2010 Guarantee payment for the works

On April 6, 2010, the Act of 8 January 2010 amending the Act - the Civil Code (hereinafter "CC") entered into force.

New rules on payment guarantee for the works are governed by the provisions of articles 6491 – 6495 CC.

The purpose of the amendment is to protect contractors and subcontractors, particularly small and medium-sized enterprises against the late payments for works executed, on the part of the investors.

The amended provisions give the contractors and subcontractors the right to demand from the investor a guarantee of payment. The Act introduces the list of acceptable forms of security, namely: (I) a bank guarantee, (II) insurance guarantee, (III) a bank letter of credit, (IV) the bank guarantee given on behalf of the investor.

Costs of guarantees shall be borne in equal shares by the investor and contractor. The investor does not have a right to exclude or limit the contractor’s right to claim warranty. Contractors may request a guarantee (a) before starting work and (b) at any stage of the construction process. Earlier grant of partial guarantee by the investor does not deprive the contractors of subsequent request of guarantee in the full amount of the claim.

The contractor that demands guarantee sets the investor a deadline for its grant, not shorter than 45 days. If the investor does not give a guarantee within this period, contractor may cancel the contract with the investor's guilt. Provisions for the payment guarantee also apply to contracts concluded between contractor (general contractor) and subsequent contractors and between contractors and subcontractors.

These rules do not apply to other entrepreneurs involved in the construction process, such as suppliers of materials or services, companies renting construction equipment, surveyors.

Kancelaria Prawna 90-060 Łódź, ul. Nawrot 4/1, tel./fax +48 /42/ 630 58 41, tel. +48 /42/ 632 51 44,
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