Contract agreement: 9 key differences from an employment contract

The construction contract is one of the most common agreements in the Russian Federation.

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Under such a transaction, one party undertakes to perform the work specified in the agreement, and the other party to pay for it.

Subjects under a construction contract can be any person, from individuals and entrepreneurs to any organizations, that is, legal entities. The parties to this agreement are referred to as the General Contractor and the Customer.

Accordingly, the Contractor is the person who organizes the implementation of certain works, and the Customer is the person who pays for these works.

In this case, the Contractor must have a license, on the basis of which he has the right to perform the work that is ordered from him.

Such an agreement requires mandatory written execution. In this regard, below we will examine step by step how this document is drawn up and what provisions should be added to its text in order for it to enter into legal force.

Construction contract

Kurgan
October 25, 2023

We are: Joint Stock Company JSC "Housing Complex", represented by the general director of the company Nikitin Nikita Sergeevich, acting on the basis of the Charter, hereinafter referred to as the Customer, on the one hand, and the Limited Liability Company LLC "Construction Management", represented by the general director of the company Borisov Borisov Borisovich, acting on the basis of the Charter, having a certificate of permission to carry out capital construction work, hereinafter referred to as the General Contractor, on the other hand, have entered into this agreement as follows:

The preamble to the agreement contains the following information:

• about the type of agreement;
• on the date and place of conclusion of the contract;
• about the names and roles of the parties to the transaction.

The essential conditions, without which the contract does not enter into legal force, according to the provisions of the Civil Legislation, are:

• subject of the agreement;
• contract price;
• turnaround time.

Sample contract for apartment renovation

To legitimize the working relationship between the repair contractor and the customer, it is enough to type “sample apartment renovation agreement” or “sample apartment renovation contract” on the Internet. It is the same. Then print and fill out.

Apartment renovation agreement between individuals , sample

Or you can draw up a document yourself, you don’t even have to go to a lawyer. The main thing is that all the most important points appear in it:

1. Participants in the transaction. Here we write down information from the passports of the customer and the contractor. The contractor can be either a company or an individual. In the first case, instead of the full name there will be the name of the company, and the signature is placed by the manager or authorized representative. In the second case, the contract is signed by any person who will do the repairs, for example, a foreman.

1. Subject of the agreement. This paragraph includes the names of all the work and where exactly it will be carried out - in an apartment, a house, in one room or just a toilet. The site address is required.

Separately, as support for the item, there is a detailed estimate and technical plan of the apartment. You can get it at the BTI, and apply at the MFC closest to your home. To do this, you will need the apartment owner’s passport and an extract from the Unified State Register of Real Estate.

An extract from the Unified State Register will confirm ownership. It’s also easy to get, you don’t even need to go to the MFC. The opportunity to order a certificate without leaving home is provided by the EGRN.Reestr service . It is very convenient and inexpensive. Applications are accepted both on the website and through the application. The finished statement in a readable format arrives by email within half an hour. It costs 200-300 rubles depending on the type.

1. Repair deadlines. Contains the start and end dates of renovations in the apartment. If necessary, we also allocate time for each stage of work. For example, builders are required to install a toilet on a certain day, and within a week to plaster and wallpaper the walls. We also indicate the date of acceptance of the work.

1. Penalties. We determine the amount of fines if any of the stages of work is not completed on time.

1. Payment for work. We write down the payment details. Here's who will come to an agreement. Whether it will be a full prepayment or only a part, payment upon delivery or for each stage of work separately according to the schedule - it is up to both parties to decide. If the full cost of services is not yet known exactly, you can leave it out for now and add it later.

1. Materials. It makes sense to add this clause if the contractor is going to buy the materials himself. Then the customer can indicate what quality they should be, what colors and textures, what company they should be produced by. The more details, the easier it will be to file a claim if something happens.

Item

Information about the subject of the contract is the main component of any contract. The subject in our case is the types of work that the General Contractor undertakes to perform, and the Customer undertakes to pay for. In the section about the subject, it is important to indicate the volume and content of the work. It looks like this:

The general contractor, on the instructions of the Customer, within the period established by the contract, undertakes to carry out the following work: Carry out the construction of the Orleans residential complex, which includes the construction of three ten-story residential buildings of a panel series at the address: Kurgan region, Kurgan city, Lenin Street 97. Number of entrances - 9 (Nine), the total number of apartments is 342. Additional structures that the General Contractor undertakes to erect on the territory of the residential complex are:

• underground parking with 250 parking spaces;
• street parking for 25 parking spaces;
• playground;
• playground;
• simulators.

The characteristics of these structures are contained in the appendices to the contract. The work is carried out in accordance with technical documentation. The general contractor carries out work on the basis of a license, which gives the right to carry out construction, reconstruction, and major repairs. The license was issued by the Ministry of Construction of the Russian Federation on April 12, 2021.

Personal income tax on remuneration to contractors

Personal income tax is withheld from payments to citizens under the GPA, since in this case the organization is recognized as a tax agent. Remuneration (advance) is included in the tax base for personal income tax on the day the remuneration (advance) is paid in cash or in kind (clause 1 of Article 223 of the Tax Code of the Russian Federation). It does not matter in which tax period the person will perform the work or provide the services. Tax is withheld on the day of actual payment of income, regardless of whether this payment is an advance payment or a final payment.

Contract price

An integral part of a construction contract is information about the cost of work. In the text of the document it might look like this:

In accordance with this agreement, the contract price is 834,540,000 rubles (Eight hundred thirty-four million five hundred forty thousand) rubles 00 kopecks, including value added tax. The customer, no later than the 10th day of each month, pays for the work performed to date, after signing the acts provided by the General Contractor. After completion of the work, an acceptance certificate for the completed work is drawn up. Next, the calculations are checked.

Final provisions

This section reflects provisions that are essentially not related to the above sections, but are important when concluding an agreement. Their wording looks like this:

• This agreement acquires legal force from the moment it is signed by the Counterparties. • The work is accepted by the Customer by drawing up an acceptance certificate for the completed work. • In case of any disagreements or disputes, the parties resolve them through negotiations. • If the parties do not reach a compromise, all disputes are resolved in court. • This agreement comes into force from the moment it is signed by the parties.

Rights and obligations

The section on obligations in our case is the most voluminous. It sets out the provisions on the rights and obligations of the Counterparties under this agreement. It is important to understand that to build a residential complex it is necessary to carry out a very large number of actions, and each of these actions is discussed by the parties in the text of the Contract. We will give some formulations that are fundamental:

The Customer has the right to: • Demand proper fulfillment of the General Contractor's obligations under this Contract. • Monitor the progress of work by the General Contractor. • Supervise the compliance of the work performed with technical documentation. • Make adjustments to working documentation. The customer undertakes: • To pay for the work performed in accordance with the payment terms specified in this agreement. • Provide the General Contractor with permission to carry out the work. • Provide the General Contractor with all the necessary documentation to carry out its activities. • Ensure normal conditions for the General Contractor to perform the work specified in the Contract. The general contractor has the right to: • Engage specialized organizations to perform certain work. The General Contractor undertakes to: • Properly perform the work specified in the Contract. • Carry out work in strict accordance with technical and working documentation.

Contents and terms

When determining the legally significant content of the GPA, it is necessary to be guided by the chapters of the Civil Code of the Russian Federation, and not by Article 57 of the Labor Code of the Russian Federation. The agreement should not contain labor law terms. Instead of the words “employer” and “employee”, the words “customer” and “performer” or “contractor” are used. The word “salary” is replaced by the concept “remuneration”. The terms “working time”, “rest time”, “vacation” cannot be used. This is due to the fact that contractors - individuals are not covered by the guarantees provided for by the Labor Code of the Russian Federation. For example, rights to paid leave, various benefits, sick leave, etc.

Fundamental points of the construction contract

While there are standard general provisions, in particular the agreements differ in the content of some fundamental clauses.

The subject of the contract is stated both succinctly (what kind of house, at what postal address and in what time frame the contractor will build for the customer) and in detail. But this paragraph should always indicate that the house is being built in accordance with the project, technical specifications, estimate and schedule. Terms of reference, work schedule, detailed estimate reflecting the types and costs of work, as well as requirements for the operation of a residential building are mandatory annexes to the construction contract. Many also include here the method of providing construction materials, so as not to put it in a separate item.

• The Contractor undertakes to arrange deliveries.
• The customer is obliged to provide materials.
• Partly contractor, partly customer.

In the subject of the contract, in addition to the house’s compliance with the specifications and the project, it is worth indicating its compliance with SP 55.13330.2016 or at least “current standards and rules.”

The timing of the work is variable, they are described in a separate paragraph, in stages and in full, or they indicate in the subject of the contract that construction will be carried out in accordance with the attached schedule from such and such a date. The absence of such a schedule, as well as vague deadlines and wording without specifics, is an excellent opportunity for the contractor to protect himself from fines and penalties when construction is delayed.

The cost of work and the payment procedure is the most “interesting” and controversial point on which it is rarely possible to reach an agreement. Either they categorically refuse to include an estimate, which is a direct violation of one of the laws on consumer rights, or they ask for a gigantic advance payment without any guarantees for the customer. According to the latest edition of the mentioned law, the estimate can be drawn up as a firm or approximate one, and an interesting wording has also been introduced: “Drawing up such an estimate at the request of the consumer or contractor is mandatory.” That is, they did not pay attention, did not require, when concluding the contract, to draw up at least an approximate estimate for the main types of work; the contractor himself may not be puzzled, having gotten away with the total amount of the contract.

How exactly the payment will take place, in stages or in two tranches (the main amount in advance, a small balance after the house is delivered), is also specified in this clause of the contract. The same paragraph states that the cost of the contract is final and cannot be increased. An exception is when the customer makes changes to the project, in agreement with the contractor and with the signing of the corresponding agreement. When the company itself purchases building materials, and the contract is concluded for the future, it is also very advisable to stipulate that the cost of building materials is also fixed, in case they become more expensive. If the company introduces a clause that the cost of building materials may increase, you need to look at how much interest they set aside for this case, so that at the start of work it does not turn out that the price tag has doubled, and there is nowhere to get money for such an increase.

Optimal for customers and very unpopular with performers is a phased breakdown of payments without a large initial advance. But if you pay almost the entire amount at once, in which case there will be no leverage left, and not everyone will be afraid of going to court. Forum participants have a sharply negative attitude towards such a scheme and have developed over the years a “recipe” for interaction with private teams, but it is also effective in relation to the insurance company.

Dimastik25FORUMHOUSE Member

The maximum you pay upon the arrival of the team and upon the delivery of materials is the cost of materials at average market prices. Otherwise, you risk being left with the material on the site, at a cost of 70% of the construction estimate and without a crew. The basic rule is that you should always be indebted to the crew. By paying for each stage, you leave a small debt for the future. The only way. And nothing else.

An advance payment of 70, 80, 90% is Russian roulette, in which it can work if the contractor is conscientious, and thus simply insures himself against deception on the part of the customer. Or maybe not, according to statistics, in this segment of the service market, a third of those who made an advance payment in the hope that the contractor will fulfill its obligations under this contract are deceived.

One of the contract options with step-by-step settlement. Although the advance payment is large, it is for individual stages, and not the entire volume at once.

Delivery and acceptance of work - this should include both the conditions of acceptance (by the customer, an engaged specialist), and the conditions for issuing claims, and an indication that the contractor must correct his defects at his own expense. In order to refuse to accept poor-quality work and achieve rework, a justified written claim with a full description, listing and photo must be submitted. An unmotivated verbal refusal is counted as acceptance by default and the work must be paid within the period specified in the contract.

Obligations and responsibilities of the parties - the more detailed all the obligations and rights of the customer and the contractor are spelled out, as well as the responsibility of each for violations, the more effective the contract. They indicate who is responsible for what (meeting deadlines, preserving the object before delivery, ensuring conditions for construction, etc.), and what the amount of penalties and fines is for each of the parties. The method of providing construction materials, a paragraph on risk insurance, and even a sub-clause on cleaning up construction waste upon completion of work can also be included here.

Warranty obligations - it is the presence of this clause that should protect in case hidden defects are discovered during the operation of the house. When concluding a turnkey construction contract, the document specifies the exact warranty period not only for the quality of the work performed, but also for engineering systems and all components (windows, doors, equipment). The guarantee for the work (preservation of the operational properties of the house) must be at least two years, and conscientious performers give all five. The warranty for components is usually prescribed based on the manufacturer’s obligations. To ensure the good quality of construction or detect deficiencies, the calendar days allocated for acceptance are not enough. Many shortcomings appear not a few days after the signing of the act, but several months, or even a year after the final settlement with the builders.

According to the law, within two years from the date of signing the acceptance certificate, the contractor can be obliged to eliminate them at his own expense, unless otherwise provided by the construction contract. Insurance companies usually try to play it safe and shorten the warranty period to a year, but if you notice this in time, you can actually insist on two. But there is also a nuance - if the defects appeared due to violation of the rules of operation of the house, the owner bears responsibility. And this annex to the contract should be studied as carefully as the estimate, so as not to accidentally be left at fault.