Common Mistakes after Construction Agreement Ep.2 ‘Extra Work Claims’
One of newsletter reader gives us a good comment about our previous Volume of our newsletter. He would like the add of Sections of Relevant laws. We found that is a good idea and benefit to the readers. Thus, from this volume onwards, the relevant section of law will be provided in the article but the reading and understanding still easy like before. Into this volume, we are going to talk about the second mistake which is also create a great damage to the owner.
Second Mistake: Amendment of the Construction without an Amendment Agreement in Written.
Amendment of the construction is a part of construction work with bunch of reasons such as the condition of the construction site, the need of the owner (utility, design, quality of the construction materials etc.), the difficulty of the construction, the limited of the budget etc. No matter what the reason is, it often effects to the quantity of work, budget and delivery deadline which may different with the original signed construction agreement. And always comes with arguments and disputes.
In one hand, the contractor should clarify the details of the amendment such as quantity of work, time frame of work and wage, also provide the owner the amendment agreement to sign before continue the work that to prevent the arising arguments and disputes in the future. In another hand, it is a duty of the owner to request the signed Amendment Agreement before continue the work. However, many times the amendment of the construction is done without the Amendment Agreement which means unfortunately the appearance of the common mistake we are talking about. In this case, if the amendment of the construction causes the delay of the delivery deadline, an extra payment of both the material cost and the wage should occur. If the owner refuses the extra payment. Who will win?
In this case, the Court Verdict always favour to the Contractor because the Construction Agreement or the Amendment Agreement not required a Signed Agreement. It is easy for a contractor to provide an evidence of the amendment and extra costs.
The owner has a liability to the extra costs as the amount of the evidence provided to the Court, with interest rate calculated according to the maximum interest rate under the construction agreement, or if the interest rate haven’t be mentioned in the agreement, the minimum interest rate under law will be applied from the date of the due payment (the date which the contractor call for payment or the date of the delivery of the construction) until the full payment is made accordance to the Section 857 and 152 of the Civil and Commercial Code and Section 85 and 104 of the Civil and Commercial Procedure Code.
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ARTICLE BY Akenarin Thongplod Thai Barrister at Law Notarial Services Attorney