What are the Contractor's Obligations in a Construction Contract According to the Saudi Civil Transactions Law?
Previously, a contractor's obligations were based on the terms of the agreed-upon construction contract, in addition to the principles of Islamic Sharia. With the issuance of the Civil Transactions Law in the Kingdom of Saudi Arabia, this law now plays a pivotal role in regulating construction contracts. In this article, we review the most prominent obligations of a contractor as stipulated in the new law.
First: Providing Building Materials and Defining Specifications in the Construction Contract
The Civil Transactions Law provides that the two parties can agree on who is responsible for supplying the building materials. This responsibility can be assigned to the contractor or delegated to the employer under the contract.
If the contractor is responsible, they are obligated to provide materials according to the conditions and specifications defined in the construction contract. In the absence of detailed specifications, the contractor must adhere to the commonly accepted standards in the market.
However, if the employer is responsible for the materials, the contractor must preserve them with care. The contractor is also obligated to return any surplus materials after the project's completion, as stipulated in Article Article 463 of the Law.
Second: The Contractor's Responsibility for Machinery and Equipment in the Construction Contract
The default principle is that the contractor bears the cost of providing the necessary machinery and tools to complete the work, unless explicitly agreed otherwise in the construction contract (Article 464).
Third: The Timeframe for Executing the Construction Work
The contractor is obligated to complete the work according to the specifications defined in the contract and within the timeframe agreed upon by the parties.
If the execution period or completion conditions are not specified in the construction contract, the contractor must complete the work within a reasonable period. This period is estimated based on the nature of the project and the accepted standards in the market.
These provisions are found in Article 465 of the Civil Transactions Law.
Fourth: The Contractor's Breach of Obligations
The employer has the right to terminate the construction contract if the contractor breaches their obligations as stated in the contract. However, a formal warning must first be issued to the contractor, giving them an opportunity to rectify the breach.
If the contractor does not correct the situation within the given timeframe, the employer has the right to hire another contractor to complete the work. The contract may also be terminated immediately if it is proven that the breach cannot be rectified, or if the delay in execution jeopardizes the project.
These provisions are based on what is stated in Article 466 of the Saudi Civil Transactions Law.
Fifth: The Contractor's Liability for Damage or Loss
If the works or materials are damaged before being delivered to the employer, without any fault on the employer's part, the contractor is not entitled to claim payment or reimbursement for expenses.
However, if the cause of the damage is due to the employer's fault, the employer bears the responsibility, and the contractor is entitled to appropriate compensation.
In the event of damage to materials provided by the employer, without negligence from the contractor, the contractor is not liable for compensation except in specific, exceptional cases.
These provisions are found in Article 467 of the Saudi Civil Transactions Law.
Sixth: The Contractor's Request for a Price Increase
In construction contracts based on a specific design, the contractor is not entitled to request an increase in payment due to rising prices or increased costs, unless modifications occur at the request of, or due to an error by, the employer and with prior agreement between them (Article 468).
Conclusion: It is always advisable to draft a clear and precise construction contract that considers the obligations of each party in accordance with the Saudi Civil Transactions Law. At Yaqeen Al Ferasah Company, we offer professional construction contract drafting services to guarantee the rights of all parties.
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