The Civil Code contains provisions that define certain contracts, i.e. stipulate what is meant by a given contract and what laws govern its performance (i.e. the rights and obligations of the parties to the contract, e.g. with respect to termination). These are the so-called named contracts, e.g. sale contract, lease contract, construction contract. The design work contract and the investor's supervision contract are not regulated by the Civil Code. These are so-called non-named agreements, the content of which is subject to free shaping by the parties.
Design work agreements have developed in the practice of commercial trading. In order to properly prepare and carry out a construction process, it is necessary for the investor to have appropriate project documentation, of which the construction project is the basic component. The requirements concerning the scope and content of the construction design are regulated by the Construction Law.
Under a design works agreement the designer (architect, general architect, design office, design studio being a legal entity, commercial law partnership) undertakes to perform the work stipulated in the agreement, pursuant to the requirements specified by the contracting authority, design standards, current regulations and achievements of contemporary technical knowledge, as well as ethical principles of the architectural profession, and the contracting authority being the investor (or the building contractor, general contractor, general contractor) undertakes to collect the work and pay the remuneration. The subject matter of the design works agreement, as specified above, usually covers development of the design documentation and exercising of authorship supervision (Article 20 Section 1 item 1 and 4 in conjunction with Article 34 Section 3 of the Construction Law).
Essential elements of any design work contract are, in particular, the data on the basis of which the designer develops the documentation (so-called input data), liability for improper performance of the contract based on bank or insurance guarantees provided by the designer, and the moment of acceptance of the documentation in light of the obligation to update it.
Doctrine indicates that the contracting authority should provide the design entity, in accordance with the provisions of the contract, with the necessary data to perform the design work (System prawa handlowego, Tom 5, ed. Stec/ Strzępka).
For example, the ordering party should have the following obligations in terms of input data:
1) providing input data (assumptions) for the design development;
2) providing clarifications to doubts and queries raised by the designer or necessary additions to the input data;
3) agreeing on estimates of additional costs related to changes and extensions of the subject matter of the contract, arising from reasons beyond the designer's control, which the parties could not foresee when concluding the contract;
4) the Contracting Authority should undertake necessary actions for proper implementation of the subject matter of the contract; it is obliged to cooperate with the designer at the stage of design documentation preparation, having in mind the good of the investment, and in particular design studies according to the accepted schedule of the design documentation implementation.
When determining the procedure related to obtaining input data for design, it is important to specify in the contract the principles for transferring the input data, including deadlines and method of their transfer, scope of data necessary for transfer, as well as the entity responsible for transferring defective data.
A performance bond serves the purpose of covering the ordering party's claims against the contractor for non-performance or undue performance of the contract, as well as covering the ordering party's claims against the contractor under the quality guarantee and warranty for defects.
It may take various forms, e.g. a security in cash, blank promissory note, bank guarantee or insurance guarantee.
Particular attention should be paid to provisions requiring the designer to extend the guarantee at his own expense in the event of extension of contract performance.
When constructing contractual provisions related to securing proper performance of the contract in long-term contracts, it is important that the contractual provisions include appropriate regulations limiting the amount of the guarantee by minimizing the guarantee amount, for example, to the value of the work that remains to be done.
The moment of acceptance of the documentation in the context of the need to update or supplement it
In case when the contract does not contain a direct obligation of the designer, according to which the designer throughout the duration of the contract would be obliged to update the legal status of the design documentation, which has been accepted by the contracting authority, and adjust it to the current law and norms, a doubt may arise whether the designer is not obliged to make the above mentioned updates.
It is worth indicating in design work contracts whether the designer is obliged to update the design documentation. If yes, then the contract should specify conditions of making such updates. If not, it is worth pointing out in the agreement that the design documentation must comply with those regulations and legal norms, which are in force on the date of preparation of the construction design or on the date of its acceptance.
Regarding the necessity of supplementing the design documentation, what needs to be determined in the contract is the moment from which the contracting authority calculates the contractual penalty for untimely handing over of the design documentation by the designer, if the contracting authority notifies defects or the necessity of supplementing the design documentation after receiving it. From the date of the original handover of the documentation? Or from the date of handing over the supplemented documentation by the designer (taking into consideration the Ordering Party's remarks)?
If the contract does not specify the date from which the contracting authority calculates the contractual penalty, the penalty should run from the original handover of the documentation. Thus, when handing over the documentation to the contracting authority, the designer should take into consideration the time for the contracting authority to report defects or additions, if any, and the time necessary for the designer to correct them. The parties in the contract may otherwise stipulate the moment of potential contractual penalty calculation.
To sum up, a design work contract requires engineering care in identifying issues that need to be regulated, and then in formulating contractual provisions concerning those issues. It is worth taking care of the relevant contractual provisions in advance in order to avoid doubts of interpretation in the future, to which the law itself often does not provide an answer.
Marta Skurska, legal adviser, Managing Partner at Skurska, Pakuła, Kancelaria Radców Prawnych sp.p., Commercial Contracts Practice