SWITZERLAND Law and Practice Contributed by: Francis Nordmann, Johannes Bürgi, Christian Eichenberger, André Kuhn and Sabrina Kunz, Walder Wyss Ltd
ule of services. They are defined for the individual units of quantity, so that the consideration owed for a ser - vice is calculated after its completion. The quantities of services performed at unit prices are determined according to the terms of the contractor agreement, in accordance with their actual measure (by measure - ment, weighing or counting) or with their theoretical measure based on the underlying designs. A lump sum may be agreed for individual services, for part of the project or for the whole of the project carried out by the contractor. It shall consist of a fixed amount of money. Agreements on lump sum pay - ments should be made only on the basis of complete and clear documentation (detailed project specifica - tions, designs, etc). Flat rate prices differ from lump sum payments solely in that they are not subject to price adjustment claus - es. 7.2 Assigning Responsibility for the Design and Construction of a Project General and total contractor models are often used. In the general contractor model, the owner uses an architect and engineering team for the planning. The owner either enters into a single planning contract with a consortium of planners/designers (often in the form of a simple partnership) or concludes individual contracts with each architect or engineer involved. For the execution of the construction work, the owner enters into a contract with a contractor that, in turn, uses subcontractors. In the total contractor model, the owner contracts with a single company that assumes full responsibility for the planning and realisation of a project. 7.3 Management of Construction Risk The contractor is liable for ensuring that the project is carried out free of defects, and bears such liability regardless of the cause of the defect (eg, negligent workmanship, use of unfit materials, unauthorised deviation from designs and instructions of the con - struction manager) and independently of fault.
If defects occur, the owner is entitled to defect warran - ty rights, such as the right of remediation, deduction and/or rescission. Owners must notify defects within a mandatory 60-day period from acceptance or discov - ery (non-waivable per 2026 reform). Parties, however, often agree on two-year extended notification. The owner’s defect warranty rights are subject to a uniform five-year limitation period following acceptance. 7.4 Management of Schedule-Related Risk Parties are allowed to agree that an owner is entitled to monetary compensation if certain milestones and completion dates are not achieved. Moreover, the par - ties often agree on a penalty to ensure that milestones and completion dates are complied with. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is common for owners to seek additional forms of security, particularly guarantees or sureties of a Swiss bank or insurance company. 7.6 Liens or Encumbrances in the Event of Non-Payment Contractors that have supplied labour and/or materi - als are permitted to a statutory lien, while designers/ planners for the intellectual work (plans, designs, etc) are excluded from such lien. The lien is entered into the land register only if, inter alia, the claim has been acknowledged by the owner or confirmed in a court judgment, and may not be requested if the owner pro - vides the contractor with adequate security, covering the principal amount plus ten years’ default interest. 7.7 Requirements Before Use or Inhabitation A project must undergo an official inspection by the competent authority of the local community before it can be inhabited or used for its intended purpose.
8. Tax 8.1 VAT and Sales Tax
Generally, the sale of real estate properties is exempt from VAT without credit of input VAT. However, with respect to commercial real estate properties, the land - lord can opt to submit the rent to VAT and the seller can opt to submit the property sold to VAT. Accord -
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