4. Contractual Relations

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4. Contractual Relations Abstract of the text: The aim of the Contractual Relations in the Construction Industry article is to discuss and summarize the basic concepts occurring in this issue.

Article: Businessmen enter into business relations with business partners and suppliers with whom they conclude various types of contracts with, following the valid legislation.

1 4. Contractual Relations Abstract of the text: The aim of the Contractual Relations in the Construction Industry article is to discuss and summarize the basic concepts occurring in this issue. The conclusion of the chapter contains a glossary with terms which is focused on the most important expressions of the text, its main orientation, problem which is discussed in it. Article: Businessmen enter into business relations with business partners and suppliers with whom they conclude various types of contracts with, following the valid legislation. It is often difficult to define the right type of contract which will refer to the determined task, n practice. If the parts conclude the contract which contains all of the determined important requirements (for example as in a contact of sale), then it will be about this type of contract

2 (regardless if the parties directly realize i tor not). If the parties don t come to an agreement regarding the other details,, other legal regulations concerning this contact will be applied. If the parties want to digress from the legal regulation in some aspects, they have to express it clearly in the contract, which rights and obligations do they use instead of those established by the law. It is therefore necessary to determine what kind of contract it is in each given case, because then the whole contractual relationship will be subordinated to the regulation concerning this type of contract. In the case of contracts between partners from different legal environments it is a complicated issue. For these reasons, it is necessary to carefully read the content of the contract very carefully, as well as the individual terms and corresponding legislation, which also may be different in various countries. Contractual relations in the construction industry are very complicated issues and their performance requires experienced professionals. The most common types of contracts are the: Contract of Sale The contracting parties to this type of contract are referred in the Civil Code as the seller and the buyer.. The obligation to deliver the subject of a sale to the buyer arises from the sales contract to the seller. And the buyer ought to meet the obligation to accept a subject to purchase and to pay for it an agreed purchase price. The essential conditions of the contract are therefore: - A definition of the contracting parties, - A definition of the object of purchase (movable and immovable) - To determine the price that must be agreed upon in accordance with generally binding legal regulations (otherwise the contract is voidable). A price is the contract price, unless a special law does not specify the price or otherwise

3 regulate its amount (see Act on Prices). The purchase contract transfers ownership of the purchase. In general, then, the ownership of movable property passes to the purchaser immediately upon delivery of things and a registration of immovable property in the Land cadaster (where property subject is to be registered in the Land register). A risk of accidental destruction object of purchase passes to the buyer with the acquisition of property, including benefits, unless agreed otherwise. The act authorizes the seller to withhold a submission of the object of purchase to the buyer, if he / she is in arrears in the payment of the purchase price. Also, the buyer is not obliged to pay the price until he / she has the opportunity to inspect the item of purchase. The secondary provisions of the purchase agreement may be: - Reservation of ownership - the parties may agree that ownership passes to the buyer until the moment of payment of the price. This reservation must be in written. - Pre-emptive right - an item of purchase is sold with the proviso that if the buyer wants to sell the item, it must first offer to the seller. Exchange contract This is a similar type of agreement as a contract of sale, but the parties exchange an item for an item. Both parties are actually in the position of seller and buyer. Contract for Work Contract for work is concluded between a client and a contractor. The contractor agrees to perform work for an agreed price at his / her own risk. The client is obliged to accept the work and to pay the agreed price (or price reasonable, unless agreed price). The subject of the work is the result of some action of the contractor (or making a product, repair things, modifications, and installation of things like.) The contractor shall perform the work at its own risk under the contract, properly at the agreed time (including the obligation to comply with any applicable binding of technical standards). The work may not be done personally by the contractor, unless something else

4 arises from the nature of the work, or agreed to by the parties otherwise. If no price has been agreed, there is an obligation to pay a reasonable price. A price is to be paid after the completion of the work. The price can be arranged according to a budget and this cannot be increased without the consent of the client. The work and the costs not included in the budget may be charged only if they have been ordered by the client in written or agreed. If the material is delivered by a ordering party / client, there is a duty to warn a contractor about drawbacks of supplied material under the conditions laid down in the Act. This applies even in the case of improper instructions given by the client. If material, the contractor is entitled to withdraw from the contract if these instructions and to use the material is insisted upon. The client shall provide the necessary cooperation to implement the work. Otherwise, the contractor is entitled to withdraw from the contract if the client through a prompt cooperation call has not provided within a reasonable time. If the work is marred by accident, the contractor loses the entitlement to the cost in terms of thwart prior to the fulfillment of the work. By the execution of the work, the customer may withdraw from the contract without giving the reason. However, he is obliged to pay work already done, if the outcome cannot be used by the contractor, and also the customer must replace the reasonable costs of the contractor. It is possible to withdraw from the contract even if it is clear that the completion of the work will not occur properly or in time, and the contractor fails to rectify in a provided reasonable time. By the death of the contractor, the contract for work at that time terminates, if the work execution depends on the specific personal qualities of the contractor. The most common types of contracts for work in the construction industry: - the construction project - the assembly - building, delivery of construction work

5 - construction work - technological part of construction - repairs - making the things - the supply of assembled machines etc.. Lease Agreement Contracting parties are the lessor (the person authorized to leave an item to the lease, usually it is the owner of things - such as a house, storage rooms, apartment, machines, etc..) and the tenant. The landlord is obliged to leave the item to the lease in a fit condition for the agreed purpose (or normal, unless agreed purpose of use), and to maintain the item of lease in this state at his / her own expense and responsibility. Among the mutual rights and obligations, the law includes: - Tenant's right for the purpose specified in the contract or the purpose of the usual - Lessor's right of access to things in order to control - Obligation to use the item by a tenant must be expressly agreed in the contract or as provided by law for the case that by not using it the item was devalued more than in the case of use - Tenant is entitled to hire a third party, if not prohibited by the lease agreement, otherwise the landlord is entitled to withdraw from the contract - Changes to the item can be done by a tenant only with the consent of the landlord; to pay the costs of these changes may be required by a tenant only if the landlord undertook to do so; these expenses are to be paid after the end of the lease, taking into account depreciation of the lease item. If the landlord has not undertaken to cover the tenant s expenses but he / she agreed on the changes, he / she is to pay the costs to the tenant after the lease

6 termination; the price is to cover the value by which the lease item has been increased - changes made without the consent of the lessor, the lessee is obligated to "remove"after the lease termination, thus to bring the lease item to its original state - the obligation of a tenant to notify for repairs to which the landlord is obliged to - the cost of repairs carried out at the expense of a tenant with the consent of the lessor, (for repairs, which the landlord is obliged to) the landlord is obliged to pay the costs of the lessee. The same applies to repairs that the landlord did not arrange, although he was notified of the need - obligation of a tenant to pay rent under the contract unless agreed rent, then rent usual, the Civil Code provides for payment of rent (especially for rental of agricultural and forest land) - to secure the rent for the property, the landlord has a statutory lien to property located on leased property, and the right of retention, it would result in eviction things - Act, also regulates the right to pardon or grant a discount on the rent due to obstacles in the use of leasehold - Lease contract may be concluded for a definite or indefinite (if not the duration of the lease in the contract, it means, that it is a lease for an indefinite period) Employment Contract it regulates the employment relation between the employer and the employee ( note: for example in the Czech Republic the contract for work or the contract for working performance regulates employment relation between the employer and the employee ) Insurance Contract the insurer undertakes to provide agreed insurance payment in case of accidental event and the insured undertakes to pay regular insurance premium to the insurer. A major problem are the contracts that are not complete, do not address

7 all the possibilities that may occur Example - body works contracts under the Civil Code: Identification data Identifying information about the participants of a contract: Client: name, surname, permanent residence, or other identifying information, if it is a legal person. Contractor: Name and surname of the contact person, residence, identification number of the company, address, name etc.. Subject of the contract This section contains information describing the nature of the work and the work carried out on it. There is usually a link to a more detailed specification - for example, technical documentation and a construction site. A price and a payment method An important part of the contract relates to finance: It is necessary to specify the total cost of the work, the amount of any advance payment and a transaction type (cash, bank transfer, etc.). It is also necessary to define the conditions of replenishment of the remainder of the price of the work ( in case of advances), the period in which they are to be performed each transaction including the deadline for receipt of tax documents. At this point, there are also given sanction for failure to meet deadlines (penalty). The deadline and the handover There is no deadline for doing, delivery and acceptance of the work, including forms of evidence of individual steps and sanctions for non-compliance with the time limits and conditions under which any defects in of the work will be removed.

8 Warranty, removal of defects At this point of a contract, there are expressed details about the warranty period, the way of reporting defects and their removal, including financing. The possibility of withdrawal from the contract The purpose of this section is to create specific options of withdrawal from the contract for participants, penalties and sub-steps that lead to the related expenses compensation (repayment of advances and the like). Declaration of the parties This point explicitly indicates that the participants had read different points of contract, take note of the conditions laid down by this fact and confirm by their signatures. Finally, the date and place of signature of the contract must be stated. Glossary: Term Contract Investor, builder and developer Explanation The contract is the document of contractual parties which specifies the subject of the contract, conditions of the conclusion, duration and conclusion of the contract relation, states the dates of performance, specifies the price or its formation or other requirements. The investor is sometimes referred to the person in the construction industry who is the purchaser of the building. However it is usually exchange of the concept builder. The financial investment of the investor can

9 be also directed at buildings and building companies. In this instance, the usage of the concept investor doesn t have to be identical to the builder. It is used for this case or similar cases the concept developer. Supplier Orderer Project architect Due date Lesser Lessee The person who provides services, supplies the goods or performs agreed construction work. The person that is natural person or legal person who during conclusion and performance takes action within his/her commercial or another commercial activity or independent employment performance and who is not consumer within the meaning of what was mentioned above in these commercial conditions. The person who performs designing activity (designs) for the purpose of the project. Determines the date or time until which the payer is obliged to pay his/her financial obligation. No observance of the determined term (so called delay) can be penalized in some way, for example pay the penalty, contractual fine or penalty for delay. the person who leases an object in return for payment to the lessee in order to use it temporarily (during the agreed time) or have benefit from it. the person whom the lesser leases an object for payment in order to use it temporarily (during the agreed time) or have benefit from

10 it. Insurer Insured the person who undertakes to provide insurance payment in agreed amount, if some accidental event happens which was determined in more details in the insurance contract the person who made a contract with the insurer Seller the person who sells products to the buyer or provides services Buyer The person who buys products from the seller or the seller provides him/her services Dictionary: contract for work (n) /ˈkɒntrækt fɔːʳ wɜːk/ smlouva o dílo contract of sale (n) /ˈkɒntrækt ɒv seɪl/ kupní smlouva contractual relation (n) /kənˈtrækʧuᵊl rɪˈleɪʃᵊn/ smluvní vztah digress (v) /daɪˈgres/ odchýlit se employment contract (n) /ɪmˈplɔɪmənt ˈkɒntrækt/ pracovní smlouva insurance agreement (n) /ɪnˈʃʊərᵊnts əˈgriːmənt/ pojistná smlouva lease agreement (n) /liːs əˈgriːmənt/ nájemní smlouva lesser (n) /ˈlesəʳ/ pronajímatel lessee (n) /lesˈiː/ nájemce issue (n) /ˈɪʃuː/ problematika obligation (n) /ˌɒblɪˈgeɪʃᵊn/ povinnost requirement (n) /rɪˈkwaɪəmənt/ náležitost summarize (v) /ˈsʌmᵊraɪz/ shrnout

11 supplier (n) /səˈplaɪəʳ/ undertake (v) /ˌʌndəˈteɪk/ valid (adj) /ˈvælɪd/ dodavatel zavázat se platný Questions: 1) How can you define the contract of sale? 2) How can you define the contract for work? 3) How can you define the employment contract? 4) How can you define the insurance contract? 5) Who is a supplier? Exercises: 1) Put the vocabulary into the correspondent definition. investor supplier to lease insurance obligation a) is the person who provides services, the goods or performs agreed construction work. b) is a person in construction industry who is the purchaser of the building. c) is the synonym of duty. d) is the act, system, or business of providing financial protection for property, life, health, etc. e). means to grant use or occupation of something under the terms of a contract. 2) Match the the vocabulary from with the vocabulary from A E. 1. contractual 2. lease

12 3. legal D. relations 4. storage E. regulations 5. insurance A. payment B. space C. agreement 3) Complete with the gerund or infinitive. a) It s not easy at university. (study) b) She s worried about her job. (lose) c) Remember me the photos, I d like to print them.(send) d) My boss made me the contract. (sign) e) I m sure he pretended ill. (be) 4) Match the sentence halves. 1. He forgot 2. I ve decided 3. He s afraid of 4. She promised 5. You should go on A. looking for your lost wallet. B. not to take drugs anymore. C. to buy the stamps. D. not to tell anybody about my disease. E. falling in love with his teacher. 5) Choose the correct option. Q1 - I miss in London. live living to live Q2 - I enjoyed them again.

13 see seeing to see Q3 - He avoided them do it because he wanted to get home early. help helping to help Q4 - I promised it by Friday. do doing to do Q5 - She's expected the job. get getting to get Q6 - Would you like? come coming to come Q7 - They don't tolerate any about their decisions. argue arguing to argue Q8 - She taught me it. do doing to do Q9 - I don't feel like it. do doing to do Q10 - Do you mind it with you? take taking to take Source: UE, Using English.com, 2014

14 Mind map: Contract of sale Contractual relations Supplier Employment contract employee Insurance contract insurer Lease agreement Lessee Solutions: 1) Put the vocabulary into the correspondent definition. investor supplier to lease insurance obligation a) A supplier is the person who provides services, the goods or performs agreed construction work. b) An investor is a person in construction industry who is the purchaser of the building. c) Obligation is the synonym of duty. d) Insurance is the act, system, or business of providing financial protection for property, life, health, etc. e) To lease means to grant use or occupation of something under the terms of a contract. 2) Match the the vocabulary from with the vocabulary from A E. 1. E

15 2. C 3. D 4. B 5. A 3) Complete with the gerund or infinitive. a) It s not easy study at university. (study) b) She s worried about losing her job. (lose) c) Remember to send me the photos, I d like to print them.(send) d) My boss made me sign the contract. (sign) e) I m sure he pretended to be ill. (be) 4) Match the sentence halves. 1. C 2. D 3. E 4. B 5. A 5)Choose the correct option: Q1 - I miss in London. live X living to live Q2 - I enjoyed them again. see X seeing to see Q3 - He avoided them do it because he wanted to get home early.

16 help X helping to help Q4 - I promised it by Friday. do doing X to do Q5 - She's expected the job. get getting X to get Q6 - Would you like? come coming X to come Q7 - They don't tolerate any about their decisions. argue X arguing to argue Q8 - She taught me it. do doing X to do Q9 - I don't feel like it. do X doing to do Q10 - Do you mind it with you? take X taking to take

17 Bibliography UE. Gerund or Infinitive? [online]. [citováno ].Available on WWW:

BUSINESS TERMS AND CONDITIONS FOR PURCHASE OF GOODS

BUSINESS TERMS AND CONDITIONS FOR PURCHASE OF GOODS Plastic Parts & Technology s.r.o., with the registered office at Linhartice 127, 571 01, Company Identification No. 25971689, incorporated in the Companies