lesson 2 services and work contract condensed

service and work contracts

• primarily regulated under art 1544cc distinguishing between a service and a work contract

• service= obligates to perform and activity or effort

  • emphasis on the diligent execution of a task rather than achieving a specific outcome

  • liability linked to the diligence exercised

• work= obligated to achieve a specific result

  • emphasis on delivering a tangible or verifiable outcome regardless of effort

  • liability linked to failure to achieve the result agreed

services vs work contracts

obligation of means vs obligation of result

activity focus vs finished product focus

results not grunted vs require a specific result

diligence liability vs outcome achieved liability

service contract

an agreement where one party undertakes to provide a activity for another in exchange for payement

• not about achieving a specific goal but performing the service properly and diligently

• applies to liberal professions

  • a lawyer providing a legal service/ a doctor treating a patient

• modern law recognises service provision can be digital

  • streaming platoforms, software subscriptions

characteristics

• consensual= binding once the parties agree without need for formalities unless legally required

• bilateral= both parties assume reciprocal obligations

  • provider performs service while client pays price

• onerous= both confer economic value

  • provider receives payement and client receives service

professional obligations

obligations of means

• the professional must apply the appropriate level of skill and diligence

• lex Artis= the professional must follows technical ethical and industry standards

  • failure to meet professional standards can lead to negligence liability such as malpractice in medical and legal services

• professionals are not required to guarantee a specific result ie a lawyer must prepare a case properly but cannot promise victory

price

• the payement does not need to be fixed in advance but does need to be objectively determinable ie not left to providers will

  • hourly rates, market rates , professional tariffs

termination

• normal termination occurs upon expiry of the agreed period or completion of the task

• unilateral withdrawal for indefinite contracts only= cannot be trapped in obligations forever

  • the client may terminate at any time without justified reason ie they asked for the service

  • the provider may terminate only for just cause ie non payement, loss of trust, misconduct

  • termination may involve compensation for damages if wrongful

• intuit personae contract= these rely on personal skills or trust so the contract ends upon death of either party

  • ie an architect personally hired to design a building= contract terminates upon his death

work contracts

an agreement whereby one party undertakes to execute work for another in exchange for a price

• obliges the contractor to deliver a specific result rather than merely performing the work activity

  • construction projects, furniture making, repairs

• regulation

  • article 1588-1600c govern the general obligations of the contractor and the client

  • the building regulation act 1999 LOE provides additional obligations for construction projects including safety and technical compliance

obligations of the work contractor

• execute the work properly

  • use care skill and dilligence

  • must follow contract and respect technical specifications

  • defective or incomplete work constitutes a breach of contract

• complete on time= deadlines in contracts are binding so delay exposes the contractor to liability for damages

• provide materials art 1588cc= contracts may require labour only (client supplies building materials) or labour and materials (contractor supplies both)

construction liability under loe art 11.2

if the contractor is construction

• they must follow the approved project and comply with regulations and work safety

• they are liable for defects in work caused by non compliance with project

obligations of the client

• pay the price art 1596cc=

  • payement may be a lump sum fixed from the start or may be unit based varied on materials used

  • the contractor cannot unilaterally increase the price later on their own even if costs rise

    • price can change only if the contract specifically allows adjustments eg clauses for material cost increases or inflation

  • right of retention 1600cc= contractor may retain the object until payement is made

  • direct action by subcontractor 1592= if unpaid subcontractor cain claim payement directly from the client to the amount they still owe the contractor

• acceptance of the work= clients must accept complete performance

  • acceptance can be express or implied (use of work without objection)

  • acceptance triggers the contractors right to demand payement

  • once acceptance has occurred the liability for defects begins

  • if a client unjsuitifbaley rejects performance they become liable for loss or destruction

risk allocation

risk follows control and responsibility for the project

• generally the contractor bears the risk of loss or desteuction before delivery because they are the owner of the work done art 1598cc

• generally the client bears the risk of loss/destruction after delivery is accepted

• exceptions article 1590 when the client bears the risk:

  • if the client refuses to accept proper performance unjustifiably the risk shift to the client for loss or destruction

  • if the contractor follows the specifications but the client supplied defective materials the client bears the risk as they are responsible for the bad quality materials

termination of work contracts

• general breaches articles 1101 and 1124cc= non completion of work, non payement , defective performance

  • remedies include specific performance, termination of contract and damages for loss suffered

• withdrawal by client art 1594= the client may terminate the contract without needing justification

  • however they have an obligation to compensate the contractor for

    • costs incurred (materials labour)

    • value of work already completed

    • lost profits

• death of contractor article 1595 cc=

  • if the contract requires personal skill the contract is terminated upon death and heirs have rights for payement of work already done and materials supplied

  • if personal skill is not essential the contract continues ie contraction firm contracted to build a house the company heirs or staff continue the work

serve client withdrawal= labour based so only pay for work already done

work clientt withdrawal= outcome based so pay for lost profits and costs included

work contracts construction defect liability

depends on time of construction

• before may 2000 defects governed by civil code articles 1591

• after may 2000 defects governed by building regulation act 1999 loe

construction liability under the civil code art 1591

10 year decennial lability period applies in cases where building suffer ruin due to defects in construction

• ruin has been interpreted expansively by Spanish courts

  • total ruin= complete collapse

  • partial ruin= partial collapse

  • functional ruin= building is unfit for intended use even without collapse

  • potential ruin= situations where defects create a risk of future collapse even when no actual damage is present yet

• liability is broad and can extended to multiple parties ie the contractor architect or any technical professional involved

• joint liability exists but it is not clearly regulated and applied mainly by courts on a case by case basis usually only when its impossible to separate responsibility = it is not automatically joint you need to show who was responsible

building regulation act 1999

applies to construction projects where the building permit was granted after 6th may 2000

• introduced to provide a more structured liability system with different limitation periods depending on severity of defect

  • cannot be contractually reduced

  • limitation period begins from acceptance of work

• art 17 tiered system:

  • strucutral= 10

  • haitability= 3

  • finishing= 1

• art 17.1 indidvual liability= each construction agent is liable only for their own faults requiring proof of causation

• joint and several 17.3= may sue any one for the full amount if multiple parties contribute or the exact cause is unclear

  • easier to apply and clearly defined compared to the cc

• developers special liability= always jointly and severally liable with other agents

  • buyer can bring direct claim regardless of who caused defects to protects purchasers who may lack technical knowledge ie don’t know who’s to blame

  • delver seen as central coordination party and the one who places building on the market