Construction Law

Construction law and contract law 

Contract law is a branch of business law that focuses primarily on the contractual relationship between the contractor and the client. Contracts between the parties can range from individual house buildings to large construction projects. Generally, they are broken down into two main categories: construction contracts and turnkey contracts.

Execution contract

In a design-build contract, the client takes responsibility for the design and planning of the construction. The contractor’s main task is to carry out the work as instructed. Consequently, the contractor cannot be held responsible for malfunctions or other defects that may arise from shortcomings in the client’s design or planning.

Turnkey contract

In a turnkey contract, however, the overall responsibility lies with the contractor. As the contractor is responsible for an essential part of the design, he is also responsible for any defects that may arise due to deficiencies in design and construction.

Legal regulations

A number of industry-wide standard contracts regulate the construction law. With the exception of the special provisions for contracts for small houses in the Consumer Services Act (in Swedish: konsumenttjänstlag (1985:716)), no other general law governs the construction law. This characteristic makes it quite unique. 

The relevant form contract depends on an individual’s construction situation and its relevant circumstances. Standard contracts act as a legal framework, governing the relationship between contractors and clients and regulating their rights and obligations during the project. The most common standard contracts in construction law are AB 04, ABT 06, and ABS 18.

It is crucial to incorporate the legal content resulting from a standard contract into the rest of the contract between the parties in order to be valid. This can be done, for example, by attaching the text of the standard contract to the contract as an annex. Another way to do it is by referring to the standard contract through a reference clause. If the parties have used a standard contract in a previous contractual relationship, it can be considered to be part of the parties’ contract by ’party use’.

AB 04

AB 04 is a regulation that directs work contracts. It contains provisions that control, among other things, the scope of the work, scheduling, payment, liability, and dispute resolution. 

The contracting authority is responsible to ensure that the project description is correct and that it contains the information necessary for the contractor to carry out his work. Moreover, the contractor has to diligently carry out its work in accordance with the project description. 

However, the contractor is not liable for defects due to incorrect design, lack of maintenance, improper care, or wear and tear. The warranty period for the contractor’s work is 5 years. For materials and supplies, the warranty period is 2 years. After the warranty period has expired, the contractor is only liable for material defects caused by negligence.

ABT 06

ABT 06 is usually used for turnkey contracts. Under ABT 06, the contractor is in charge of the design and execution of the work, which means they have greater responsibility compared to construction contracts. Warranty period for defects in works in accordance with ABT 06 is five years. This period also applies to materials and supplies.

ABS 18

ABS 18 is a revised version of ABS 09. ABS 18 oversees construction contracts for the construction or extension of one- or two-family dwellings (small building contracts) that a trader performs for a consumer. 

The Consumer Services Act largely regulates the contractual relationship between a trader and a private individual in the case of building contracts for single-family houses. According to Section 17 of the Consumer Services Act, a consumer who, as the client, wishes to claim that the service provided by a trader is in any way defective must do so within a reasonable time. 

However, this should not happen later than three years, unless otherwise provided by a guarantee or similar undertaking from the contractor. For fixed items such as flooring and painting, a limitation period of 10 years applies. Complaints may always be made if the contractor has acted negligently.

We are here to assist you

If you find yourself in a dispute with, for example, a client or a supplier during a construction project, you are welcome to contact us. 

At Advantage Law Firm, we have extensive and long-standing experience in construction law. We can assist you in cases and work both preventively and preparatory, and handle the process in court or arbitration.

Contact us with your questions, and we will happily assist you.