Is a formal, signed, Building Contract necessary?
This will generally depend on the value and complexity of the works being considered. There is no legal requirement for the parties to enter into a formal Building Contract.
Types of Building Contract
The type of Contract selected will depend on the amount of information available at Tender stage, and how quickly the Employer wishes the works to commence on site.
There are three types of Building Contract:
- Lump Sum
- Cost Plus (Lump Sum or Percentage fee)
Purpose of the Building Contract
The Building Contract, or ‘Private Agreement’ as it is commonly known, should clarify:
- Building Permit and Licence Numbers,
- Carrying out the works - scope, start date, design responsibility and completion,
- Control of the works - role of the Architect/Engineer,
- Payment terms - valuation rules and timescales,
- Retention - on each interim payment, usually 5% which is released by the Employer on provisional acceptance and hand over of the works),
- Variations/Change Control Procedures for instructing changes to the scope/quality of the work,
- Insurances - Employer’s and builder’s liability and responsibility for insuring,
- Termination - situations under which the contract might come to an end, and procedures to be followed in that event,
- Settlement of disputes - when, and by whom, are these to be resolved,
- Liquidated Damages (or ‘Penalty Clause’) - if agreed by both parties, this must be reasonable, and not excessive,
- I.K.A (National Insurance) - method and timing of payments.
The 'bottom line' is that you should have an agreement between yourself and the Contractor that it is enforceable by the Greek Courts.
Form of Building Contract
We have developed a ‘standard’ Building Contract or Private Agreement which is suitable for use with Lump Sum ‘new build’ or ‘renovation’ projects, which has been approved by our Greek Lawyers.