1. Introduction
Construction projects normally take place over a relatively long period of time.
Situations often arise that cause the parties to have more claims against each other than that resulting from the agreed remuneration.
In unit price contracts, a calculation of the quantities produced must be carried out, there may be invoice works carried out which the builder believes have become unnecessarily high due to irrational operation or other irresponsible circumstances on the part of the contractor, there may be a number of change order claims where the builder partly disputes the basis and regardless of the size of the claims, the builder may consider that the contractor was delayed with the consequence that the builder has submitted claims whether daymulkt and/ or the builder considers the extent of defects and deficiencies to be so great that he will withhold enough money as collateral.
All of these examples, and several other circumstances, necessitate a final settlement where all claims and counterclaims come on the table once and for all.
It is not a desirable situation for one party to withhold claims in order to then advance them at a later, and for the other party, highly surprising time.
It is perfectly normal for the parties to conduct final settlement negotiations and for such to be effective, one must know what claims and counterclaims are on the table. Without a mechanism to ensure that all claims are brought forward, such negotiations could easily develop in an inappropriate manner, and no one is served.
2. Overview of the rules
The rules of NS 8407, NS 8405 and NS 8406 are reasonably similar, but we have taken an overview of them in the matrix below.
As in all other articles, we start from NS 8407 since this is the standard contract that is used most often today.
3. Final Setup with Final Invoice
It is stated in NS 8407 paragraph 39.1 (and corresponding provisions of NS 8405 and NS 8405) that no later than two months after the takeover, the contractor must send a statement to the builder showing all the claims he has against the builder.
The inventory should contain absolutely everything that the contractor makes of claims against the builder. O
Whether the claims have been invoiced earlier or not, whether the invoices have been paid or not, whether claims are disputed or brand new play a role. Everything the contractor maintains of claims, as well as the amount involved, must be included.
The contractor must also include all of index regulation, claims for interest if the builder has paid for invoices late, etc.
The main rule and starting point is that all claims should be included, and what is not included is considered waived.
The inventory should be set up so that all claims the contractor has against the builder are summed up, and then the amount paid by the builder during the construction period is entered. The difference including VAT will then constitute the contractor's net remaining amount which becomes the amount of the final invoice.
There is a difference in principle between NS 8407 paragraph 39.1 on the one hand and the provisions of NS 8405 paragraph 33.1 and NS 8406 paragraph 25.1 respectively which may act as a trap for a contractor accustomed to NS 8405 and NS 8406 contracts.
In the latter two standard contracts, the contractor has the opportunity to correct his final statement after it has been handed over to the builder, but then under the condition that the correction takes place within the expiry of the two-month deadline for sending the final statement and final invoice.
That option does not have the contractor in a NS 8407 contract. There is a rule that once the slat layout and invoice have been sent to the builder, you no longer have the opportunity to correct them. This even though one could have waited until the two month deadline expired and rather spent more time to quality ensure.
Finally, it is mentioned that there is an exception for the type of claim that one cannot know the size of when a claim for final settlement is to be submitted.
The fourth paragraph of all provisions states that: “claims relating to work to be carried out only after the takeover, claims to incumbents (...), remaining claims for indexation and claims brought before the arbiter, the courts or arbitration”.
In addition, there is an opportunity to take “reservation on subsequent amendment of the final statement if the basis for calculating a claim has not been provided in time”.
4. What happens if entrepreneur overstays the deadline of two months?
Contractor need not fear that his claim will lapse under one of the provisions of the standard contract even if the deadline is missed. He just has to be careful to submit his claim on time so that he does not risk the claim becoming obsolete.
However, the builder may have a vested interest in clarifying what claims the contractor wishes to make in connection with the final settlement.
Accordingly, NS 8407 paragraph 39.1, last paragraph (and similarly in NS 8405 paragraph 33 and NS 8406 paragraph 25) contains a clear rule that the entrepreneur should beware of.
It follows from this provision that the builder may send the contractor a written notice giving the contractor a minimum period of 14 days to submit his final statement and final invoice.
If the contractor does not do this within the deadline set by the builder, the contractor loses all claims “not already paid or mentioned in the second sentence of the preceding paragraph”.
The requirements referred to “in the second sentence of the preceding paragraph” is “claims relating to work to be carried out only after the takeover, claims to incumbents (...), remaining claims for indexation and claims brought before the arbiter, the courts or arbitration”.
5. Payment of final invoice by the builder. Objections and claims
The rules on how the builder shall act when receiving the contractor's final statement and final invoice are set out in NS 8407 paragraph 39.2, and corresponding provisions in NS 8405 paragraph 33.2 and NS 8406 paragraph 25.2.
When the builder receives the final assembly and final invoice from the contractor, it follows from NS 8407 paragraph 39.2, first paragraph that the builder shall pay the invoice “within two months counted from receipt of final line-up with final invoice”.
To the extent that the builder has objections to the contractor's final statement and final invoice, or his own claims that the builder will enforce against the contractor (such as day mulch), these must: “to be made within the payment deadline” which is two months after “the receipt of final line-up with final invoice”.
The builder must submit all objections and counterclaims he has, including those made earlier.
If the contractor has repeated previously made claims that the builder has disputed, the builder must also repeat that the claims are disputed in his feedback to the contractor. If he does not, the objections are lost with the consequence that the contractor's previous (disputed) claim shall be considered accepted.
Thus, one can conclude that the effects of neglect are as severe on the builder as they are on the contractor. The key point is that there is an unequivocal mechanism for clarifying the parties' positions in connection with the final settlement itself.
The builder should note that he does not have such a deadline to correct his lineup over objections and counterclaims as the contractor has as long as the two-month deadline has not expired. A right contractor only features in NS 8405 and NS 8406, but not in NS 8407, ref above.
Once the builder has submitted his statement of objections and counterclaims, it is legally binding provided that it is submitted within the two-month payment deadline from “the receipt of final line-up with final invoice”.
If the builder overstays this deadline, all objections and counterclaims will lapse. This is stated in NS 8407 paragraph 39.2, the last paragraph of which states that “(I) Claims and claims not made within the time limit may not be made later”.
Finally, it is mentioned that objections and claims brought before the arbitrator, the courts or arbitration, or any objections to and claims to index regulation” do not lapse, while deficiency claims etc are governed only by the provisions of NS 8407 paragraph 42. The corresponding rule follows from NS 8405 paragraph 33.2 and NS 8406 paragraph 25.2.
