Dutch Civil Code

Book 7 Particular agreements

Title 7.12 Construction agreement

Section 7.12.1 Construction agreement in general

Article 7:750 Definition of 'construction agreement'
- 1. A construction agreement is an agreement under which one of the parties '(the constructor') engages himself towards the other party ('the principal') to make and deliver a tangible construction on another basis than an employment agreement, in exchange for a price to be paid in money by the principal.
- 2. Where the counter performance of the principal does not or not entirely exist of the payment of a sum of money, the present Title (Title 7.12) is applicable as far as the nature of the counter performance does not oppose to this.

Article 7:751 Subcontractors
The constructor is entitled to let subcontractors perform the work under his guidance and directions and to give them, with regard to certain parts of the work, direct control, notwithstanding his liability towards the principal for a proper performance of the construction agreement.

Article 7:752 Price has not been determined
- 1. If no price has been determined in the construction agreement or if only an indicative price has been set, then the principal has to pay a reasonable price. In determining this price, account is taken of the prices which the constructor usually charges at the time of the conclusion of the construction agreement and of the expectations that he has created about the presumable price.
- 2. If an indicative price has been set, this indicative price may not be exceeded by more than 10%, unless the constructor has warned the principal as soon as possible of the probability of a higher excess in order to give him the opportunity still to restrict or simplify the construction. Within the limits of reason the constructor is obliged to cooperate in the effectuation of such a restriction or simplification.
- 3. Paragraph 2 applies accordingly to construction agreements whereby the price has been made dependent on the duration of the work to be performed as estimated at the conclusion of the construction agreement.

Article 7:753 Cost-increasing circumstances
- 1. When, after the conclusion of the construction agreement, cost-increasing circumstances arise or come to light that cannot be attributed to the constructor, the court shall, upon a legal claim of the constructor, adjust the agreed price entirely or partially in proportion to the cost-increase, provided that the constructor, at the moment that he stipulated the price, did not have to reckon with the possibility that these circumstances would occur.
- 2. The constructor is entitled to adjust the price without intervention of the court if the cost-increase is a result of incorrect information provided to him by the principal and this information is relevant for fixing the price, unless the constructor should have discovered this incorrectness before the price was fixed.
- 3. The provisions of paragraph 1 and 2 apply only if the constructor has warned the principal as soon as possible of the need of a price increase, so that the principal either can make use of the right granted to him in Article 7:764 or can make a proposal to restrict or simplify the work to be performed.

Article 7:754 Duty of the constructor to give a warning
The constructor must, not only at the moment on which he enters into the construction agreement but also during the performance of this agreement, warn the principal of any inadequacies in the construction or work that is assigned to him as far as these are known to him or reasonably should have been known to him. The same applies in case of defects or the unsuitability of things which are coming from the principal, including the land on which the principal lets others perform the work, as well as in case of errors or shortcomings in plans, drawings, designs, calculations, specifications, estimations or implementing regulations which are supplied by the principal.

Article 7:755 Additional work performed
In the event that the principal has asked for additives or changes in comparison to the agreed work, the constructor may only then demand an increase of the agreed price when he has pointed out in time to the principal that this will necessarily lead to a price increase, unless the principal should have understood of his own accord that such an increase would necessarily result from this. It is not possible to derogate to the disadvantage of the principal from the present Article, except by means of a standard regulation as meant in Article 6:214*).

*) Up until now no such standard regulation has been issued.

Article 7:756 Dissolution of the construction agreement prior to the completion of the work
- 1. If it becomes probable even before the determined time of completion of the work that the construction will not be completed in time or will not be completed properly, then the court may entirely or partially dissolve the construction agreement upon a legal claim of the principal to this end.
- 2. If it becomes probable even before the completion of the work that the principal will not or not properly comply with his obligations or that the constructor will not be able to perform the construction as a result of circumstances which cannot be attributed to him, then the court may entirely or partially dissolve the construction agreement upon a legal claim of the constructor to this end.
- 3. The court determines the legal effects of the dissolution of the construction agreement; it may also dissolve the agreement subject to certain conditions to be set by court.

Article 7:757 Impossibility to perform the work
- 1. Where it becomes impossible to perform the work because the thing with regard to which that work must be performed perishes or is lost due to a reason not attributable to the constructor, the constructor is entitled to a proportional part of the fixed price on the basis of the work already performed and the costs already made. In the event of wilful intent or gross negligence of the principal, the constructor is entitled to receive a sum of money calculated in accordance with the provisions of Article 7:764, paragraph 2.
- 2. Where the thing, in the event meant in the previous paragraph, was in the keeping of the constructor, the principal is not obliged to pay any compensation, unless he is to blame for the perishing or the loss, in which case the previous paragraph applies to the full.

Article 7:758 Completion and delivery of the construction
- 1. If the constructor has made clear that the construction is completed and ready for delivery and the principal does not, within a reasonable time, make an inspection and neither accepts the construction, whether or not under reservation, or rejects it under indication of certain construction defects, then the principal is regarded to have accepted the construction tacitly [unless the principal had reasons to reject the construction]. After an acceptance, the construction is considered to be completed and delivered.
- 2. After the completion and delivery, the construction is at the risk of the principal. Therefore he must pay the price, irrespective whether the construction will perish or decline due to a cause not attributable to the constructor.
- 3. The constructor is released from his liability for construction defects which the principal reasonably should have discovered at the moment of the delivery of the completed construction.

Article 7:759 Repair of construction defects
- 1. If construction defects, for which the constructor is liable, come to light after the delivery of the completed construction, then the principal must give the constructor the opportunity to repair these defects within a reasonable period, unless this cannot be expected of the principal in view of the circumstances, all without prejudice to the constructor's liability for damages resulting from a poor completion and delivery.
- 2. The principal may claim that the constructor repairs the construction defects within a reasonable period, unless the costs of repair would be in no proportion to the importance of these repairs for the principal in comparison to his interests in receiving a financial compensation for damages.

Article 7:760 Liability for materials and equipment
- 1. Where the constructor has used defective or unsuitable materials or equipment which have resulted in a poor performance of the work, this result is for account of the constructor.
- 2. However, if the poor performance of the work is a result of defective or unsuitable materials or equipment coming from the principal, including the land on which he lets others perform the work, then this result is for his own account as far as the constructor has not failed to comply with his duty to warn the principal as referred to in Article 7:754 or has not failed otherwise with regard to these defects or this unsuitability in providing the proper expertise or carefulness.
- 3. Paragraph 2 applies accordingly in case of errors or shortcomings in plans, drawings, designs, calculations, specifications, estimations or implementing regulations which are supplied by the principal.

Article 7:761 Prescription of legal actions based on construction defects
- 1. Each right of action based on a construction defect in the completed and delivered construction becomes prescribed on the expiry of two years after the moment on which the principal has made a complaint about it. If the principal has given the constructor a period within which he has the opportunity to repair the construction defect, the prescription period starts to run just at the end of the period within which the constructor could have made the repair or so much earlier as the constructor has made clear that he will not repair the construction defect.
- 2. A right of action becomes in any event prescribed on the expiry of twenty years after the delivery of the completed construction if it concerns a building, and on the expiry of ten years after the delivery of all other completed constructions.
- 3. Where, as a result of one of the previous paragraphs, a right of action would become prescribed between the moment on which the constructor has notified the principal that he will examine or repair the construction defect and the moment on which he obviously regards this examination or repairing attempts as ended, the prescription period is lengthened in accordance with Article 3:320.
- 4. When the constructor demands payment of the price, the principal's right to rescind the construction agreement partially or to claim damages is left unhindered by paragraph 1 up to and including 3 of the present Article.

Article 7:762 Liability for concealed construction defects
The liability of the constructor for hidden construction defects of which he was aware and which he has concealed, cannot be excluded or limited by agreement, nor can they be subjected to a shorter prescription period than the prescription period referred to in Article 7:761. A concealment by a person who was appointed by the constructor to lead the performance of the work, is equated with a concealment by the constructor himself.

Article 7:763 Death of the constructor or a long lasting inability to work
Where the constructor, after the construction agreement has been entered into, dies or becomes unable to work for a long time, each of the parties has the right to end the construction agreement as far as the death or inability to work of the constructor gives him, in view of the nature of this agreement, a reasonable interest to end it . With regard to the work that already has been performed and the costs already made, the principle has to pay a reasonable compensation which is to be determined by taking into account all circumstances.

Article 7:764 Termination of the construction agreement
- 1. The principal may at any time terminate the construction agreement, either entirely or partially.
- 2. In the event of such a termination the principal shall have to pay the price for the entire work and construction, reduced by the costs and expenses which the constructor has saved as a result of the termination, whereas the constructor has to deliver in exchange the work that already has been completed. If the price has been made dependent on the costs which the constructor in reality has made, then the price payable by the principal is calculated on the basis of the actually made costs, the performed labour and the profit which the constructor would have made on the whole work and construction.

Section 7.12.2 Particular provisions for the construction of a house on behalf of a natural person who does not act in the course of a professional practice or business

Article 7:765 Applicability of Section 7.12.2
The present Section (Section 7.12.2) applies to a construction agreement related to the construction of a house, existing of a to be build immovable thing or a component of such a thing, build for a natural person who, when entering into the construction agreement, did not act in the course of his professional practice or business.

Article 7:766 Written agreement and period of reflection
- 1. A construction agreement as meant in Article 7:765 is entered into in writing.
- 2. The private deed of the construction agreement, drawn up between parties, or a duplicate of it must be handed over to the principal against the delivery of a dated receipt if the constructor requests such a receipt. After this private deed has been handed over to the principal, the principal has during three days the right to rescind the construction agreement. When the principal has exercised this right and within six months the same parties bring about a new construction agreement with regard to the same to be built house, then this right does not arise again.
- 3. Paragraph 1 and 2 do not apply to a construction agreement which is related to the construction of a house on a land plot which already belongs to the principal, and the acquisition of this land plot is not connected with the construction agreement.

Article 7:767 Payment of the contract price
The principal can only be obliged to make payments which correspond, at least approximately, with the progression of the construction or with the value of the goods transferred to him, except that it is permitted to stipulate by agreement that he deposits, by way of security for the performance of his obligations, an amount of no more than 10% of the contract price on an account of a notary or that he provides other security for this amount. Where the principal pays more than the amount referred to in the previous sentence or grants security for a higher amount, the surplus is regarded as an undue performance.

Article 7:768 Withholding the last 5% of the contract price
- 1. Without actually invoking the right to withhold his performance on the basis of Article 6:262 and with preservation of his right to claim the delivery of the completed construction, the principal may withhold up to 5% of the contract price from the last payable instalment or instalments and deposit this amount on an account of a notary instead of paying it to the constructor.
- 2. When three months since the completion and delivery of the constructed house have passed, the notary brings the deposited amount under control of the constructor, unless the principal wants to use his right to withhold performance as meant in Article 6:262 ((‘exceptio non adimpleti contractus’). In that case the principal notifies the notary of the amount with regard to which the deposit must be continued.
- 3. The notary also brings the amount under control of the constructor as far as the principal agrees with this or the constructor grants alternative security or because of a decision which is binding for both parties and in which is stated that the deposit is not or no longer justified.
- 4. During the period of three months referred to in paragraph 2 the principal cannot become liable for damages towards the constructor caused by a deposit as meant in paragraph 1 or by an alternative security granted by the constructor to this end, not even when no construction defects were found. If the principal becomes liable for damages due to one of the previous causes after the period of three months has expired, then the amount of these damages is set at the statutory interest of Article 6:119.

Article 7:769 Mandatory law
It is not possible to derogate to the disadvantage of the principal from the provisions of the present Section (Section 7.12.2), nor from Article 6:262 as far as its application is necessary for the purpose of Article 7:768, except when this derogation is made by means of a standard regulation as meant in Article 6:214*).

*) Up until now no such standard regulation has been issued.