Nejvyssi soud k vadam projektove dokumentace a zvyseni ceny dila

The Supreme Court on defects in the project documentation and the increase in the price of the work

Last year, the Supreme Court dealt with a case of a contract for work in which the price was agreed upon as fixed, maximum, and not to be exceeded, and its changes were possible only by a written amendment to the contract. After completion of the work, the contractor informed the client that one of the dimensions (kilograms of pipes to be dismantled) was incorrectly set in the project documentation at almost five hundred times lower than the actual extent. However, the contractor carried out the work, including dismantling of the pipeline in full, and demanded the client to conclude an amendment to the contract increasing the price of the work.

The client refused to enter into such an amendment and the contractor therefore brought the dispute before the court, before which it sought an increase in the price of the work in accordance with the legal regulation laid down in the Civil Code, according to which the court may decide on a fair increase in the price of the work if a completely extraordinary unforeseeable circumstance occurs which makes the completion of the work substantially more difficult.

Thus, in its decision 33 Cdo 301/2023, the Supreme Court addressed the question of whether an incorrect entry in the project documentation, and an incorrect one to a significant extent, constitutes an extraordinary unforeseeable circumstance that significantly hinders the completion of the work. It stated that such a completely exceptional and unforeseeable circumstance is constituted in particular by extraordinary cases such as natural disasters or war. In the Supreme Court's view, a defect in the project documentation does not constitute an extraordinary unforeseeable circumstance, even if such defect requires additional work.

The Supreme Court concluded that the project documentation for the work is, from the law's point of view, a part of the client's orders. Therefore, defects in the project documentation, such as the incorrect determination of the quantity of pipes to be dismantled in this case, are covered by the regulation of improper nature of an order. The correct course of action would have been for the contractor to draw the client's attention to the defects and, where appropriate, to suspend the work until the order was varied (in this case, presumably, an amendment to the contract and increasing the price of the work executed). If the client had insisted on performance according to the defective project documentation, the contractor would have been entitled to withdraw from the contract. Therefore, if the contractor dismantled the pipeline in its entirety, even though the project documentation indicated a significantly lower scope, without informing the client of this discrepancy between the project documentation and the reality, the contractor did not have the right to an increase in the price.

The decision provides important guidance on how to deal with cases of incorrectly prepared project documentation. The Supreme Court also mentioned other solutions that could be considered (unjust enrichment or so-called acting for the benefit of another person) but ruled all of them out. Thus, not only in the case of incorrect dimensions, but also in other cases of  errors in the project documentation, contractors should not rely on the client's willingness to increase the price of the work later but should immediately notify the client of the inaccuracies found.

If you are interested in more detailed information, please contact the authors of the article or other members of the EY team with whom you work.

Authors:

Jan Turek

Veronika Juhasová