Property Damages from Breach of a Construction Contract
Construction projects often involve complex processes and significant financial investments. When a construction contract is breached, the consequences can include property damages, delays, or even financial losses. In this guide, we outline your rights and options under Bulgarian law in cases of non-performance of construction contracts.
What Is a Construction Contract?
A construction contract is a legal agreement between a client (referred to as the “assignor”) and a contractor (referred to as the “executor”). The contract governs activities such as:
- Construction of new buildings.
- Renovation or improvement of existing structures.
- Repairs or reconstructions.
Essential Elements of a Construction Contract
- Defined Scope: A detailed description of the work to be performed.
- Timeline: Deadlines for various stages of completion.
- Cost and Payments: Agreed pricing and payment terms.
- Penalties: Clauses for non-performance or delays.
Construction contracts may also include provisions for quality guarantees and liability for defects.
Types of Breaches in Construction Contracts
- Non-Performance: Failure to start or complete the agreed work.
- Delayed Performance: Breach of deadlines for specific stages.
- Defective Performance: Construction work that fails to meet agreed standards or specifications.
Legal Rights of the Assignor
When a construction contract is breached, Bulgarian law offers several remedies to the assignor:
- Claiming Penalties
Most construction contracts include penalty clauses for non-performance. These clauses stipulate a pre-agreed amount payable by the breaching party. Penalties can be:
- Fixed sums.
- Percentages of the contract value.
Important Note
You can claim penalties without proving actual damages, as the penalty serves as a form of compensation for non-performance.
- Claiming Property Damages
In addition to penalties, you may claim compensation for:
- Direct Losses: Expenses incurred due to incomplete or defective construction.
- Indirect Losses: Lost profits or financial harm caused by delays or substandard work.
To claim damages, you must demonstrate:
- The breach of contract.
- The resulting losses.
- A causal link between the breach and the losses.
- Contract Termination
If the contractor fails to perform within a reasonable time, you may terminate the contract. Before doing so, you must provide the contractor with written notice and a reasonable extension period for compliance.
- Correction of Defects
If the work is defective, you can:
- Demand that the contractor corrects the defects at their expense.
- Correct the defects yourself and claim reimbursement.
- Seek a reduction in the agreed payment amount.
Liability for Defective Work
- During Construction
If the contractor deviates from the approved project specifications, you can file a complaint with the relevant authorities. Construction supervision bodies may impose penalties or halt the project.
- After Completion
Under Bulgarian law, contractors are liable for construction defects for a specified period, known as the warranty period. Depending on the nature of the work, this period ranges from 5 to 10 years.
Examples of Covered Defects
- Structural flaws.
- Faulty insulation or waterproofing.
- Issues with internal installations (plumbing, electrical systems, etc.).
Steps to Protect Your Interests
- Document the Breach
- Keep written communication with the contractor.
- Photograph defective or incomplete work.
- Obtain expert opinions if necessary.
- Notify the Contractor
- Send a formal notice detailing the breach and requesting compliance.
- Consult a Lawyer
- Seek legal advice to evaluate your options and prepare for potential legal action.
- File a Claim
- Submit your claim for penalties, damages, or contract termination in court.
How Legal Frame Can Assist
Our experienced construction law attorneys at Legal Frame provide comprehensive services, including:
- Drafting and reviewing construction contracts.
- Advising on penalty and warranty clauses.
- Representing clients in disputes over construction defects or delays.
Frequently Asked Questions
- What if the contractor refuses to fix defects?
You can either correct the defects yourself and seek reimbursement or file a claim for damages.
- Can I claim damages beyond the penalty amount?
Yes, if your losses exceed the penalty, you can claim the additional damages in court.
- Is defective construction considered a legal breach?
Yes, failure to meet agreed quality standards constitutes a breach of contract.
For tailored advice on resolving construction disputes, contact Legal Frame today. Let us help protect your rights and investments.