POLAND Law and Practice Contributed by: Michał Wielhorski, Mateusz Prokopiuk, Małgorzata Wąsowska and Klaudia Michalec, act legal Poland
verifying the previously prepared design docu - mentation. In market practice, there are agreements in which one entity prepares the design documen - tation and carries out the construction works (ie, a design and build contract). In such a case, the same entity is responsible to the investor for both the design and the implementation of the project. 7.3 Management of Construction Risk Construction contracts often contain various forms of security arrangements to protect the interests of the parties against potential project risks. The most commonly used security meas - ures include: • imposing on the contractor an obligation to maintain CAR insurance (in which the investor may also act as a co-insured party); • a payment guarantee; • a security deposit; • a declaration of voluntary submission to enforcement; • substitute performance; • contractual penalties; • retained amounts; and • construction supervision. 7.4 Management of Schedule-Related Risk In market practice, the work schedule and a detailed list of milestone deadlines are integral parts of a contract for construction works. The parties to the contract may agree that the inves - tor will be entitled to charge contractual penal - ties in the event of contractor’s breach of the work schedule – the amount of penalty is agreed by parties to the contract.
If the contractual penalties do not cover the full amount of damage suffered by the investor, the contract may provide for an option to claim dam - ages in full. Such a provision gives the inves - tor an additional tool to protect their interests in situations where delays have a significant impact on the project. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance The choice of additional form of security depends on the specifics of the project, the financial capacity of the contractor, and the preferences of parties to the contract. In practice, letters of guarantee issued by banks and insurance agen - cies are most commonly used, owing to their effectiveness and widespread acceptance in the market. Other forms of security encountered in market practice include retained amounts and security deposits. 7.6 Liens or Encumbrances in the Event of Non-Payment Polish law provides for the option to encum - ber an investor’s property with a compulsory mortgage in the event of arrears in payments to the contractor or architect. However, such an encumbrance requires the contractor or archi - tect to obtain either a final court judgment or a final court decision securing the contractor’s or designer’s claim by means of a compulsory mortgage. In practice, cases of voluntary encumbrance of property by an investor in order to secure the contractor’s or architect’s claims are unheard of. 7.7 Requirements Before Use or Inhabitation In Polish construction law, an occupancy per - mit is required before a building can be used.
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