Withdrawal from a construction contract

These difficulties are also linked to the nature of contracts entered into in this sector, which significantly restrict the options available to the weaker party to the contract – typically the contractor or subcontractor. These contracts most often (precisely in relation to contractors or subcontractors) do not provide for the possibility of termination or withdrawal from the contract, which in current market conditions sometimes leads to a party being tied to the contract, even in the event of a significant decline in the contract’s profitability and the simultaneous abuse of position by the better-protected party to the contract.

In such circumstances, one must ask whether the fact that Title XVI (Construction Contracts) of Book III of the Civil Code does not provide for any general provisions concerning the termination or withdrawal from a construction contract means that such remedies are impossible? Or is it only possible to withdraw from the contract in the cases specifically provided for in Article 6494 and Article 656 of the Civil Code?

It should be noted that Article 491(1) of the Civil Code applies to a construction contract as a bilateral contract. Furthermore, the prevailing view is that Article 491(2) of the Civil Code may be applied in the event of withdrawal from a construction contract (see the Supreme Court judgment of 22 October 2020, case no. II CSK 94/19). This position is, however, justified in various ways: by the argument that the contractor’s performance is divisible within the meaning of Article 379(2) of the Civil Code, or by the observation that, whilst the contractor’s performance under a construction contract is not divisible within the meaning of Article 379(2) of the Civil Code, it may be subject to division through its partial fulfilment over time.

The possibility of partial performance by the contractor leads to the conclusion that such performance may be regarded as divisible within the meaning of Article 491 § 2, first sentence, of the Civil Code, which in turn allows the effects of withdrawal from the contract to be limited exclusively to that part of the obligation in respect of which the other party is in default, or to the entire remainder of the unfulfilled obligation, thereby making it possible to avoid the severe consequences of settling the entirety of the obligations performed in a situation where partial performance of the obligation was also of significance to the creditor.

Bearing the above in mind, one must also bear in mind the provisions of Article 657 of the Civil Code, according to which:

The right of the contractor or the client to withdraw from the contract may be limited or excluded by specific provisions.