The Penalty for Delay in the Construction Contract

Abstract

A construction contract is a consensual agreement that becomes binding once the offer and acceptance match. The agreement covers two key aspects: the work to be completed by the contractor and the payment agreed upon by the employer. Building professionals and construction experts bear a specific responsibility regulated by civil law, known as the decennial liability, which is considered a matter of public policy. This liability is defined by several factors, including the presence of a construction contract and the task assigned to the contractor or architect being the construction of fixed structures or buildings. The contractor and architect's responsibility arises after the completion of the delivery; prior to that, the contractual relationship follows general liability rules. The contractor's commitment to completing the work by the agreed deadline is an obligation to achieve a result, not merely to make an effort. If the contractor or architect delays delivering the work without a valid excuse or prior notice, the employer may include a clause in the contract imposing a penalty for each day of delay or specify a lump-sum penalty as agreed. The purpose of this penalty is to compel the contractor to avoid delays and complete the work on time. The delay penalty serves as a warning, making the contractor liable for financial consequences (compensation) if they fail to deliver the work on time. However, contract execution might be delayed for reasons shared by both parties, such as the employer's delay in making payments or the contractor's failure to execute the work without written protest from the employer. In such cases, the contractor may be granted additional time to complete the work without incurring the delay penalty.