What types of construction contracts exist under Bulgarian law and international practice?
As we said earlier, it is important to distinguish between contracts in construction and construction contracts, because the first concept covers the entire “contract puzzle” around a project, while the second is only one of its key pieces 🏗️. In practice, a single project may run in parallel with a design contract, contracts for the supply of materials and components, a construction supervision contract, contracts for repair and finishing works, and more complex “mixed” agreements. By contrast, a construction contract in the narrow sense is the one where a specific final material result is owed—expressed as a new immovable property or a substantial improvement of an existing one—in exchange for remuneration, following the contract-for-work logic under Article 258 of the Obligations and Contracts Act (ЗЗД).
The “true” construction contract
A construction contract in the narrow sense is a type of contract for work where the subject is not the labour process or its organisation, but the final result the builder must deliver—such as a completed building, a separate unit within a building, or a stage of the works. The key difference compared to other forms of work contracts is that the result is always material, and it is linked to creating a new immovable property or substantially upgrading an existing one, which places the agreement in a field of strong statutory and documentary discipline.
Remuneration is structural and inseparable from this model, because payment is built into the concept of Article 258 ЗЗД, and in that sense the construction contract has no “gratuitous equivalent.”
Where the parties have clearly agreed on the subject matter but the price is not fixed with precision, practice allows remuneration to be determined based on the “actual” prices for the period of construction, rather than triggering the disruptive outcome of pushing the entire relationship into unjust enrichment. This distinction matters because an approach of “no contract exists” would lead to settlement through the return of what was received under an invalid contract under Article 34 ЗЗД in connection with Article 55(1) ЗЗД, which in practice shifts the yardstick from “ordinary profit” to “documented costs,” especially given that the builder is not a possessor and the improvement rules under Articles 72–74 of the Ownership Act (ЗС) do not apply.
The construction contract is commonly understood as causal and bilateral, meaning the parties’ obligations are mutually conditioned and each party undertakes its obligation as the legal basis for the counter-performance. From this follow typical non-performance tools, including the right to refuse counter-performance, because the genetic and functional link between the performances is part of the nature of a bilateral agreement, while “causal” reflects the idea that if the intended legal outcome collapses, the contract’s legal support is undermined.
The construction contract is also consensual, meaning it arises once there is agreement on its content, without any additional act being required as a condition for its formation. In that sense, the existence of a detailed development plan, the approval of an investment project, and the issuance of a building permit are preconditions for accurately defining the subject matter and for making performance possible, but they are not elements of “concluding” the contract itself. Actions such as handing over the construction site and protocols for construction line and level belong more to the performance phase than to the contract’s formation.
Construction is often described as having a more strongly expressed element of aleatoriness, meaning uncertainty regarding benefit and the exact scope of counter-obligations at the moment of contracting. This is because additional works, technological changes, mandatory instructions, and shifts in material and labour prices may arise after signing, potentially affecting remuneration under Article 266(2) ЗЗД. The idea is not that the contract is “a gamble,” but that construction naturally unfolds over time and is exposed to external pressures, which also explains why it is frequently treated as a contract of continuous performance and why termination (rescission) typically does not have retroactive effect for such contracts under Article 88(1), first sentence ЗЗД.
As a rule, the construction contract is concluded with regard to the person of the builder, which in practical terms means the employer chooses a contractor because of professional capacity, organisation, equipment, and qualified specialists, not simply “anyone.” This matters both for the risk of mistake as to the person and potential voidability in certain scenarios under Article 28(1), second sentence ЗЗД, and for the limits of re-delegation. The law allows the use of subcontractors for specific types of construction and installation works under Article 163(4) of the Spatial Development Act (ЗУТ), but the logic of “specific types” is that the builder is not freely replaceable for everything, and subcontracting is conceived as controlled distribution of specialised parts.
At the same time, the requirements for those who perform construction activities are placed at statutory level, including through the rules of Article 229(1)–(2) and Article 231 ЗУТ, reinforcing that the builder’s qualities are legally relevant and expected by the regime.
In the classical sense, the construction contract is generally not a contract with transfer effect, because the builder does not “sell” what is built to the employer. Under a true construction contract, ownership of what is built is acquired by the employer originally through accession under Article 92 ЗС, regardless of who supplied the materials. In repairs and improvements, ownership of incorporated materials is acquired by attachment under Article 97 ЗС, because the existing object is the principal thing. This is a fundamental difference from agreements where a transfer of rights is the central objective and follows a different logic.
What are the main categories of construction-related contracts commonly used in Bulgaria?
When speaking about “contracts in construction” in the broad sense, we mean different contract types that are closely linked to the construction process, but not all of them are construction contracts in the narrow sense. Typical groupings can be outlined as follows, each with a different centre of risk and different rules on quality, acceptance, liability, and documentation:
- a design contract, which is essentially a contract for work, but the subject is an intellectual product—an investment project—rather than a material construction result
- supply contracts for construction materials and components, following the logic of commercial sale
- a construction supervision contract, closer in nature to a services contract within construction
- repair and finishing contracts, which may have construction features but are usually smaller in scope and often do not require an investment project or the full “site regime” typical of construction works
- mixed contracts such as construction plus preliminary sale, construction entrepreneurship, and engineering, which combine elements from several contract types
This distinction matters because otherwise a wrong legal classification follows, and with it the wrong rules on acceptance, liability, risk, rescission, and remuneration.
Construction plus preliminary sale
A contract for construction and preliminary sale of an immovable property is often marketed as a “sale of a finished construction product” or a “sale of a future property,” but it is not a true construction contract because the ordering buyer is not an employer under Article 161(1) ЗУТ and is not the landowner or a holder of a building right. Here, the buyer mainly has a legal expectation to acquire ownership later, holding a formative right to demand transfer of ownership under Article 19(3) ЗЗД through the procedural route of Articles 362–364 of the Civil Procedure Code (ГПК), which is typical preliminary-contract protection.
The legal qualification is delicate and may shift between three ideas: a contract for work, a sale of a future thing, or a mixed contract. The practical issue is not academic, because it affects whether payments are treated as remuneration for work, as price for a future thing, or as a combination, and it influences risk allocation for accidental events and liability for defects. Form is also different here: because there is a preliminary-sale part, written form is required for validity under Article 19(1) ЗЗД, not merely for evidentiary strength.
“Property in exchange for construction”
A contract for transfer of an ideal share in immovable property and/or establishment of a building right in exchange for an obligation to construct is very close to the true construction contract, but with a key difference in the counter-performance. Instead of cash, remuneration is “property compensation,” meaning real rights transferred or established in favour of the builder. This model is typically used where the owner cannot finance construction, and the builder assumes the economic burden in exchange for receiving certain units or shares.
Two qualifications are possible, but the more natural logic is to view construction as the characteristic performance and the agreement as a work contract whose equivalent is non-cash remuneration, which fits the broader notion of “remuneration” under Article 258 ЗЗД, unlike “price” under Article 183 ЗЗД, which carries a stronger association with money. Form, however, becomes formal for validity: where real rights over immovable property are transferred or established, a notarial deed is required under Article 18 ЗЗД, and the real-right effect and sequencing of performances are also influenced by the transfer rule in Article 24(1) ЗЗД for contracts transferring ownership or establishing real rights over specific things.
Construction entrepreneurship
A construction entrepreneurship contract contains parts of the “classic” construction contract but develops as a complex agreement that may include organisation, services, brokerage, sale, and other elements. Historically, the notion of a “construction entrepreneur” was used for a figure organising the project and mediating, including ensuring participants and steps up to commissioning, and regardless of legislative terminology shifts, practice continues to use this model for complex projects.
In a narrower practical sense, it often differs from the ordinary construction contract mainly quantitatively, because the entrepreneur typically engages subcontractors for nearly all works. This does not automatically remove it from the construction-contract sphere, because toward the employer the main contractor remains responsible for subcontractors’ actions as for his own, and subcontracting specific works is expressly allowed under Article 163(4) ЗУТ.
Engineering contract
The engineering contract is used for large and complex objects where the subject is “turnkey” and goes beyond pure construction. It commonly includes design, construction, supply and installation of machinery and equipment, testing, and commissioning, and sometimes achieving pre-set parameters and capacity. Legally, it is a mixed contract incorporating a construction contract, a design contract, a supply-and-install contract, and services.
A key difference from the true construction contract is the distribution of responsibility for design and materials. Under engineering, the contractor designs and assumes responsibility for the fitness of the design and compliance with technical and statutory requirements, and also provides materials and components. This changes the ability to raise objections about “unsuitable design or material” under Article 260(1) ЗЗД, because the contractor is not simply executing a design provided by the employer. In the supply-and-install part, the distinction between liability for a sold thing with defects and liability for defective performance becomes relevant, with sale rights under Article 195 ЗЗД, work-contract remedies following Article 265 ЗЗД, and where the employer’s design is the cause and the contractor warned in time, the rule in Article 267(2) ЗЗД becomes significant.
What is the significance of written form in construction contracts?
As a rule, a construction contract is informal in terms of validity, but written form has enormous practical and evidentiary value. The requirement that relationships between construction participants be arranged in written contracts under Article 160(2) ЗУТ and the idea of a written contract between employer and contractor under Article 163(1) ЗУТ are understood as form for proof and as an expression of the documentation principle, rather than a universal validity form. Practically, the contract is presented when opening the construction site under Article 157(2) ЗУТ and is used in the procedures for acts and protocols, including Act template 15 and Protocol template 16 under Ordinance No. 3 of 2003, which means the legislator expects a document that “incorporates” the parties’ will.
Where the counter-performance includes transfer or establishment of real rights, the contract becomes formal on another ground and must be executed in notarial form under Article 18 ЗЗД. Separately, in public procurement, written form is required for validity under Article 112(1) of the Public Procurement Act (ЗОП), showing that the legislator uses “validity formalism” specifically where public interest is protected.
What does “true” versus “non-true” construction contract mean?
As we said earlier, it is crucial to distinguish between contracts in construction and construction contracts, because not every agreement connected with a project is a “true” construction contract in the legal sense. This distinction determines which rules apply, whether the special regime under the Spatial Development Act is engaged, whether mandatory documentation under Article 170 ЗУТ applies, and who bears the typical “construction” liability.
A true construction contract is the one that carries all characteristic features of a contract for work under Article 258 ЗЗД, but with the specific construction subject—creating a new immovable property or substantially improving an existing one. Its core markers include the employer being the landowner or building-right holder under Article 161(1) ЗУТ, the object being individualised through an approved investment project, the contractor being a construction participant under Article 160 ЗУТ, performance being subject to mandatory documentation under Article 170 ЗУТ and Ordinance No. 3 of 2003, and completion being followed by commissioning under the regime of Article 177 ЗУТ.
Contracts “property in exchange for construction” are often placed close to this group because, although remuneration is non-cash and notarial form under Article 18 ЗЗД is required, the economic and legal core remains construction in exchange for remuneration.
Non-true or “quasi” construction contracts contain many elements of the true construction contract but do not fully match its structure. They either combine construction with other legal elements or change the parties’ roles. Typical examples include construction plus preliminary sale, construction entrepreneurship, and part of repair and finishing contracts. In construction plus preliminary sale, the ordering party is not an employer under Article 161(1) ЗУТ but a future buyer relying on preliminary-contract mechanisms under Article 19 ЗЗД and Articles 362–364 ГПК, and written form for validity under Article 19(1) ЗЗД applies.
Finally, there are contracts related to construction but not construction contracts in the narrow sense, such as design, supply, and supervision agreements. They support the project but do not contain the characteristic obligation to deliver a constructed object as a final material result.
Which aspects of a construction contract’s content are essential?
“True” construction contracts should account for eight core aspects, because each one changes the risk profile, control mechanics, documentation, and even the property-law consequences.
The object
The first aspect is the type of object to be built. This matters in practice because different objects trigger different technical and construction rules, and sometimes point to special regimes under sectoral laws. A typical breakdown includes residential and administrative buildings, industrial and warehouse buildings, road facilities, technical infrastructure objects, energy objects, and others. These categories are not mere labels—they shape what “proper performance” means and what compliance and control look like.
Rights over the land
The second aspect is whether the employer is the owner of the land or a holder of a building right established by the landowner. The legal consequences are most visible when construction deviates from the detailed development plan or the approved investment design and ends up “building more than permitted.”
If the employer is the landowner, they acquire the excess construction through accession as landowner. If the employer is a superficiary, construction that exceeds the scope of the building right is acquired by the landowner, again through accession. This changes both the economics of the project and the leverage points in disputes about payment and responsibility.
Commissioning
The third aspect is how the object is put into operation, which depends on the construction category under Article 137(1) of the Spatial Development Act (ЗУТ).
For category 1–3 constructions, commissioning follows the route of a permit for use under Article 177(2) ЗУТ, issued on the basis of Protocol template 16. For category 4–5 constructions, an operational commissioning certificate is issued under Article 177(1) ЗУТ based on the final report of the construction supervision entity. The procedural detail is linked to Ordinance No. 2 and the documents under Ordinance No. 3 of 2003.
Construction supervision
The fourth aspect is whether the contract and the object require mandatory construction supervision performed by a consultant under Article 166 ЗУТ. Mandatory supervision again depends on the category of the construction, with exceptions appearing for specific category-5 scenarios.
This is not an administrative footnote. Supervision affects how compliance is tracked day-to-day, generates mandatory instructions and documents, and later becomes highly relevant in private-law disputes.
Materials
The fifth aspect is who provides the materials and components. In a true construction contract, the employer always provides the “main material”—the land or the existing object—because by definition the employer is the owner or the holder of the building right under Article 161(1) ЗУТ.
Other materials are typically provided by the builder, but the parties can allocate this contractually. This is not only about money. It also has property-law implications because it affects how ownership over incorporated materials is treated and how risk is allocated when defects or non-conformities appear.
Subcontractors
The sixth aspect is the use of subcontractors. Contracts may be structured so the builder assigns specific works to subcontractors, or so the builder performs everything with its own equipment and workforce.
Subcontracting is widespread and expressly permitted under Article 163(4) ЗУТ, but it does not change the idea that the contract is concluded with regard to the person of the builder and that the builder remains responsible to the employer for subcontractors’ actions as for its own.
Whether the result is a separate object
The seventh aspect is whether the final result is a separate object of civil circulation. If the contract produces a new immovable property that can be transferred independently, this changes the project’s economic function and the structure of subsequent transactions.
If the subject is an improvement of an existing building or of separate units, the result may not constitute a new standalone object and instead “merges” into the principal thing, which affects how parties plan securities, sales, and investment structures.
Remuneration in money or in rights
The eighth criterion is whether remuneration is paid in money or in real rights.
With monetary remuneration, written form under Article 160(2) and Article 163(1) ЗУТ is generally treated as proof-focused, and the typical sequence is that the builder performs first and the employer pays for the accepted work under Article 266(1) ЗЗД.
Where remuneration is through transfer or establishment of real rights, the agreement requires notarial form under Article 18 ЗЗД, and the sequence often effectively “reverses” because the real-right effect follows the rule in Article 24(1) ЗЗД for contracts transferring ownership or establishing real rights over specific things. In practice, this means the builder receives rights earlier and the employer must manage risk through guarantees, control mechanisms, and documentary instruments.
Administrative intervention
A decisive “over-criterion” shaping the entire environment is the strong administrative intervention in construction. This means that certain contractual duties have both private-law and administrative dimensions—non-performance can trigger not only contractual liability but also findings, mandatory orders, and sanctions from control bodies, including measures such as stopping or removing construction.
This is also why the contract has an exceptionally large “natural content,” meaning many rules enter the relationship through mandatory law regardless of how detailed the parties’ wording is.
Documentation
The documentation principle is a defining feature of construction and is legally mandated. Article 170(1) ЗУТ requires that all circumstances related to the project—handover and acceptance of the site, works that will be covered, acceptance and handover acts, and more—are documented by the parties, and that instructions are recorded in the order book.
This documentary regime is why, in real life, construction contracts are almost always written and “attached” to a system of protocols, acts, and certificates—without them, payment, acceptance, defects, and deadlines become difficult to prove.
What should a construction contract – and respectively a subcontract – contain?
A properly drafted construction contract is not a formal document for the file archive, but a risk, finance, and liability management tool 🏗️⚖️. It must simultaneously comply with the Obligations and Contracts Act (as a contract for work) and the Spatial Development Act (as the special regime governing construction participants).
Under Article 258 of the Obligations and Contracts Act (ЗЗД), the contractor undertakes to produce something “at his own risk” in exchange for remuneration. Under Article 160(2) of the Spatial Development Act (ЗУТ), the relationships between construction participants must be regulated by written contracts. This means the content must be detailed, clear, and provable.
Below are the mandatory and strategically necessary elements.
I. What should a construction contract contain?
The construction contract is the core agreement in the investment process. It should cover the entire lifecycle of performance—from commencement to warranty liability.
1️⃣ Parties and legal basis
- Full identification of the employer (landowner, building-right holder, or person legally entitled to build)
- Identification of the contractor (capacity, registration in the Central Professional Register of Builders)
- Legal basis for construction – issued construction documents (approved design, building permit)
2️⃣ Subject matter of the contract
- Clear description of the construction object
- Reference to the approved investment design
- Scope of construction and installation works
- Attachments: bills of quantities, technical specifications, drawings
The subject must be precisely defined because in case of dispute the court examines whether the delivered result corresponds to what was contractually agreed.
3️⃣ Deadlines ⏳
- Starting date (e.g., after building permit issuance, site handover protocol, etc.)
- Completion deadline
- Interim milestones
- Conditions for extension
- Force majeure regulation
Time is not a technical detail—it is directly linked to liability and penalties.
4️⃣ Remuneration and payments 💰
- Type of price (lump sum, unit prices, estimated price)
- Advance payment
- Interim payments
- Retention amounts
- Indexation mechanism
- Conditions for price adjustment
These clauses must be aligned with Article 266 ЗЗД, which links payment to acceptance of the work.
5️⃣ Acceptance of construction and installation works
- Interim acceptance procedures
- Final acceptance procedure
- Acts and protocols
- Consequences of refusal to sign
- Time limits for objections
Acceptance is legally decisive because it triggers payment and starts certain liability periods.
6️⃣ Guarantees and defect liability 🛠️
- Warranty periods (not shorter than statutory minimums under the Spatial Development Act regime)
- Notification procedure
- Deadline for remedy
- Employer’s right to repair at the contractor’s expense
These clauses must be coordinated with Article 265 ЗЗД and the statutory warranty framework under the Spatial Development Act.
7️⃣ Penalties and damages
- Delay penalties
- Liability caps
- Termination penalties
- Performance guarantees (e.g., bank guarantees)
8️⃣ Subcontractors
- Whether subcontracting is permitted
- Employer approval mechanism
- Explicit preservation of contractor’s full liability
Under Article 163(4) ЗУТ, subcontracting is allowed—but it does not release the contractor from responsibility.
9️⃣ Author’s supervision and construction supervision
- Link to the author’s supervision agreement
- Binding nature of instructions
- Procedure in case of disagreement
Supervision instructions may affect both technical execution and contractual risk.
🔟 Termination and rescission
- Grounds for termination
- Procedure
- Financial settlement
- Regulation of partial performance
Because construction contracts are typically of continuous performance, rescission rules under Article 88 ЗЗД must be considered carefully.
II. What should a subcontract contain?
The subcontract should function as a back-to-back instrument aligned with the main construction contract. Any inconsistency between the two creates risk for the main contractor.
1️⃣ Identification of parties
- Contractor (main contractor)
- Subcontractor (with specific technical and professional capacity)
2️⃣ Subject matter
- Clearly defined construction and installation works
- Explicit reference to the main contract
- Attached bills of quantities and specifications
The subcontract must not expand or contradict the main contractor’s obligations.
3️⃣ Deadlines
- Synchronized with the main schedule
- Delay sanctions
- Coordination duties
4️⃣ Remuneration
- Calculation method
- Payment conditions
- Whether payment is linked to employer payment
This is a strategic clause: “pay-when-paid” mechanisms must be clearly drafted to avoid invalidity or imbalance.
5️⃣ Quality standards and warranties
- Required performance standards
- Defect procedure
- Warranty liability toward the contractor
Warranty periods should mirror the main contract to protect the contractor’s recourse rights.
6️⃣ Liability
- Recourse liability
- Indemnification obligations
- Liability caps
The subcontract must allow the contractor to recover sums paid to the employer due to the subcontractor’s fault.
7️⃣ Documentation and proof
- Acts and protocols
- Certificates
- Compliance with approved design
Without documentation, recourse claims become difficult to prove.
8️⃣ Insurance and security
- Professional liability insurance
- Performance guarantees
- Advance payment guarantees
9️⃣ Termination
- Grounds for termination
- Consequences
- Settlement of completed works
⚖️ The key principle
The construction contract governs the relationship “externally” – between employer and contractor.
The subcontract governs the relationship “internally” – between contractor and subcontractor.
But the two must function as a coherent legal system.
A well-drafted structure ensures that risk flows logically from the employer to the contractor and from the contractor to the subcontractor—without gaps, overlaps, or hidden liabilities.
What is the liability for defects and the warranty liability of the contractor and subcontractor under the law and under a well-drafted contract?
Liability for defects and warranty liability in construction are complex because they combine the general regime of the contract for work under the Obligations and Contracts Act (ЗЗД) with the mandatory warranty framework under the Spatial Development Act (ЗУТ) 🏗️⚖️.
To understand the full scope of this liability, several stages must be distinguished:
liability before acceptance, liability for apparent and hidden defects, statutory warranty liability after acceptance, and recourse liability between contractor and subcontractor.
Under Article 261 ЗЗД, the contractor must perform the work so that it is fit for its ordinary or contractually agreed purpose. “Ordinary purpose” means that the construction must be objectively suitable for normal use according to its type—for example, a residential building must ensure structural stability, safety, weather protection, and habitability. “Agreed purpose” refers to specifically negotiated characteristics—such as a defined energy efficiency class, special load-bearing capacity, or compliance with industry-specific technical standards. If the building fails to meet these criteria, there is defective performance.
The regime of defects is governed by Article 265 ЗЗД. If the completed work has defects or deviates from the order, the employer may request:
- rectification at the contractor’s expense
- reduction of the remuneration
- rescission of the contract in case of substantial defects
The statute provides special time limits. Under Article 265(3) ЗЗД, the employer’s rights are extinguished if not exercised within six months of discovering the defect. However, for construction works, the period is five years. This five-year period is of particular importance and has the nature of a preclusive term—once expired, the right is lost.
Acceptance of the work is legally decisive. Under Article 266(1) ЗЗД, remuneration is due for the accepted work. At acceptance, the employer must inspect the work and raise objections regarding apparent defects. If no objections are raised, the work is deemed accepted without reservations as to visible defects. Hidden defects—those that could not be discovered during ordinary inspection—may be claimed within the statutory time limits.
After acceptance, statutory warranty liability under the construction regime begins. Pursuant to Article 160(3) ЗУТ, warranty periods for construction and installation works must not be shorter than the statutory minimums established by secondary legislation. The parties may agree on longer periods, but not shorter ones.
In practice, minimum warranty periods vary depending on the type of work—for example, structural elements may have warranty periods reaching up to ten years, while installations and finishing works may have shorter statutory minimums.
It is essential to distinguish two layers of liability:
Before acceptance, the contractor bears full contractual risk for proper and complete performance.
After acceptance, warranty liability covers defects that appear within the warranty period and are due to improper performance.
With regard to subcontractors, Article 163(4) ЗУТ allows the contractor to assign specific types of construction and installation works to subcontractors. However, this does not release the contractor from liability toward the employer. The contractor remains fully responsible for performance and warranty compliance vis-à-vis the employer.
If a defect results from subcontractor work, the employer claims against the contractor. The contractor then exercises recourse rights against the subcontractor under their agreement.
In a well-drafted contract, warranty liability is operationalised through a clear procedure:
- written notice of defect
- defined response period (e.g., 7 or 14 days)
- reasonable period for rectification
- employer’s right to remedy at contractor’s expense in case of inaction
- retention amounts or warranty guarantees 💰
In the subcontract, warranty clauses must be “back-to-back” with the main contract—mirroring warranty periods, quality standards, and recourse mechanisms. Otherwise, the contractor may be exposed to liability without effective recovery.
Time limits are critical. The five-year period under Article 265(3) ЗЗД for construction works runs from discovery of the defect, but it operates within the broader framework of statutory limitation under Article 110 ЗЗД, which sets a general five-year limitation period for claims unless otherwise provided. Correctly fixing the starting moment—typically the date of acceptance protocol—is crucial.
In construction, liability for defects is not only a matter of compensation. It directly affects financing, insurance, project resale, and regulatory compliance. This is why detailed contractual structuring of defect and warranty mechanisms is one of the most important elements of risk management.
How are remuneration, indexation, and additional construction works negotiated?
Remuneration is an essential element of the construction contract because the agreement is onerous and its economic purpose is realised through the price and payment mechanism 💰🏗️.
The parties are free to structure remuneration, most commonly as a monetary amount, but it may also take non-monetary form, including transfer of real rights over parts of the constructed property.
Written form is the standard in construction practice, not only because Article 160(2) ЗУТ requires written contracts between construction participants, but also because evidentiary limitations under procedural law make written price clauses indispensable.
The amount of remuneration may be:
- fixed (lump sum)
- based on unit prices applied to measured quantities
- estimated or determinable through methodology
Even when the price is fully fixed, it may be adjusted under Article 266(2) ЗЗД if the officially determined prices of materials or labour change during performance.
Indexation in construction refers to a contractual or statutory mechanism allowing adjustment of remuneration when cost components change significantly 📈. The legal reference point is Article 266(2) ЗЗД, which provides that if during performance the duly determined price of materials or labour changes, remuneration is adjusted accordingly, even if agreed as a lump sum.
Court practice treats this rule as dispositive, meaning that parties may regulate indexation differently. A well-drafted contract therefore includes a specific formula—often linked to statistical indices or objective market indicators—to avoid uncertainty.
Additional construction and installation works fall into two main groups:
First, works that are technologically necessary or required by lawful mandatory instructions in the construction process (e.g., from the designer exercising author’s supervision, the construction supervisor, or control authorities). Such works are considered part of the agreed remuneration and are payable by the employer.
Second, works resulting from voluntary project changes or optimisation. These require amendment of the contract, usually through a written addendum, because they alter scope and budget.
Payment structures are contractually flexible and may include:
- advance payments (often secured by a bank guarantee)
- interim payments linked to certified progress
- retention amounts serving as performance security
- final payment upon final acceptance
Acceptance under Article 264 ЗЗД means the legal and factual act by which the employer reviews the completed works and raises objections for improper performance. If no objections are raised, the work is deemed accepted. Hidden defects must be notified immediately upon discovery unless the contractor already knew of them.
Retention mechanisms are common: a percentage of each payment is withheld as security for proper performance and defect rectification. Typically, half of the retained amount is released at completion, and the remainder after the defect liability period expires.
In public procurement contracts, price modifications follow a special regime under the Public Procurement Act (ЗОП), including restrictions under Article 116 and inflation-adjustment mechanisms under Article 117a, often with percentage caps and reporting requirements.
Why trust a construction law attorney from BSLC for drafting and reviewing construction and subcontracting agreements?
Entrusting a construction law attorney from BSLC with drafting and reviewing construction and subcontracting contracts means reducing legal and financial risk before the first excavation begins.
Construction contracts are not ordinary civil agreements. They stand at the intersection of:
- the Obligations and Contracts Act
- the Spatial Development Act
- secondary legislation and technical standards
- commercial law
- and often public procurement rules
An attorney who systematically works in the construction sector understands:
- the specifics of Articles 258–269 ЗЗД
- the written-form and documentation requirements under Articles 160, 163, and 170 ЗУТ
- warranty regimes and defect liability
- subcontracting structures and derivative liability
This knowledge translates into concrete contractual clauses that protect your interests.
A BSLC construction lawyer will focus on details that are often underestimated but later generate serious disputes, such as:
- precise definition of the subject matter through reference to approved design and bills of quantities
- structured remuneration and indexation mechanisms
- clear acceptance procedures and objection deadlines
- risk allocation in cases of delay, force majeure, or administrative acts
- warranty management and defect-remedy procedures
- properly aligned subcontract clauses ensuring effective recourse
For subcontracting arrangements, the protection is even more delicate. The main contractor remains liable toward the employer but must secure robust recourse mechanisms against subcontractors. Without careful drafting, the contractor may end up paying the employer without realistic recovery options.
Working with a specialised construction lawyer means thinking strategically—not merely “having a contract,” but having a contract that functions in real construction conditions: inspections by control authorities, issuance of Acts 15 and 16, hidden defect claims, delayed payments, or litigation.
In construction, project values are high, deadlines are tight, and pressure is constant. Legal certainty is not a formality—it is a core risk-management instrument. Choosing a construction law attorney who understands both doctrine and practice is therefore an investment in the stability of the entire project.
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