions.
You ensure that you have no problems with state authorities.
Construction services contracts must comply with local legislation and industry standards. A professional contract will include specific clauses that ensure compliance with all relevant regulations, from safety and health standards to environmental and urban planning standards.
You effectively manage costs and payments.
Our previous experience with clients in construction has given us a comprehensive perspective on incidents that can occur during the execution of a contract for work and, respectively, on potential sources of additional costs. A well-drafted construction services contract provides a clear framework for managing costs and payments, including the least predictable at the time of its signing. The contract model you use should cover such aspects, and at Docs & Deeds, we ensure that this happens.
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