Guarantees for small construction firms

2010-01-26

The Sejm has ratified an amendment to the civil code, according to which small construction firms will be able to demand from investors guarantees for payments of construction work. The costs of such a guarantee will be covered by both parties to the contract.
The new provisions stipulate that the investor provide contractors with security for debts resulting from a signed contract for construction work. This security can take the form of a bank guarantee, an insurance guarantee or a bank letter of credit. Small subcontractors will enjoy the same rights in relation to the contractors commissioning them with work. According to the amendment, such guarantees can be demanded at all stages of a construction investment and the investor or contractor will not be able to restrict them or exclude them. If a contractor firm does not obtain the expected guarantee within 45 days it has the right to withdraw from the contract and the investor will be deemed to be at fault in such cases.