Contractor duties and building defects under the Civil Code
The office of lawyer Ali Barakat in Baghdad sets out the contractor's duties and the warranty for defects in the work under a construction contract (muqawala), in articles 864 to 890 of Civil Code No. 40 of 1951, published in the Iraqi Official Gazette, issue 3015, of 8/9/1951. This page concerns the duties of performance, inspection, and defects after handover. The contractor's delay, and the ten-year warranty against the collapse of buildings and other permanent structures, are explained on the page Contractor delay, defects and the decennial warranty.
The construction contract and the materials for the work
A construction contract is a contract by which one party undertakes to make a thing or to perform work in return for a remuneration undertaken by the other party, under article 864. The contractor may confine the undertaking to the work, while the employer supplies the materials the contractor uses or relies on, in which case the contractor is a shared hireling. The contractor may also undertake both the work and the materials, in which case the contract is istisna, under article 865.
If the contractor undertakes to supply all or part of the materials, the contractor is responsible for their quality and warrants them to the employer, under article 866. If the employer supplied the materials, the contractor must take care of them, use them in accordance with the craft, account to the employer for their use and return what remains. If any of those materials become unfit for use through the contractor's neglect or lack of technical competence, the contractor must restore their value to the employer. The contractor must also provide any additional tools and supplies needed to complete the work, at the contractor's expense, unless the agreement or the custom of the trade provides otherwise, under article 867.
Those rules identify who warrants the quality of the materials and who bears their loss, before a defect in the method of performance, or a defect appearing after handover, is examined. They are read with the written construction contract, and with any building permit from Amanat Baghdad or the municipal directorate, described on the page A building permit from Amanat Baghdad or the municipality.
A defective method of performance while the work is in progress
If, during the course of the work, it appears to the employer that the contractor is performing it in a defective manner or in a manner contrary to the contract, the employer may warn the contractor to adopt the correct method within a suitable period fixed by the employer. If the period expires without the contractor returning to the correct method, the employer may claim either rescission of the contract or that the work be entrusted to another contractor at the first contractor's expense, where the nature of the work allows that. The contract may be rescinded at once if it is impossible to remedy the defect in the method of performance. If, however, the defect in the method is not such as greatly to reduce the value of the work or its fitness for the intended use, rescission is not available, under article 869.
That is a path during performance, based on a warning, a period and the possibility of repair. It is not the ten-year warranty against collapse, or against a defect that threatens the strength and safety of the building, after a permanent structure has been handed over, even though both paths give the employer a remedy if the work departs from the contract or from the craft.
Inspection, handover and apparent and hidden defects
When the contractor has completed the work and placed it at the employer's disposal, the employer must proceed to inspect it as soon as is customary, and must take delivery of it, if need be, within a short period. If the employer, without a legitimate reason, refuses inspection or delivery despite being invited to do so by an official warning, the work is treated as having been delivered, under article 873, first. The employer may refuse to take delivery if the contractor has departed from the conditions of the contract, or from what the craft requires for that kind of work, to a degree that leaves the employer unable to use it, or that it would not be just to compel the employer to accept it. If the departure does not reach that degree of gravity, the employer may only claim a reduction of the price proportionate to the importance of the departure, under paragraph 2. If the work can be repaired without heavy expense, the employer may require the contractor to carry out the repair within a suitable period, and the contractor may carry it out within a suitable time if this does not cause the employer harm or heavy expense, under paragraph 3.
If the work consists of distinct parts, or the price is fixed by unit, either party may request an inspection after each part is completed, or after a section of sufficient importance relative to the work as a whole is completed, and the contractor may in that case recover from the price in proportion to what has been completed. What has been paid for is presumed to have been inspected, unless it appears that the payment was only on account, under article 874.
Once the work has been delivered in fact or by operation of law, the contractor's liability for any apparent defect, and for departure from what was agreed, is lifted. If, however, the defects were hidden, or the departure was not apparent and the employer did not notice it at the time of delivery but discovered it afterwards, the employer must inform the contractor as soon as it is discovered, otherwise the employer is treated as having accepted the work, under article 875. Delivery, in fact or by operation of law, is therefore a dividing line: what was apparent falls away on delivery; what was hidden remains if the contractor is informed as soon as it comes to light.
The remuneration falls due on delivery of the work, unless the agreement or custom provides otherwise, subject to article 874, under article 876. If the contract was concluded for a lump-sum remuneration on the basis of a design agreed with the employer, the contractor may not claim any increase in the remuneration even if a variation or addition is made to that design, unless this is due to a fault of the employer or is authorised by the employer and the contractor's remuneration for it has been agreed. That agreement must be in writing unless the original contract itself was made orally, under article 877. If the prices of raw materials and of labour rise, the contractor may not rely on that to claim an increase in the remuneration, even if the rise reaches a point that makes performance of the contract difficult. If, however, the economic balance between the parties' obligations collapses completely because of events that could not have been foreseen at the time of contracting, and the financial basis of the construction contract therefore disappears, the Court of First Instance may order an increase in the remuneration or rescission of the contract, under article 878.
If the contract was concluded on a bill of quantities at a unit price, and it appears during the work that a substantial excess over the estimated expenses is necessary to carry out the agreed design, the contractor must inform the employer at once, stating the expenses anticipated. If the contractor does not do so, the right to recover the excess is lost, under article 879. If the remuneration was not fixed in advance, or was fixed only approximately, it is determined by reference to the value of the work and the contractor's expenses, under article 880.
A sub-contractor, and the end of the construction contract
The contractor may entrust performance of the work in whole or in part to another contractor, unless a term of the contract forbids this or the nature of the work implies that the employer's reliance was on the contractor's personal competence. The original contractor remains, in that case, liable to the employer for the second contractor, under article 882. The second contractor, and the workers who worked for the first contractor, have a direct claim against the employer for what is owed to them by the contractor, provided it does not exceed what the employer owes the original contractor at the time the claim is brought, under article 883. That claim is brought before the Court of First Instance.
The construction contract ends when the contractor completes the agreed work and delivers it in accordance with articles 873 and 875, under article 884. The employer may rescind the contract and stop performance at any time before completion, provided the contractor is compensated for all expenses incurred, work completed, and profit that could have been earned if the work had been finished. The Court of First Instance may reduce the compensation for lost profit if the circumstances make that reduction just, under article 885. The contract also ends if performance becomes impossible, and on the contractor's death if the contractor's personal qualifications were taken into account in the contracting, under articles 886 and 888, with the estate entitled to the value of the work completed to the extent of the benefit, under article 889.
Legal basis and sources
Frequently asked questions
Who warrants the quality of the materials in a construction contract?
If the contractor undertakes to supply the materials, the contractor is responsible for their quality and warrants them to the employer, under article 866. If the employer supplied the materials, the contractor must take care of them, use them in accordance with the craft, return what remains, and make good what is lost through neglect or lack of technical competence, under article 867.
What is the effect of delivery of the work, in fact or by operation of law, on apparent defects?
Once delivery has taken place in fact or by operation of law, the contractor's liability for any apparent defect, and for departure from what was agreed, is lifted. A hidden defect, or a departure that was not apparent, must be notified as soon as it is discovered, otherwise the employer is treated as having accepted the work, under article 875.
Does the use of a second contractor release the original contractor towards the employer?
No. The contractor may entrust performance to another contractor unless a term or the nature of the work forbids it, but remains liable to the employer for the second contractor, under article 882.
Related topics and articles
- 01Contractor delay, defects and the decennial warrantyContractor delay, and the ten-year warranty against structural collapse, under Civil Code articles 868 and 870 to 874.
- 02A building permit from Amanat Baghdad or the municipalityA building permit from Amanat Baghdad or the municipal directorate, and how the building is then recorded in the real estate register.
- 03What a landlord reviews before and after a lease in BaghdadWhat a Baghdad landlord reviews before and after a lease under Rent Law 87/1979 and the Civil Code.
- 04Sale or mortgage and the real-estate tax step in governorates not organised in a regionSale or mortgage and the real-estate tax step in governorates not organised in a region, under Law 162/1959 and Land Registration Law 43/1971.
- 05Ending co-ownership of shared propertyHow co-ownership of property ends under the Civil Code: agreed partition by registration, a First Instance claim, or sale if it cannot be divided.