1. Introduction
It is only at the time of takeover that the subcontractor is obliged to deliver the subject of the contract in accordance with the agreed requirements, and within the agreed closing deadline.
We return in more detail to the effects of the contract work being handed over, but mention that the standard contracts have their own provisions on this, cf NS 8415 paragraph 32.6, NS 8416 paragraph 24.4 and NS 8417 paragraph 37.4.
The time of takeover is also the start of the deadline for the absolute complaint deadline of five years and for when claims become obsolete after three years, cf. Statute of Limitations Act of 18.5.1979 No. 18, Section 3 (2).
2. Overview of the rules
Below we have taken a matrix showing the individual topics.
As can be seen from the matrix, provisions on the same subjects are included in all three standard contracts. It is not accidental since the takeover represents perhaps the most central and important part of the parties' execution of the contract.
We start from NS 8417 since it is this contract standard that is used most often today, but refer to NS 8415 and NS 8416 where this is natural.
By the way, we would like to add that the rules of the subcontracting standards are identical to the rules of the parent standards when it comes to the takeover. What is different in the subcontracting standards are the rules on registration business and the effects when one is held. Often registration transactions are not carried out and therefore exhaustive provisions on takeover transactions and their effects must also be in place. We deal with the rules on registration business in a separate article and therefore do not go into those rules here.
3. Takeover business
It follows from NS 8417 paragraph 37.1 that both parties have an obligation to meet at the takeover business.
If one party fails without a valid reason for absence, the other may carry out the business.
In other words, it is not possible to prevent a takeover by abstaining.
If a party is prevented from participating, he must notify of his absence “without undue residence” and at the same time give an account showing that he has “factual reason” to require that the takeover business must be postponed.
At the commencement of the takeover business, the subcontractor shall present a list of deficiencies that he has identified in his own final examination, as well as the status to the extent that he has finalized/remedied since the final inspection.
In NS 8417, paragraph 37.1, last paragraph, it is stated that the general contractor is presumed to have checked the test and FDV documentation received five weeks prior to the commencement of the takeover business.
From NS 8417 paragraph 37.1, first paragraph, it is stated that the takeover shall take place “aggregated for the entire subject matter of the contract unless partial takeover has taken place”.
Moreover, the last paragraph of NS 8417, paragraph 37.1 states that the parties shall: “jointly carry out a proper examination of the subject-matter of the contract”.
That the fear is “diligent” This is, of course, linked to other provisions of NS 8417. Among other things, NS 8417 paragraph 42.2.1 states that the general contractor loses his right to complain about defects that he “have or should have discovered” on the takeover business or “at the control of” the test and FDV documents.
We mention that the same rules apply essentially also in NS 8415 paragraph 32.8 and NS 8416 paragraph 24.8.
Regarding the rules on the loss of the right of complaint if one does not take sufficient care during the takeover business, we refer to NS 8415 paragraph 36.6 and NS 8416 paragraph 27.5.
4. Protocol
The parties shall always keep a record of the takeover transaction, cf. NS 8417 paragraph 37.2, NS 8415 paragraph 32.7 and NS 8416 paragraph 24.7.
In all the provisions there is a fairly detailed description of what information should be included in the protocols, and it is rare for us to see errors made in them.
However, we clarify that deficiencies invoked by the general contractor must be included in the protocol, as should the subcontractor's objections if he disagrees. Often, the parties will have agreed on the length of the subcontractor's remediation deadline already at the conclusion of the contract, and whether this deadline should be covered by a day's notice.
If a deadline for rectification has not already been agreed, this should be agreed at the takeover hearing and entered in the protocol. The same applies to the timing of any aftercare.
By the way, we refer to the relevant provision of the three standard contracts.
5. The right of the general contractor to refuse a takeover
All three standard contracts have a provision on the right of the major/general contractor to refuse a takeover, and in NS 8417 there is clause 37.3.
For all practical purposes, there are the same assessment themes in the three standard contracts and we do not problematize any disparities here.
The ideal starting point is that all works should be completed and the subject of the contract without defects and defects at the time of takeover, but this is not the case, as a rule.
Regardless of the objectives of a subcontractor to deliver without errors, or the main/general contractor's expectations, works will remain or deficiencies will occur.
However, there is a limit to what must be accepted and the standard contracts contain a provision on when a main/general contractor can refuse to take over.
The provisions of NS 8417 are slightly differently worded than the provisions of NS 8415 and NS 8416, but the legal content of these is reasonably similar.
What is the subject of consideration is whether the defects, or a rectification of them, are of such a nature that the builder cannot avail himself of the contract object for the intended purpose, or not.
If the subject matter of the contract can be used as intended, and the deficiencies can be remedied without preventing its use, the main/general contractor must take over.
If, on the other hand, the situation is that the contract object cannot be used at all, or only to a very limited extent, it is obvious that the main/general contractor may refuse to take over.
There will of course be grey areas between these two extremes and we recommend that the parties seek expert assistance if the question of a takeover or a takeover presents doubts and challenges.
Please note that deficiencies in test and FDV documentation may also give the main/general contractor grounds for refusing a takeover.
As for physical defects, there is not any deficiency in this documentation that can justify not taking over.
In NS 8415 paragraph 32.5 a materiality claim is entered and in NS 8417 paragraph 37.3, third paragraph it states that takeover cannot be denied if “the shortage has little bearing on” the FDV function, and “the documentation is also not necessary for the builder to be able to assess whether the requirements of the contract have been met”.
In addition, it is noted that the main/general contractor is not obliged to take over before the agreed deadline.
Finally, we would like to clarify that in practice the main/general contractor will not refuse to take over the works of a subcontractor unless the builder refuses to take over from the main/general contractor. It is only when the builder refuses that the rules on refusing takeover come into force.
6. Partial takeover
It follows from NS 8417 paragraph 32.5, NS 8415 paragraph 32.10 and NS 8416 paragraph 24.10 that the general contractor may take part when this is specifically agreed.
It also follows from all three provisions that the main/general contractor may demand to take over part of the works at the takeover shop even if not all works have been completed. The condition is that the main/general contractor must discuss this with the subcontractor first. It shouldn't be a particularly difficult dialogue to bring with subcontractor.
The point is that a partial takeover of whatever is finished (enough) to be put into use is far more rational and justifiable for both parties (normally) than if the main/general contractor were to refuse to take over the entire subject matter of the contract (assuming that would have been a rightful alternative).
The consequence of such a partial takeover would be that any daily allowance for the proportionate value of the entire contract object represented by the acquired party ceases to run. In addition, the subcontractor gets the right to submit a claim for final settlement for what has been taken over. Further, the complaint deadline will begin to run.
The only duty that continues for the contractor is to keep the entire subject of the contract insured until everything is taken over, cf NS 8417 paragraph 37.5 last paragraph letter a.
These rules also follow from NS 8415 paragraph 32.10 and NS 8416 paragraph 24.10.
However, such a partial takeover may present practical challenges for the subcontractor. For example, it is conceivable that he will face greater challenges in terms of accessibility to those parts of the contract subject that have not yet been finalized.
For that reason, the subcontractor has the right to demand an extension of the deadline and an adjustment of remuneration for any inconvenience caused by such a partial takeover. If so, he must notify in accordance with the general notification rules.
We refer, in this regard, to NS 8417 paragraph 37.5, the second paragraph, which refers to the provisions on the extension of the deadline in paragraph 33 and the adjustment of remuneration in paragraph 34, respectively. Further, we refer to NS 8415 paragraph 32.10, second paragraph referring to corresponding provisions of Chapter IV of this Standard. In NS 8416 paragraph 24.10, second paragraph, reference is made to paragraph 19 of this standard.
In our view, such a partial takeover would most often benefit both parties, but do not disregard the fact that the parties will disagree completely on whether the main/general contractor has the right to refuse to take over everything in such a situation. It should therefore be borne in mind that a partial takeover in such a situation may complicate the parties' dealings.
Our advice is that expert assistance is sought and a thorough assessment is carried out, preferably with your own agreement, on the consequences of a possible partial takeover by the developer.
7. Effects of Takeover
All three standard contracts have an exhaustive list of the effects of taking over the subject of the contract. We refer to NS 8417 point 37.4, NS 8415 point 32.9 and NS 8416 point 24.9.
