The construction services contract (contrat d'entreprise) is the contract by which the contractor undertakes to execute a work, for a price that the client undertakes to pay (art. 363 CO). It differs from a mandate by its obligation of result: the contractor guarantees a work conforming to agreed specifications. This contract governs many situations: building construction and renovation, IT development, manufacture of objects, technical studies. PBM Avocats in Geneva and Lausanne intervenes in drafting these contracts and in disputes arising from them.
Definition and Obligation of Result (arts. 363-364 CO)
Unlike a mandatary who undertakes diligent effort, the contractor guarantees a result: the work must be delivered in accordance with contractual specifications, within agreed deadlines. This obligation of result has several implications:
- The contractor bears the risk of technical failure if attributable to them;
- They must notify the client of defects in material supplied or instructions received that could compromise the conformity of the work (art. 365 CO);
- They organise their work and means freely, without being subject to the client's permanent instructions;
- The distinction from an employment contract (subordination) is often disputed in practice.
Warranty for Defects in the Work (art. 368 CO)
The warranty for defects is the contractor's central obligation towards the client. Art. 368 CO provides the following remedies in the event of a defect:
| Remedy | Condition | Content |
|---|---|---|
| Remedy (correction) | Defect repairable without disproportionate cost | Contractor repairs defects within a reasonable period |
| Price reduction | Defect not repaired or disproportionate repair | Reduction of price proportional to the diminution in value |
| Contract rescission | Serious defect rendering work unusable | Return of work and reimbursement of price |
| Damages | Proven fault of contractor | Compensation for additional damage (art. 368 para. 1 CO) |
Notification and Limitation Period for Defects
The client must notify defects immediately upon delivery of the work (art. 367 CO). For hidden defects, notice must be given immediately after discovery. The warranty period is 2 years from delivery for movable works (art. 371 CO), and 5 years for immovable works (buildings). The parties may contractually extend these periods.
The Lump Sum Price and Its Rigidity (art. 373 CO)
When a lump sum price has been agreed, the contractor is bound by this price even if the actual work turns out to be more extensive than planned. Exceptions are limited:
- Unforeseeable and exceptional circumstances that make execution excessively onerous (art. 373 para. 2 CO)
- Additional work expressly ordered by the client
- Modifications ordered by the client that substantially alter the scope of work
Frequently Asked Questions about Construction Services Contracts
How must the contractor notify defects in a construction services contract?
It is the client (employer) — not the contractor — who must verify and notify defects. Art. 367 CO requires the client to inspect the work upon delivery and notify the contractor without delay if defects are found. The notice must be sufficiently precise to allow the contractor to identify the problem. For hidden defects, notice must be given immediately after their discovery. Failure to notify results in loss of warranty rights.
What is the contractor's right to remedy defects?
The right to remedy is the contractor's right to correct defects in their work before the client can exercise other remedies (price reduction, contract rescission, damages). Art. 368 CO provides that when a work is defective, the client may first require the contractor to remedy the defects within a reasonable period. Only if the contractor does not repair the defects within this period may the client resort to other remedies.
Who bears the risk of accidental destruction of the work during construction?
Under art. 376 CO, if the work perishes or deteriorates by an accidental event before delivery and without fault of the client, the contractor bears the risk. However, if the loss is due to the nature of the material provided by the client or to instructions given by them, the risks pass to the client. If the client is in default in accepting the work, the risks are also attributed to them. This provision is supplementary and may be modified contractually.
Can the price be modified during performance of a construction services contract?
In principle no, especially if the price was agreed on a fixed basis (lump sum price under art. 373 CO). The contractor cannot demand a supplement for additional work that should have been foreseeable when the contract was concluded. However, if the price is not fixed at a lump sum but calculated on the basis of time spent and materials (cost-plus price), overruns are possible subject to prior notification to the client (art. 375 CO). Additional work expressly ordered entitles the contractor to additional remuneration.
Can the client terminate a construction services contract without cause?
Yes, this is a particularity of Swiss construction services law. Art. 377 CO grants the client the right to terminate the contract at any time, even without cause. However, they must pay the contractor the full agreed price, less what the contractor has saved or could have earned by using their work elsewhere. This rule is a matter of public policy and cannot be excluded contractually. It reflects the primacy of the client's interest in the completion of the work.