What are the main sources of law that govern and regulate contracts for the design or carrying out of building works?
In Angola, the contracts for execution of public works are mainly governed by the Public Procurement Law, enacted by Law No. 9/16 of 16 June 2016 with the corrections of the Rectification no. 23/16 of 27 October 2016 and the Presidential Decree No. 202/17 of 6 September 2017. Construction works that are procured by private (non-public sector) entities are governed by the Civil Code, approved by Decree-Law No. 47344, of 25 November 1966, as amended by Decree-Law No. 9/11, of 16 February 2011. Often, contracts for private works foresee the subsidiary application of the Public Procurement Law.
Australia is a ‘common law’ jurisdiction. This means that Australian law is derived both from ‘statute’ (Acts and legislative instruments of the Australian and State and Territory Parliaments made in accordance with Australia’s Constitution) and ‘common law’ (the decisions of the Australian Courts and tribunals, also known as ‘case law’).
In Australia, the areas of law which are relevant to building works are as follows:
Contracts for the delivery of work, including the delivery of building works, are, together with the rules of general contract law (as governed by Articles 1101–1369 of the Belgian Civil Code), primarily governed by Articles 1787 and the subsequent articles of the Belgian Civil Code. For example, the latter article governs the liability of the contractor or developer and the architect, and also deals with the event of a unilateral termination of a contract.
The mandatory Law of 9 July 1971, relating to house construction and the sale of houses to be or being built (and on execution of that piece of legislation, the Royal decree of 21 October 1971), plays a dominant role in regulating contracts relating to residential construction activities. This legislation implements a number of measures to assist purchasers. In relation to consumers, some of the mandatory provisions of Book VI – Market Practices and Consumer Protection of the Commercial Code (that came into force on 31 May 2014 replacing the Act of 6 April 2010), must also be taken into account.
The Law of 15 June 2006 regarding public procurement contracts and some contracts for the delivery of work, supplies and services and its implementation decrees must be taken into account with regard to the execution of construction works in the public sector, together with a number of specific regulations. As of 1 July 2013 this regulation changed quite substantially so that public procurement contracts are now governed by the Law of 2006 as well as various royal decrees.
The above laws and regulations are supported by additional sources of law, such as customs of the building industry, as well as relevant case law.
Belgian legislation does not separately deal with contracts for the design of work and therefore generally, the rules of general contract law are applicable to design work. Nonetheless, the Belgian Civil Code contains a number of articles which regulate the relationship between the architect and his principal.
Since the profession of an architect is, according to Belgian law, a regulated profession, an architect will principally also need to comply with a number of deontological or ethical rules, characteristic to the profession of an architect.
The Law on Obligations is the main source of legislation which regulates contracts for the design or carrying out of building works. Provisions of the Law on Obligations regulate all contractual obligations in this country.
Canada is a common law jurisdiction. This means that Canadian law is derived both from statute (Acts and legislative instruments of the federal Parliament of Canada and provincial and territorial legislative assemblies made in accordance with Canada’s Constitution) and common law (the decisions of the Canadian Courts and tribunals, also known as ‘case law’).
In Canada, the areas of law which are relevant to building works are as follows:
The main law governing and regulating contracts for the design and carrying out of building works is the Contract Law of the PRC (1999). The Contract Law and the interpretations of it by the Supreme People's Court set out rules relating to all aspects of contract law, including setting out the following fundamental principles of contract:
The Croatian Obligations Act (Zakon o obveznim odnosima, Official Gazette Nos. 35/05, 41/08, 125/11 and 78/15) regulates contracts for the carrying out of building works (building contracts) as well as contracts for the design of building works, which are in general considered to be service agreements. In addition, the code of practice in construction, which was adopted in 1977, is still applicable as a customary law source and is, in accordance with the general principles of the Croatian Obligations Act, applicable if the contracting parties (where both are commercial entities) do not exclude it or, where private individuals contract, where the parties agree that it will apply. However, due to technical and contractual developments since 1977, this code of practice lost its importance and a new code is being prepared to take into consideration current legislation and practice.
In the Czech Republic construction law is made up of several main bodies of law:
Various statutes and subordinate legislation (eg orders, ministerial and other types of regulation).
Subordinate legislation – ministerial decrees:
In Denmark, construction law is mainly based on the following bodies of law:
NB. AB Consumer – 'General Conditions for the provisions of works within building to consumers' (A standard form contract that takes into consideration that the employer is a non-professional party)
In general, the French legal system is based on constitutional laws, legislative codes and statutes. In particular, construction law is contained in the French Civil Code and the Housing and Construction Code.
Other types of law, such as employment law or environmental law, may apply depending on the use of the building to be erected.
Two bodies of laws regulate the material legal relationships between the parties to a construction contract:
Whilst the provisions of the Civil Code apply automatically, the application of the VOB/B must be expressly agreed as an integral part of the contract between the parties. However, a simple Civil Code contract is rarely used for complex building projects. Since 1 January 2018, the Civil Code has defined a construction contract, consumer construction contract, architect and engineer contract and the construction developer contract and partly provides special provisions for each of those contracts. For the first time, building contract law was codified as a separate area of law, taking into account the complexity of the construction process and its specific requirements.
Hong Kong is a common law jurisdiction, meaning that the law derives from judges' decisions and is developed by the courts. In Hong Kong, there is also legislation governing issues relating to construction safety and building works. In Hong Kong, construction law is made of five main bodies of law:
The main source of law is the Hungarian Civil Code (Act V of 2013) which contains the general provisions regulating contracts for the design and carrying out of building works (and contracts in general). As a main rule, these provisions are permissive, so the parties (such as the employer, contractor etc) are free to deviate from the rules contained in the Civil Code.
There are several other statutes directly governing and regulating construction law in detail. The most important of these include the Construction Act (Act LXXVIII of 1997), also known as the Formation and Protection of the Built Environment Act, Government Decrees Nos. 191/2009, 194/2009, 312/2012 and 266/2013.
Contract interpretation and guidance generally comes from long-established common law principles through the development of case law in court judgments. Also relevant is tort, a body of common law that may impose obligations on contracting parties outside the terms of the contract (unless restricted by the terms of the contract), for example, tort law may regulate the parties' liabilities for negligence.
Equity is a set of legal principles that provides discretionary remedies used by judges to achieve a fair and reasonable result in order to avoid injustice that might result from the strict application of common law. Equitable principles are developed through case law. In the context of construction contracts, equitable rights of rescission, rectification, restitution and set-off frequently arise.
Statute in Ireland comes in the form of the Constitution, Acts and Statutory Instruments. Acts and Statutory Instruments generally regulate a broad range of contracting parties' obligations and rights in relation to arbitration, public procurement, health and safety, criminal offences.
The main source of law regulating the design and carrying out of private building works is the Italian Civil Code and, in particular, section 1655 et seq., Law 1150/1942 and Presidential Decree 380/2001.
The main laws governing and regulating contracts for design and construction works are as follows:
General construction law is, in principle, governed by Dutch civil law, as codified in the Dutch Civil Code. The Dutch legislature has created a separate section in the Dutch Civil Code for a number of special agreements, including specific rules for general construction contracts.
In addition, Dutch construction law is created in detail by uniform general conditions or unilateral general conditions. For these conditions to apply, parties must explicitly or tacitly agree with these conditions.
Finally, public law lays down the rules regarding spatial planning and safety within which parties are permitted to carry out construction projects.
In Nigeria, common law principles and practices govern and regulate contracts for designs and building works. In a design or construction contract, the fundamentals of common law agreements, parties, intention, considerations etc must be in place. Many states in Nigeria have laws regulating contract and which laws are codifications of common law principles.
Designs and construction contracts due to their unique nature and technicalities usually contain terms that are standard and reflect the agreed construction process in standard uniform forms.
There are a number of local regulations governing designs and building construction works in Nigeria. These regulations specify the designs and building standards which the owners/developers, architects and building contractors must comply with when undertaking the construction works.
Aside the standard forms, construction contracts must not contravene the provisions of the relevant laws contained in the Urban and Regional Planning Laws, National Building Code, 2006, National Environmental Standards and Regulations Enforcement Agency Act, Environmental Impact Assessment Act, Public Procurement Act, and such other laws regulating the professionals engaged in the Construction Industry such as the Builders Registration Act, Engineers Registration Act, Quantity Surveyors Act and Architects Registration Act.
The main sources of law that govern and regulate contracts for the design or carrying out of building works are the different standard documents agreed and developed by contractors and builders in collaboration. Different standard documents apply depending on the type of work being undertaken. For instance, the NS 8405 is designed for a contractual relationship in which one party (the contractor) agrees to undertake building or civil engineering work for another party (the client), where most of the drawings, descriptions and calculations are to be provided by the client. NS 8407, on the other hand, is a classic procurement and construction (design and build (D&B) procurement) document.
Most of the standard documents have been interpreted by legal theory and case law.
In addition, the Planning and Building Act of 2008 (and its related regulations), lays down formal standards which apply to construction projects.
In Poland the following acts regulate contracts for the design and carrying out of buildings works:
In Portugal, the execution of public works is governed by Decree-Law No. 18/2008, of 29 January 2008, which enacted the Public Contracts Code ('Public Contracts Code') as amended by Decree-Law No. 149/2012, of 12 July 2012, Decree-Law No. 214-G/2015, of 2 October 2015, and Decree-Law No. 111-B/2017, of 31 August 2017. Construction works that are procured by private (non-public sector) entities are governed by the Civil Code, enacted by Decree-Law No. 47344, of 25 November 1966 ('Civil Code').
In Romania, contracts for the design or carrying out of building works are regulated by a special set of laws, in addition to the general rules contained in the Romanian Civil Code.
The most important pieces of legislation governing construction contracts are:
There are three levels of legislation in the Russian Federation: federal, regional and local. The major laws regulating construction are established at a federal level, and may be made more specific at the regional or local levels.
The federal laws regulating construction are:
Federal regulations relating to health and safety and quality of construction (including sanitation, environmental and fire-prevention rules) are set down in Federal law No. 384-FZ dated 30 December 2009 (“On technical regulations for safety of buildings and constructions”) and various codes on the safety of buildings and constructions issued by the government of the Russian Federation and competent Federal authorities.
European Law is incorporated into local law through binding acts adopted by the Slovak Parliament, together with subordinate legislation which specify the rights and obligations stipulated in those acts. Although Slovak national law does not recognize construction law as a special separate legal sector, the Building Act is considered to be the main base of legal regulation for construction law in the Slovak Republic. The Building Act is further implemented via several governmental orders.
The Building Act deals with the public relationships between private parties and local authorities. Contractual relationships between parties are regulated by the following Acts:
Another useful source in the field of carrying out building works is the Act on public procurement which governs the procurement of Public-Private Partnership (PPP) projects and other relevant issues. There are numerous secondary rules issued by the Government of the Slovak Republic and Ministry of Finance of the Slovak Republic concerning PPP projects in the construction industry.
Construction contracts in Spain are mainly governed by the Spanish Civil Code (chiefly in articles 1588 to 1600), which sets out the basics for the provision of construction services, and by the Spanish Building Act 38/1999 of 5 November 1999 (Ley de Ordenación de la Edificación) that governs the construction process, laying down the obligations and responsibilities of the various parties involved in the process. The Spanish Technical Construction Code (Código Técnico de la Edificación) provides for technical standards for buildings. Also to be taken into account are the Urban Planning Law of the region where the real estate is located and the relevant town council's building ordinances.
The main sources of law that govern and regulate contracts for the design or carry-ing out of building works are the Planning and Building Act (Plan-och bygglagen) the Law of Contracts (Avtalslagen) and the Consumer Service Act (Konsumenttjänstlagen).
The Civil and Commercial Code is generally regarded as the main source of law governing and regulating the specific contracts including construction contracts for building works. Its provisions stipulate the duties and liabilities of the contracting parties who enter into construction contracts.
In addition, the Building Control Act B.E. 2522(1979) and its accompanying ministerial regulations (collectively, the BCA) are the specific sources of law governing the process of application for building construction permits, restrictions on the construction of the building, safety, fire protection and various other aspects. Therefore, the BCA must be carefully considered by the developers or the contractors before commencing construction of a building.
The Town Planning Plan B.E. 2518(1975) and its accompanying ministerial regulations are the specific sources of laws governing town planning and the utilization of the land. The National Environmental Quality Act B.E. 2535(1992) and its accompanying ministerial regulations are the specific sources of laws governing environmental quality and environmental impact assessments. Consequently, it is also necessary for those laws to be considered by developers and contractors before planning the development of a project.
Announcement of the National Council for Peace and Order No. 3/2559 suspends certain restrictions under the general town and country plans to exclude the enforcement of the law on town planning and building controls in the area of special economic development zone by allowing the construction of industrial plants in areas declared as Special Economic Zones (SEZs). The provinces have been designated as SEZs are Chiang Rai, Kanchanaburi, Mukdahan, Nakhon Phanom, Narathiwat, Nong Khai, Sa Kaeo, Songkhla, Tak and Trat. This Announcement is however subject to change upon the authority’s discretion.
Abu Dhabi law is based on a civil law system which means that the law is developed though constitutions, legislative codes and statutes. Judges’ decisions may be referred to, but a judge’s decision is not considered law as it would be in a common law system.
Further, as Abu Dhabi is one of the emirates comprising the United Arab Emirates, it has a combination of law specific to the Emirate of Abu Dhabi and laws which apply to all of the emirates (called federal laws). In the case of construction law, the main sources of law are:
In addition to these two main sources of law, there are numerous other federal and Abu Dhabi specific laws which do not deal solely with contracts for building works, however they often affect these contracts. For example, the Labour Law [Federal Law No. 8 of 1980 (as amended)] which governs employment matters.
The law of the United Arab Emirates is based on the civil law system. The law of Dubai and the UAE is codified which means that a comprehensive legal framework has been established, and it is envisaged that it will govern most eventualities. The purpose of the system is to minimise the court's discretion, however previous decisions can be used as guidance, the courts and judiciary are not bound by precedent.
This system can be contrasted with the common law, where the legal framework is developed through judgments and precedents which bind the court. Legislation under the common law is concept based as opposed to the civil law which is far more prescriptive. The judiciary interpret the law depending on the facts of the case as the laws do not cover every eventuality, preferring to leave this to the court system.
Dubai, being part of the federation of the United Arab Emirates is bound by both federal laws and laws specific to the Emirate of Dubai. The construction specific laws are comprised of federal and emirate laws and regulations. The main federal law is the Civil Transactions Code Federal Law No. 1 of 1985 (as amended) ('the Code') which contains the general contract principles as well as a section on Muqawala which relates specifically on construction related matters.
In addition to the Federal laws, Dubai has numerous regulations, standards, codes of practice, guidelines and circulars issued by Dubai Municipality and the free zones of TECOM and JAFZA in relation to building standards in their relevant jurisdictions. These standards include building standards, environment, health and safety guidelines and other technical conditions.
Administrative Resolution No. 125 of 2001 concerning the adoption of Building Regulations and Standards provides a detailed technical discourse about how to build in Dubai Municipality governed areas. Similar standards are used in JAFZA and TECOM areas.
The main health and safety provisions fall under Federal Law No. 8 of 1980 (as amended) ('the Labour Law'), as well as all employment related matters in addition to numerous regulations, codes of practice and specific technical guidelines.
Although European law is transposed into local law through statutes, the legal system in England and Wales is based on common law. This means that the law and corresponding legal system derives from judges’ decisions and is developed by the courts and similar tribunals (called case law), rather than through constitutions or legislative codes and statutes.
In England and Wales, construction law is made up of six main bodies of law:
Although European law is transposed into local law through statutes (and will, insofar as already incorporated into UK law, continue to apply following ‘Brexit’), the legal system in Scotland applicable to work in the construction sector is largely based on common law. This means that the law and the corresponding legal system derives from judges’ decisions and the authoritative works of certain institutional writers of the 17th and 18th Centuries (including Stair, Erskine, Bell and Kames) and is developed by the courts and similar tribunals (case law), rather than through constitutions or legislative codes and statutes.
In Scotland, construction law is made up of six main bodies of law:
Construction issues in Ukraine are regulated by a number of laws, subordinate legislation (on state and local levels) as well as by different construction regulations which are not legally binding, but are widely used in practice.
At state level, the main sources of construction law are as follows:
Following Ukraine's ratification of the EU Association Agreement, on 16 September 2014, current legislative initiatives in Ukraine are aimed at the further deregulation and simplification of the construction permit system in line with European legislation and practice.
The US has three branches of government: judicial, legislative, and executive. Each branch contributes to the body of law governing design and construction contracts. Those main sources of law are common law, statutory law, and regulatory and administrative law, described below. A construction project may be subject to different laws, depending upon, among other conditions, whether the project is private or public, the jurisdiction in which the project is located, and the nature of the project.
Common law, created by the judicial branch of government, consists of published decisions made by courts and certain other tribunals deciding disputes between parties. A judge charged with deciding a case is obligated to employ the same reasoning as previous judges who sat in superior courts within the same jurisdiction as the current case is being heard and must reach a decision consistent with what was decided in those former cases (decisions in cases that are not superior or are outside the jurisdiction may be persuasive but are not binding). This method of deciding a case, called stare decisis, creates a unified body of law referred to as common law.
Statutory law, created by the legislative branch of government, consists of laws made by legislatures at the national, state, and local levels. The resulting laws are referred to as statutes. A group of statutes on the same topic, for example, design or construction, can be grouped or arranged together, resulting in a ‘code’ or an ‘act’.
A legislature can create statutes for a multitude of reasons, including: to create new law; to change existing law; to supplement existing law; to shape emerging law, including law made by another branch of government; or to codify common law. If a dispute arises involving a statute that the parties cannot otherwise resolve, a judge from the judicial branch of government will interpret the statute and resolve the dispute based on common law.
Regulatory and administrative law, created by the executive branch of government, consists of rules and regulations made by governmental agencies at the national, state and local levels. The relationship between regulatory/administrative law and common law is similar to the relationship between statutory law and common law. If a dispute arises that the parties cannot otherwise resolve, a judge from the judicial branch of government will interpret the rule or regulation and decide the dispute based on common law.
Zimbabwe’s legal system is based on Roman Dutch law. Contracts for the design or carrying out of building works are governed by common law. The relevant local authorities have powers to designate the design and carrying out of building works in their jurisdictions. The local authorities have stipulated building standards through model building by-laws which parties must incorporate in their agreements for the design or carrying out of building works.