Delay, defects and other failures to perform
(Правовое руководство по составлению строительных контрактов)
This chapter deals with certain remedies to which the purchaser may be entitled for delayed or defective performance by the contractor. It also deals with the remedies to which the contractor may be entitled in respect of the following failures to perform by the purchaser: delay in payment of the price or in providing security for payment of the price; delay in taking over or accepting the works; and failure to supply design, equipment or materials for construction. It also deals with the remedies available to both parties for delay in payment of sums other than the price, or the failure to perform auxiliary obligations. It is advisable that the contract specify the remedies for the failures to perform mentioned above. In drafting contractual provisions on remedies, account should be taken of the remedies provided by the law applicable to the contract (paragraphs 1, 2, 6 and 7).
Delay in performance occurs when a party performs his contractual obligations later than the time stipulated in the contract for their performance, or does not perform them at all. Defective performance occurs when a party fails to comply with those contract terms which describe the technical characteristics of the construction to be effected (paragraph 4).
Because of the complex and long-term character of the performance undertaken by the contractor under a works contract, the purchaser needs a detailed system of remedies. The system of remedies set forth in this chapter emphasizes two elements: the initial remedy usually given to the purchaser is to require the completion or cure by the contractor of performance which is delayed or defective; and the remedy of termination is given as one of last resort (paragraphs 9 to 12).
It is sometimes recommended that the purchaser be given a choice of alternative remedies upon certain failures to perform by the contractor. The contract may provide that the purchaser may not alter a choice of remedy he has made unless the contractor consents to the alteration. When the contractor is required to cure defects, it may be provided that he is to have freedom as to the manner in which the cure is to be effected (paragraphs 14 and 15).
In view of the detailed character of the system of remedies given to the purchaser, this chapter sets out in paragraph 50 a summary of those remedies.
The purchaser may delay in payment of the price or in providing security for payment of the price (paragraph 52). The parties may wish to provide for the payment of interest if the purchaser delays in payment of the price (paragraphs 53 to 56). Where the purchaser is in delay in paying a specified percentage of the price, or in furnishing security for payment of a specified percentage of the price, the contract may entitle the contractor to grant the purchaser an additional period of time to perform, and if the purchaser fails to perform within the additional period, to suspend the contract and, if the failure continues for a specified period after the suspension, the contractor may be entitled to terminate the contract. Alternatively, the contract may entitle the contractor to immediate termination of the contract, if the purchaser fails to pay or furnish security within the additional period (paragraphs 57 and 58). The contract may provide that acceptance of the works by the purchaser is deemed to occur in certain circumstances. In cases where this approach is not feasible in regard to acceptance, and in all cases of take-over, the contract may provide that, where the purchaser is in delay in accepting or taking over, the contractor is entitled to require the purchaser to accept or take over within an additional period. If he fails to accept or take over o within the additional period, the contract may provide that the con sequences of acceptance or take-over arise as from the date when a written notice stating that the consequences are to arise is delivered to the purchaser (paragraphs 59 to 61).
The contract may specify the remedies to which the contractor may be : entitled if the purchaser fails to supply a design, equipment or materials which he is obligated to supply, e.g., to require the purchaser to supply the design, equipment or materials within an additional period, and if the } purchaser fails to do so, to terminate the contract (paragraphs 62 and 63). The contract may specify the remedies to which a party may be entitled if the other party is in delay in payment of a sum other than the price, or fails to perform an auxiliary obligation (paragraphs 64 to 66).