- The main points of lease and work contracts
- Overview of the main mistakes when concluding contracts
- Example # 1. The subject of the contract is incorrectly defined
- Example # 2. The term is incorrectly spelled out in the work contract
- Example No. 3. Incorrectly formed price in the contract
- Example No. 4. The contract contains conditions that contradict the norms of the law
- Example No. 5. Conclusion of a contract by an unauthorized person
- Example No. 6. Payment for work performed under a work contract is dependent on the receipt of money from third parties to the customer
- Example No. 7. The absence in the contract of obligations to pay for interim acts
- Example No. 8. The contract contains a condition on payment for work after the transfer of executive documents to the customer, but it is not spelled…
- Example No. 9. Incorrect records of early termination of the contract
- Example No. 10. Incorrect VAT records
In this article, we will continue talking about the nuances of competently drafting contracts with contractors and suppliers for suburban construction and apartment renovation. And also consider the main mistakes made when they are concluded..
The main principles of drafting contracts in the construction of a country house. Part 1
The main points of lease and work contracts
All lease agreements, including the lease of special equipment, must contain the following essential conditions:
- subject of a contract
- rent clause
If the term is not specified, then the lease is considered concluded for an indefinite period. The parties will be able to terminate it at any time unilaterally by providing the other party with a month’s notice before the expected expiration date of the obligations.
The subject of the contract must be defined in such a way that when fulfilling the obligations under the contract, it is not possible to replace one object with another. In Russia, the rental objects can be:
- railway rolling stock, including construction cranes on a railway track;
- sea vessels, including special purpose vessels;
- river vessels (or used in inland waters), including special equipment created on their basis;
- trucks, tractors with semi-trailers, cranes, excavators and other special equipment on automobile traction, the management and operation of which requires special skills and knowledge.
The subject in this case will be the obligation to transfer technical devices:
- the use of which requires qualified management;
- designed for the transportation of various goods, people or towing specialized objects;
- having the properties of a source of increased danger.
The next essential condition of the lease is the price. As for the definition of rent, it can be indicated in the text in several ways:
- recorded in a certain amount, paid in a lump sum or after a certain period;
- as payment to the lessor, a percentage of the income received when using the leased object is transferred (can be expressed not only in cash, but also be replaced by a natural equivalent as agreed by the parties);
- as payment, the lessee provides certain services to the lessor;
- as payment, the lessee transfers to the lessor the subject of the contract for ownership or lease;
- as payment, the lessee at his own expense makes certain improvements to the leased property specified in the contract;
- combinations of the above forms can also be provided as payment.
The Civil Code defines two types of vehicle lease agreements:
- with the provision of management and maintenance services;
- without the provision of management and maintenance services.
Depending on the type of the concluded contract, the obligations of the parties to maintain the vehicle in good condition and the procedure for compensation for damage in case of its infliction by the leased object differ..
The last on the list and, perhaps, the most controversial in terms of registration is the work contract. For such transactions, Russian legislation provides for the following essential conditions:
- the subject of the contract, it is usually understood as the volume, types and content of work that should lead to a specific result;
- start and end dates of work;
- price of work.
Additionally, the text is prescribed:
- settlement procedure and conditions;
- obligations of the parties;
- the procedure for the production of work;
- work acceptance procedure;
- responsibility of the parties for improper performance of their obligations.
A work contract implies the performance of work by people associated with certain risks. In order to avoid later misunderstandings, it is recommended to prescribe in the text that the responsibility for compliance with safety standards at the facility rests entirely with the contractor, including the creation of safe working conditions.
If the need to perform work disappears, the conditions and procedure for terminating the contract should be prescribed. By agreement of the two parties, all articles of the document can be edited, based on the characteristics of the object, its location and other conditions.
For a work contract implying the performance of design or survey work, additional conditions may be:
- participation of the parties in the approvals of the documentation developed by the designer;
- use of the created design and estimate documentation (the ability to transfer it to third parties, for example, for subsequent adjustments or the development of a new project based on this documentation);
- determination of ownership of inventions;
- provision of confidential information.
But let us return to the essential conditions. So the most important and defining clause in any contract, including in a work contract, is the subject of the contract. To determine it, you must also indicate:
- list of works;
- the object on which the work is to be carried out;
- result to be achieved by contract work.
There is an opinion that if there is no design and estimate documentation at the construction site and the construction contract is concluded without reference to the project, then this is a violation of the rules on essential conditions. However, in practice, the lack of documentation does not at all indicate the inconsistency of the terms of the parties, if the responsibility for the development of such documentation lies with the contractor..
The second important condition is the timing. Moreover, both initial and final. There are many examples from judicial practice when the contract was recognized as not concluded in the absence of an end date, and in the event that it was impossible to determine the actual start date of work. True, there is a way out of the situation when the agreement has already been concluded, and the term is not specified in it. If the parties, by signing an additional agreement, set the date for the start and end of work, the contract will be considered concluded. It should also be understood that if the contract itself and its integral attachments contain different information about the timing, the court will recognize the contract as not concluded.
It is also necessary to distinguish between the term of the contract itself and the term of the contract work. The first cannot replace a clearly spelled out condition on the timing of the work and leads to a court decision that the contract is still not concluded. However, the transaction can be considered completed if the parties, within a reasonable time from the date of the conclusion of the contract, have fulfilled their obligations, despite the absence of this condition in the text.
The third and most controversial essential condition of the contract is the price. On the one hand, it can be drawn up with an estimate, on the other, it can be firm and recorded in the contract only in numbers. In the course of fulfilling contractual obligations, it is not uncommon for the contractor to demand payment from the customer in excess of the established price due to the performance of additional work. However, the validity of these requirements depends on the following factors:
- whether the customer was informed about additional work;
- whether the customer has agreed to carry out additional work;
- whether the customer accepted the result of additional work (sometimes the value of these works for the customer is taken into account, that is, whether he will subsequently use the result of the work).
Sometimes contracts are concluded in such a way that they cannot be attributed to any particular type. This type of document is called mixed. It may contain signs of several contracts. For example, the contractor not only undertakes to carry out certain work, but also to provide the construction site with materials. This type of contract is most often used when the equipment is installed by the manufacturer’s construction team. Such documents must contain all the material conditions characteristic of both transactions.
Overview of the main mistakes when concluding contracts
In judicial practice, repeated mistakes are often encountered when concluding contracts. We will try to give the most striking and common examples below..
Example # 1. The subject of the contract is incorrectly defined
“The contractor undertakes to build a house at the specified address”, “the supplier undertakes to deliver a brick to the construction site”, “the lessor undertakes to lease a car” – any contract with such wording will be recognized as not concluded.
The house can be one-story, cottage, high-rise building. This formulation does not give a correct assessment. In the case of a construction contract, there must be a link to the design documentation or the entire list of work performed must be fully described. And if it is difficult to include everything in the text of the document itself for some reason, then it is quite possible to issue a detailed description with a mandatory application..
In the second case, the quantity of goods is not defined: 1 piece, 1 cubic meter or several hundred. In addition to the numerical expression, there should also be an explanation of the quality and characteristics of the product. Indication of GOST or TU. Clarifications regarding the product being in use prior to the sale.
In the case of rental, all characteristics are also indicated – a car of the brand such and such, with a carrying capacity of 5 tons, the number is such and such.
In general, the subject of the contract should be described in such a way that no one doubts what exactly you meant or that one subject (work) cannot be replaced by another (s).
Example # 2. The term is incorrectly spelled out in the work contract
“Within 4 months from the start of work”, “a month after the provision of all initial data”, “from April 1, 2013 until the signing of the certificate of completion” – when making out this way, one should be aware that it is precisely to determine the start time and the end of the commitment will be nearly impossible. In the case of a contract, this will entail the recognition of the contract as not concluded, in other cases there will be no less problems. Commitments to such language can be deferred indefinitely.
It is optimal to indicate in the contract the date in the format “day / month / year” of the beginning of work and “day / month / year” of the end of work. You should pay attention to the fact that it is desirable that the date of commencement of work was not earlier than the date of the conclusion of the contract. Any objection that in the event of any unforeseen circumstances the contract may be overdue should be dismissed. In case of a significant delay through no fault of the contractor, the deadline for the fulfillment of obligations can always be adjusted by an additional agreement. Both parties can initiate its signing..
Example No. 3. Incorrectly formed price in the contract
This type of error is more related to work contracts. The situation is simple: in the course of the work, the prices for materials changed slightly and the total cost of the object increased, however, only the final amount is spelled out in the contract without any reservations. It should be borne in mind that according to Art. 709 of the Civil Code of the Russian Federation, if the methods of price formation are not indicated, then it is recognized as firm. As a result, the contractor under such a contract suffers losses due to the increased prices for materials. The contractor has the right to demand an increase in the fixed price only with a significant increase in the cost of materials and before signing the acceptance certificate, if this increase in price could not be predicted at the stage of signing the documents.
Example No. 4. The contract contains conditions that contradict the norms of the law
“For violation of the terms of work, the customer has the right to demand from the contractor the payment of a fine in the amount of 50% of the amount, and the contractor loses the right to demand payment for the work performed and reimbursement of the cost of the materials spent”.
The condition of the contractor’s loss of the right to pay for the work performed is invalid, since it does not comply with the norm of Article 702 of the Civil Code of the Russian Federation, which provides for the customer’s obligation to accept and pay for the result of the work performed by the contractor. As a result, if the work is done and there are no claims to its quality, the customer is in any case obliged to pay. However, the contractor will still return the penalty for delay.
Example No. 5. Conclusion of a contract by an unauthorized person
Sometimes, when signing a contract, the question arises as to who should sign it. The best option for an individual is the signature of the citizen himself. In more difficult situations, it is allowed to sign the contract by his representative who has the right to do so. In the case of a legal entity, especially a large construction company with a large staff, mistakes are often made. For example, a contract is signed by a foreman, chief engineer or deputy director. The only one who has the right to sign the contract is the head. All other employees can acquire this opportunity by obtaining the appropriate power of attorney. Then, when the contract is signed by a non-manager, a copy of the power of attorney will be drawn up as an attachment to the document.
Another common mistake is the signing of an agreement by the director of the branch, who also does not have a power of attorney or another type of registration of this right..
Example No. 6. Payment for work performed under a work contract is dependent on the receipt of money from third parties to the customer
“Payment for work performed is made after the sale of the built house”.
According to article 190 of the Civil Code, the period adopted by the agreement should be determined by the date or the expiration of a specific period of time, which can be calculated in years, months, and so on. The term can still be determined by an indication of a specific event, which must necessarily occur. In our case, there is an indication of an event that should not inevitably occur, which is not recognized by the agreement of the payment term. As a result, an agreement with such a wording is recognized as not concluded..
Example No. 7. The absence in the contract of obligations to pay for interim acts
If the contract stipulates that payment is made after the customer signs the object commissioning certificate or after the contractor receives a positive conclusion from the state body, then in the absence of these documents, the customer does not have an obligation to pay for the work performed. Consequently, all intermediate acts are not subject to payment. The transfer of the advance payment under such an agreement must also be separately regulated by the corresponding entry in the text. By default, advance payments are not provided.
Example No. 8. The contract contains a condition on payment for work after the transfer of executive documents to the customer, but it is not spelled out which documents should be transferred
If it is not specifically clear from the signed contract which executive documents are to be transferred to the customer, then the obligation to pay for the work appears the next day after their delivery. This is based on paragraph 1 of Article 711 of the Civil Code. Accordingly, from the moment these obligations occur, in case of delay in the receipt of money, the contractor has the right to receive the interest specified in article 395.
Example No. 9. Incorrect records of early termination of the contract
“In the event of an early termination of obligations, the customer undertakes to pay the full amount under the contract to the contractor” – when signing a document with such conditions, it should be understood that even if the desire to break off relations is caused by poor performance, payment will still be made in full.
Example No. 10. Incorrect VAT records
If the text of the contract does not specifically indicate that VAT is included in the price, then the specified tax is paid in excess of the price set in the contract.
In conclusion of the article, I would like to add that everyone can protect themselves from blunders in the contract and for this it is not at all necessary to have a legal education and follow the latest changes in the legislation of the Russian Federation. It is enough just to devote due time to the document and carefully evaluate each item for the presence of certain consequences. And if any recorded sentence raises doubts or is ambiguous, draw up a protocol of disagreements and rewrite it at your discretion. Learn to exercise your right, this is how you can save both money and nerves.