LATVIA Law and Practice Contributed by: Jānis Kārkliņš, Annija Kārkliņa, Ēriks Krēsliņš and Rihards Strads, BERG
6.23 Remedies/Damages for Breach Under the Civil Law, if a tenant withdraws from a lease without legal grounds before the agreed term, they may be required to pay the full lease amount. Howev - er, if early termination is justified, the tenant must pay only for the period during which the premises were actually occupied. The Civil Law follows a compensatory damages mod - el, meaning the tenant may be liable for the landlord’s losses. Although there are no fixed statutory limits, damages are generally confined to the landlord’s actual losses and may include both direct and indirect damages, as well as lost profits. Landlords typically require a security deposit to secure the tenant’s obligations, and it is common practice for the security deposit to be in the form of cash. 7. Construction 7.1 Common Structures Used to Price Construction Projects Private contractors are generally free to agree on pric - ing for construction projects; however, it is advisable to prepare a detailed estimate covering all planned works. Such an estimate sets out the price of each component. Contract terms, including pricing, may still be amended if the agreement allows it. In public procurement, construction costs must be specified in estimates and classified into defined cost categories. Accordingly, contractors perform agreed tasks for a predetermined price. 7.2 Assigning Responsibility for the Design and Construction of a Project Each expert is responsible for their part of the project within their competence. For example, the building designer is responsible for ensuring that the structure is implemented in accordance with the design from completion of the design phase until commissioning. The construction work manager, appointed by the contractor, is responsible for ensuring that construc - tion works comply with the design and applicable laws and regulations. Supervision of the construction work shall not release a performer of construction work
from the liability regarding quality of the construction work, conformity thereof with the building design, and laws and regulations governing the construction. Under Cabinet of Ministers regulations, the main contractor is responsible for organising the works in accordance with the work organisation plan and the overall construction execution plan. Accordingly, the main contractor must engage only suitably qualified subcontractors. 7.3 Management of Construction Risk Risk management in construction projects primarily depends on the terms of the construction contract. However, liability for intentional misconduct cannot be excluded, whereas excluding liability for gross negli - gence may also be problematic. Liability limitations are typically used to address risks such as delays, non-performance or defective work. Various legal mechanisms can be used to secure performance, such as bank guarantees or insurance policies. 7.4 Management of Schedule-Related Risk Schedule-related risk is managed through contrac - tual deadlines and detailed work programmes set out in a time schedule. Construction contracts typically include penalties for delay, non-performance or defec - tive performance. Accordingly, parties may agree that the owner is entitled to monetary compensation if milestones are not met or work is not completed within the agreed timeframe. This is standard practice in construction projects to ensure compliance with contractual obli - gations. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Typical forms of security include performance bonds, bank guarantees and parent company guarantees, particularly in larger or higher-risk projects. Retention amounts (withholding a portion of the contract price) are also widely used. Latvian law sets minimum statutory warranty peri - ods depending on the building category. During this period, the project owner may require the contractor, at its own expense, to remedy defects identified after
430 CHAMBERS.COM
Powered by FlippingBook