1. Introduction
In NS 8407 Chapter III, there is a provision that deals with the requirements to be made to the subject of the contract, and it is paragraph 14.
This provision, one might think, was unnecessary as long as it is the contract documents that presuppose what requirements should be made to the subject of the contract.
On the other hand, we do not find a corresponding provision in NS 8405 or NS 8406.
The reason for this is that the general contractor must design detailed projects so that the functional requirements are met. It is therefore important to ensure that the subject matter of the contract satisfies certain minimum requirements.
Accordingly, the requirements of paragraph 14 apply unless expressly stated otherwise in the contract documents.
In this article we will go into more detail into the individual provisions belonging to paragraph 14 “The subject of the contract”.
2. Overview of the rules
Our starting point is, of course, NS 8407, but as the matrix shows, there are also a few provisions of relevance in NS 8405 and NS 8406, respectively.
3. Agreed requirements
The first provision of NS 8407 paragraph 14 “The subject of the contract” is 14.1 which is about “Agreed requirements”.
There it is established that the subject matter of the contract shall be delivered in accordance with “agreed requirements”, and it is referred to the contract documents with accompanying drawings, models, descriptions and any reference objects.
For the record, it is mentioned that there is also a separate provision in the performance contract standards that the contract work must meet the requirements specified in the contract, namely NS 8405 paragraph 11.1, first paragraph “Execution” and NS 8406 paragraph 11 “Entrepreneur performance”.
We will not go into more detail about this here, but refer to what we have written about contract documents and interpretation in the article under the topic “General Provisions”, read here.
4. Unspecified parts
Furthermore, it follows from NS 8407 paragraph 14.2 that “(U) specified parts of the subject-matter of the contract shall be of the same standard as the specified parts with which it is natural to be compared”.
A similar provision is found in NS 8405 paragraph 11.1, second paragraph and NS 8406 paragraph 11, second paragraph, which states that where no quality requirements are specified, “apply such quality requirements as are customary for equivalent works”.
5. “The purpose of the builder”
It follows from NS 8407 paragraph 14.3 that the subject matter of the contract shall “suitable for the purposes which the builder has with it and which the general contractor was or must have been familiar with at the time of the conclusion of the contract”.
This provision substantiates the rule of interpretation in the first paragraph of paragraph 2.2 of NS 8407 that: “the functional and solution, quality or brand requirements specified in the tender or competitive basis apply in front of solutions” mm in the general contractor's offer unless a “express reservation”.
6. Laws, regulations and public decisions
Moreover, NS 8407 paragraph 14.4 states that the subject matter of the contract must comply with laws, regulations and public decisions.
It must be possible to assume that the general contractor ensures that the subject matter of the contract satisfies the statutory minimum requirements, even if these are not expressly defined or specified in the tender or competitive basis.
If the statutory minimum requirements are not met, the general contractor will not be issued a temporary use permit, and at least not a certificate of completion.
By the way, it is the responsibility of everyone with the right of responsibility according to the plan and the rules of the Building Act to design to comply with applicable laws and regulations.
If the law, regulation or public decision changes after the contractor submits his offer, and this results in the need to change the subject matter of the contract, the contractor may submit a request for amendment in accordance with the provisions of NS 8407 paragraph 32.2.
The premise is that the contractor should not have taken the change into account (and avoided the consequences) when the offer was made.
7. General norms, etc.
In NS 8407, point 4.5 “General norms, etc.” it is established that the subject-matter of the contract shall comply with “Norsk Standard and (...) generally accepted norms at the time of the offer”.
This is also related to the general contractor's responsibility to design details.
A number of guides and construction detail sheets have been published on how to design and carry out works to ensure that these are built in a safe manner.
As we will return later, this provision will also provide guides of relevance to what is called systematic completion (of engineering systems and facilities).
The Norwegian Standards and Guides have been published which explain in a thorough and detailed way how to proceed to ensure that technical systems and facilities function as they are designed — both individually, integrated with others and as a unified unit where the entire contract object is in operation.
We will return to this in the articles on the termination phase.
8. Choice of solutions
In NS 8407, paragraph 14.6 “Choice of solutions” one finds the provision that best gives visibility to what is normally considered to be the general contractor's “carrot” for assuming the functional risk.
It follows from this provision that a general contractor has an extensive right of choice as to what he fulfils the functional requirements with. The prerequisite is that he stays within the confines of the agreement.
This right of choice enables the general contractor to use his expertise and resources to find solutions, products, qualities, etc. that are sufficient to meet the functional requirements
Since the general contractor is a businessman with the same legitimate need to create a financial surplus as the builder, he will naturally have a desire to choose alternatives that keep his own costs down.
Sometimes it may occur that builders lack the understanding that the general contractor should have this freedom of choice.
An example of this issue is the judgment of the Borgarting Court of Appeal of 22.2.2024 (LE-2023-151768). This case concerned the relationship between the builder and the general contractor where the contract was based on NS 8407 and the relevant provision was clause 14.6.
The judgment illustrates how paragraph 14.6 is to be understood.
In that case, a contract had been signed between a municipality and a contractor based on NS 8407 (turnkey contract).
During the implementation phase, the general contractor came up with a solution for how to avoid sentences without using a solution that the municipality had suggested in the competition basis. It was clear from the basis of the competition that mass replacement would probably have to be down to a depth of 3 metres.
The general contractor found a solution that involved mass replacement down to 1.6 meters, thereby saving money. The municipality went to court because it believed that this savings should benefit the municipality, and not the general contractor.
The municipality lost the case, and the general contractor kept the savings he had achieved.
We have covered the ruling under “Recent Case Law”, read here.
Alternatively, it can be seen that the developer tries to limit this freedom of choice through detailed descriptions which, by a long way, mean that one is actually approaching an execution centre.
Another method to limit the general contractor's freedom of choice at a more general level is to require the general contractor to present 2-3 alternative, equal solution proposals from which the builder should be able to choose. If one chooses such a variant as a builder, it would be natural to decide on such a thing for partial deliveries such as bathroom modules, kitchen solutions, facade panels and/ or other visible things.
A third, or supplementary method, may be for the builder to make specific requirements for LCC (life cycle costs) and/ or Breeam. This is in order - if nothing else, at least indirectly - to ensure that the costs of the FDVU for the next few decades remain at the lowest possible level.
A builder who discovers along the way that the general contractor is using his freedom of choice in a way that the builder believes gives him a final product that is inferior to what was intended, can of course intervene in the general contractor's freedom of choice.
If he does, however, this must be done using the change order system, see NS 8407 paragraph 14.6, second paragraph.
9. The Graykager verdict. Judgment of the Borgarting Court of Appeal of 27.1.2022 (LB-2020-066936)
The judgment contains, among other things, a good account of the tasks of the general contractor with regard to the design and requirements for the subject matter of the contract. There are a number of statements in the judgment concerning NS 8407 paragraph 14, and accordingly we find it natural to include these parts here.
The case concerned a land-based fish farm outside Fredrikstad that was designed and partly built with foundations that were not adapted to local soil conditions. The Court of Appeal concluded that the general contractor (Gråkjær) was responsible for the fact that the design error arose from an interpretation of the obligations in the turnkey contract award up to NS 8407, in particular paragraph 14.
From the judgment, the following is found:
“The design and execution of foundations is part of the turnkey contract and as such Gråkjær's responsibility.
It is called about engineering in NS 8407 paragraph.16.1:
Unless otherwise agreed, the general contractor shall provide all necessary engineering in order to deliver the contract object in accordance with the contract, including the rules in paragraph 14.
The Court of Appeal mentions here that “engineering” usually means describing in detail the work to be carried out, drawing up drawings, mapping the functional requirements imposed by law, regulation and contract to the work processes and the result, as well as selecting methods, products and materials that ensure that the functional requirements are met.
On this basis, the Court of Appeal shall briefly describe the obligations deriving from NS 8407 paragraph 14, as a starting point for the further assessment of the requirements for Gråkjær's performance.
The starting point follows from paragraph 14.1, where it is stated that the subject matter of the contract must meet the agreed requirements.
It follows further from paragraph 14.3 that the facility must match the purpose of the builder, and it follows from the second paragraph of the same provision that the choice of solutions must be adapted to the conditions on the site.
It also follows from paragraph 14.4 that the contract works must be delivered in accordance with public law requirements, and from paragraph 14.5 that they must comply with general norms — including the Norwegian Standard, with the corresponding supplementary rules in the so-called Eurocodes, as also shown in the comment above. The Court of Appeal has not found it necessary for the outcome of the case with any further explanation of the Eurocodes in addition to that which can be inferred from paragraph 14 of the Standard.
The Court of Appeal also finds reason to mention in this context NS 8407 paragraph 14.6 which gives the general contractor a freedom of choice as to how he will fulfil the functional requirements.
As mentioned above, the general contractor assumes a performance obligation. Typical for turnkey contracts is that the general contractor has a functional risk, which implies responsibility for the fulfillment of certain functions by the object of the contract. The fact that the building must be properly founded so that the loads of the plant are brought down to the ground without the risk of skewing that can damage the structure is undoubtedly a key function for a facility with a complex load picture to be placed on a consistent basis.
The Court of Appeal thus agrees with Fredrikstad Seafoods that the contract must be understood as containing a requirement for a purposeful and functional foundation solution. How Gråkjær chose to design such a solution is not decisive, and the absence of a description of a constructive reinforced base plate is not decisive for the interpretation as the Court of Appeal sees it. This can also be inferred from the general contractor's right of choice, within the framework of the contract, to design the solution he deems appropriate, cf. clause 14.6.
The main function of the foundation is to transfer the weight of the building down to the foundation. A generally good and professional performance requires that the foundations take care of this function. To achieve this, the general contractor must take into account the ground conditions. A foundation solution that is not adapted to the ground conditions and, for that reason, is unable to keep the building stable enough to avoid skew damage, will not satisfy the requirement of “generally accepted norms”, cf. NS 8407 paragraph 14.5.
