This judgment concerns a rehabilitation project carried out as a turnkey project. The object of the contract was a commercial building erected in the 1980s that was to be partly redeveloped and partly rehabilitated. A risk transition was agreed for the builder's design, cf. NS 8407 item 24.2. Our focus in this article is the Court of Appeal's understanding of NS 8407 item 22.3 “General Contractor's Work Basis”, the tender basis and the significance of the function description when determining what the general contractor had “reason to reckon with” and the court's more overarching assessment of function allocation and risk.
It was the general contractor who appealed the district court's judgment before the Court of Appeal, while the builder lodged a derivative appeal. The general contractor lost substantially, while the builder got a somewhat better result than in the district court. The builder was awarded most of his claim for legal fees.
The judgment is 68 pages and it falls too far to account for all conditions.
What we find particularly interesting is the basis for some of the contractor's change order requirements.
These requirements are based on the fact that the building was from the 1980s, and it was this one that was to be rehabilitated. Thus, the building constituted the general contractor's working base, cf. NS 8407 item 22.3. This provision is contained in Chapter V, which deals with “Builder's benefits”.
From this provision it is clear that the builder has the risk that the working base”is such that the general contractor had reason to assume on the basis of the contract, the nature of the assignment and the circumstances in general”.
This was a central proposition on the part of the general contractor which the Court of Appeal did not attach importance to. In its reasoning for this, the Court of Appeal started with a thorough account of the division of functions between the parties.
In that regard, the court attached very great importance to the builder's formulations in the tender basis, and the court cites several key formulations in this. Formulations that, to a large extent, had as a consequence that the general contractor had the risk of the physical work base.
In his review, in particular, one of the disputed change order requirements is the focus, namely that the existing carrier system was too weak and needed to be strengthened.
In the court's view, the clear starting point was that “the general contractor (...) assumed the responsibility and risk for all detailed design and execution necessary to fulfil the function description and other requirements set out in the tender offer basis. This is both for conditions the builder had described to some extent, but also for conditions the builder had not described in the offer basis”.
In the function description, some specific requirements were made, but for “works and building parts not mentioned, the general contractor is free to perform as he pleases provided that the planning and building legislation and related regulations, as well as requirements in framework and commissioning permits are complied with. It is the responsibility of the general contractor to evaluate the offer material and include all works so that the delivery is complete and in accordance with the regulations”.
The general contractor had to own “design final solutions according to the requirements and assumptions described and the general contractor is responsible for all interfaces. The Contractor is responsible for obtaining all relevant and necessary additional information in order to be able to offer a complete delivery.... The Contractor is responsible for ensuring that all works are carried out in accordance with applicable requirements, laws, regulations, rules and standards”.
The Court of Appeal had taken these quotations from the builder's job description and the Court of Appeal justified its decision by, among other things, what was quoted from there.
Furthermore, the Court of Appeal held that the providers had been encouraged to “to examine existing drawings and other engineering of existing support systems in the archives of the Planning and Building Administration”. The bidding rules also stated that providers would have to make “own preliminary investigations” and overtake “Relevant information”.
Of particular relevance to the carrying system, the Court of Appeal highlighted “that the general contractor had responsibility for “assessing whether reinforcements or an increased number of pillars are required in connection with the redevelopment””.
Since the function description was not intended to be an almost complete basis for the execution, the general contractor had to provide the necessary engineering. In this regard, the Court of Appeal writes that it was the general contractor's “responsibility to make necessary and possible clarifications of any uncertainties in the project prior to the submission of tenders, possibly making reservations in the tender”.
The Court of Appeal further emphasized that “applicable public law requirements” should be complied with by the general contractor. When it came to the carrying system, the Court of Appeal came to the conclusion that it was foreseeable that the requirements today were more stringent than the requirements of the 1980s.
Regarding the general contractor's claim that the builder had the risk of the physical work base NS 8407 item 22.3, the court referred mostly to the points that we have described above. This was a rehabilitation project, it was foreseeable that the requirements for loads had changed and become stricter since the 1980s, and the contract expressed that the general contractor had to take this into account.
The judgment also contains several statements concerning, for example, the interpretation of agreements between professional parties, but it falls too far to go into these in this article.
