Source: http://budowaiprawo.eu/index.php?mod=proti_art&id=1223&lang=en
Timestamp: 2020-08-12 12:33:06
Document Index: 525561391

Matched Legal Cases: ['art. 3571', 'art. 632', '§ 2', 'art. 3531', 'art. 3571', 'art. 362', '§ 2']

Due to the adoption of a lump sum price in a construction works agreement, the contractor, who is familiar with the scope of work assigned to him, will receive the agreed remuneration. However, the Polish Civil Code provides for a loophole to the benefit of the contractor – he may demand that the terms of the agreement are adjusted to the changed circumstances in the event that it has not been possible for the contractor to foresee such change. Depending on whether we are dealing with an unpredictable change of prices, or with any other circumstances which would threaten the contractor with a significant loss, the court may amend the terms of the agreement accordingly (art. 3571, art. 632 § 2 of the PCC).
Construction contracts, in particular the ones that are being performed for many months, often provide for individual regulations in respect of the adjustment of the amount of the remuneration to the economic reality, which regulations are referred to as the price adjustment clauses. Here, the parties to the agreement are only bound with the freedom of contract principle, according to which it is forbidden to freely implement contractual solutions only in the event that the content or purpose of the contract is inconsistent with its nature (i.e. the nature of the legal relationship), the law or the principles of community life (art. 3531 of the PCC).
The FIDIC Conditions of Contract (to include the most frequently applied ones: the Red Book and the Yellow Book) include market adjustment clauses as well – Sub-Clause 13.7 and Sub-Clause 13.8. While the former pertains to the corrections on the remuneration resulting from changes in the legislation, Sub-Clause 13.8 provides for a mechanism of calculating adjustments of remuneration in accordance with "the table of adjustment data”, which should be attached as an Appendix to Tender.
If the parties are able to foresee the adjustment of contractor’s remuneration in the agreement, they may also exclude it. Without trying to delve into disputes on whether it is admissible to exclude the adjustment (or, in more general terms: the right to demand that the agreement is changed) in cases set out in the aforementioned provisions of the Polish Civil Code, one needs to adopt the rule that if the parties to the agreement agree that the contractor will be deprived of the right to claim an increase in the remuneration, they need to have it expressly stipulated in the contract. Otherwise, the provisions of the Code shall apply.
It is well known that the ordering parties, in particular the ones who dispose of public resources, strive to shift most of the risks onto the contractor. This tendency is evidenced by the modification of the FIDIC Conditions of Contract, which modification consists in the exclusion, stipulated in the Particular Conditions, of the application of Sub-Clause 13.8. With the lack of contractual regulations, the contractors, in the event of the occurrence of some extraordinary circumstances (as, for example, a drastic increase in the prices of the building material), will reach for protection resulting from the above cited code-based regulations. They are of the, legitimate, in my view, opinion that the sole removal of Sub-Clause 13.8 does not yet mean the exclusion of the possibility to increase the remuneration on the basis of the mentioned provisions of the Civil Code.
Meanwhile, some of the courts would assume a different interpretation. In the substantiations for judgments, we will often read that due to the removal of Sub-Clause 13.8 from the Conditions of Contract (i.e. a modification of the standard agreement which is adopted by both parties as a basis for the conclusion of the contract), the contractor becomes at the same time deprived of the possibility to obtain compensation in the event of the occurrence of circumstances which he could not have foreseen. What is surprising is the fact that the courts claim at the same time that in this manner, the parties are also excluding the application of the code-based regulations!
What is the basis for such claim? Unfortunately, the substantiations for judgments are of little usability. In many cases it is completely impossible to establish on what grounds the court would assume that the parties were willing to deprive the contractor not only of the possibility to adjust the remuneration based on Sub-Clause 13.8 (to which the contractor agreed by signing the Conditions of Contract amended by Particular Conditions, under which the application of the subclause has been excluded), but also of the possibility to change the agreement in the event of any extraordinary circumstances. It must be added that the scope of application of Sub-Clause 13.8 and art. 3571 and art. 362 § 2 of the PCC is different, and so are the effects of their application.
With the courts continuing to adopt such interpretation, one may only hope that soon it will be verified by the Supreme Court with effect in favor of the contractors. Otherwise, the courts will continue to interpret the provisions of the contracts against the will of the parties and the contractors will remain disillusioned as to whether they can retain any equality as regards incurring risk by the parties to the agreement.
It is also worth adding that the attitude of the public ordering parties is also changing in this regard. At present, Sub-Clause 13.8 is frequently retained in the Particular Conditions, yet with some slight modifications consisting in, inter alia, the introduction of the maximum adjustment amount. However, one will still not attach any importance to the relation between Sub-Clause 13.8 and the provisions of the Civil Code, which enable the contractor to demand an introduction of amendments to the agreement in case of achange in the circumstances.