PORTUGAL Law and Practice Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves, Miguel Paquete and Mafalda Oliveira Cordeiro, CS’Associados
6.23 Remedies/Damages for Breach There are no statutory or customary limitations on the damages that a landlord may collect as a con - sequence of tenant breach and lease termination. In general, in addition to claiming outstanding rents, landlords seek to claim compensation for damage caused by the tenant to the property, as well as for costs incurred due to the eviction process. Landlords may also seek to claim an indemnity for breach of con - tract, this normally being equal to the value of rents that would be due until the end of the lease term, though courts tend to reduce or dismiss any indem - nities payable thereunder on account of the potential lease of the premises to third parties. For details on security deposits posted by tenants, see 6.8 Costs Payable by a Tenant at the Start of a Lease . 7. Construction 7.1 Common Structures Used to Price Construction Projects The most common structures used to price construc - tion prices are the following: • Fixed price The agreed construction price is deemed as fixed and final, corresponding to all works comprised in the work scope. This fixed price may vary in the event of additional works or the decrease of works comprised within the initial work scope. • Price series Construction is performed based on a pre-agreed series of unit prices, the project cost corresponding to the total unit prices for each type of work performed considering the amount thereof. • Open book pricing The project cost is based on the costs of materials and supplies incurred by the contractor, to which a margin, spread or fixed fee value is added as the contractor’s consideration. 7.2 Assigning Responsibility for the Design and Construction of a Project In general, the contractor is liable for all deficiencies and errors arising out of the execution of the works or the quality, shape and dimensions of the applied materials (in cases where the project does not stipu -
late the rules to be observed, as well as where these are different from the ones approved). Without prejudice, professional liability applies to the several service providers involved in a construction project, from architects/designers and engineers to ultimately the contractor itself. This means that the project owner may seek to hold these liable depend - ing on the nature of any deficiency or error and on the party/ies responsible for its design/features and/or incorporation in the project, and such liability may be exclusive to one party or shared by multiple parties. 7.3 Management of Construction Risk Construction agreements usually regulate the contrac - tor’s liability for the project, this including, in addition to a set of representations and warranties (in order to establish the contractor’s competence and qualifica - tions), a number of undertakings concerning execu - tion of the works. These undertakings might include, for example, the obligation to put in place adequate insurance policies (such as contractor’s all-risk insur - ance), to safeguard the works and neighbouring prop - erties, to allocate suitable and skilled manpower, to use state-of-the-art construction techniques or to use appropriate equipment, among others. Construction risk is also managed via progress moni - toring by the appointed supervising entity, as well as by coupling payments with the effective verification of such progress, mainly via monthly work certificates and the achievement of pre-agreed milestones. 7.4 Management of Schedule-Related Risk Construction agreements may stipulate schedule tar - gets such as partial completion or milestone dates, together with delay management mechanisms such that the contractor deploys corrective measures. In addition, construction agreements usually contain penalty clauses according to which failure to meet certain milestones or the incurring of critical pro - ject delays results in monetary penalties that corre - spond to a predefined percentage of the project cost per each day of delay, this increasing as the delay increases. Typically, these clauses also stipulate that the agreement may be terminated if such penalties reach a certain threshold.
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