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 foundation and regardless of the size of the claims, the builder may consider that the contractor was delayed with the consequence that the builder has presented the requirement for daymulch 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 8417, NS 8415 and NS 8416 are reasonably similar, but we have taken an overview of them in the matrix below.
As in all other articles, we start from NS 8417 since this is the standard contract that is used most often today.
3. Final Setup with Final Invoice
It is stated in NS 8417 paragraph 39.1 (and corresponding provisions of NS 8415 and NS 8415) that no later than two months after the takeover, the subcontractor must send a statement to the general contractor showing all the claims he has against him.
The list shall contain absolutely everything that the subcontractor makes of claims against the general contractor.
Whether the claims have been invoiced earlier or not, whether the invoices have been paid or not, whether claims are disputed or brand new does not matter. All claims maintained by the subcontractor, as well as the amount involved, must be included.
The subcontractor must also include all of the indexation, claims on interest if the general contractor has paid invoices after maturity.
The inventory should be set up so that all claims the subcontractor has against the general contractor are summed up, and then the amount paid by the general contractor during the construction period is entered. The difference including VAT will then constitute the subcontractor's net remaining amount which becomes the amount of the final invoice.
There is a difference in principle between NS 8417 paragraph 39.1 on the one hand and the provisions of NS 8415 paragraph 33.1 and NS 8416 paragraph 25.1 respectively which may act as a trap for a subcontractor accustomed to NS 8415 and NS 8416 contracts.
In the latter two standard contracts, the subcontractor has the opportunity to correct his final statement after it has been transmitted to the general contractor, but then on condition that the correction takes place within the expiry of the two-month period.
The subcontractor in a NS 8417 contract does not have that option. There is the rule that once the final statement and invoice have been sent to the general contractor, there is no longer the opportunity to correct it. This even though one could have waited until the two month deadline expired and 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?
The subcontractor does not have to 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 main contractor may have a vested interest in clarifying what requirements the subcontractor wishes to make in connection with the final settlement.
Accordingly, NS 8417 paragraph 39.1, last paragraph (and similarly in NS 8415 paragraph 33 and NS 8416 paragraph 25) contains a rule to which the subcontractor should beware.
It follows from this provision that the general contractor may send the subcontractor a written notice giving the subcontractor a minimum period of 14 days to submit his final statement and final invoice.
If the subcontractor fails to do so within the deadline set, the subcontractor 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 main/general contractor. Objections and claims
The rules on how the general contractor shall act when receiving the subcontractor's final statement and final invoice are set out in NS 8417 paragraph 39.2, and corresponding provisions in NS 8415 paragraph 33.2 and NS 8416 paragraph 25.2.
When the general contractor receives a final statement and final invoice from the subcontractor, it follows from NS 8417 paragraph 39.2, first paragraph, that the general contractor must pay the invoice “within two months counted from receipt of final line-up with final invoice”.
To the extent that the general contractor has objections to the subcontractor's final statement and final invoice, or its own claims that the general contractor will enforce against the subcontractor (such as daymulkt), these must “to be made within the payment deadline” which is two months after “the receipt of final line-up with final invoice”.
The general contractor must submit all objections and counterclaims he has, including those made earlier.
If the subcontractor has repeated previously made claims that the general contractor has already disputed, he must repeat that the claims are disputed in his feedback to the subcontractor. If he fails to do so, the objections are lost with the consequence that the subcontractor's previous (disputed) claim is deemed accepted.
Thus, it can be concluded that the effects of neglect are as severe on the general contractor as they are on the subcontractor.
The key point is that there is an unambiguous mechanism for clarifying the parties' positions in connection with the final settlement itself.
The general contractor should note that he does not have the opportunity to correct his statement of objections and counterclaims once the latter has been submitted. This is in contrast to the subcontractor who can correct until the two-month deadline has expired.
We emphasize again that this right only subcontractors in execution centers have (NS 8415 and NS 8416), but not in total subcontracting (NS 8417), ref above.
Once the main/general contractor has submitted its statement of objections and counterclaims, it is legally binding provided that it is submitted within the payment deadline of two months from “the receipt of final line-up with final invoice”.
If the main/general contractor overstays this deadline, all objections and counterclaims are void. This is stated in NS 8417 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”. The same rule follows from NS 8415 paragraph 33.2 third paragraph and NS 8416 paragraph 25.2, third paragraph.
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 8417 paragraph 42.
The corresponding rule follows from NS 8415 paragraph 33.2 and NS 8416 paragraph 25.2.
