Construction companies may encounter substantial risks and find themselves in disputes because of poor drafting of construction contracts and due to lack of legal support. As a result, it may become hard or impossible to prove the legitimacy and relevance of their claims while the construction companies themselves may become vulnerable to abuse by their clients. Therefore, it is always recommended to ebgage professional legal counsel when entering into construction projects.
The importance of legal support may be even more important for the foreign constructuin groups entering the market during these times when foreign experience and know-how are in demand within the construction sector of the Russian business. The regulatory framework, the applicable legislation and the prevailing interpretations given by the court may be quite different in Russia from what some would expect in other jurisdictions. Lack of attention to the legal aspects may lead to negative consequences even when the counterparties are reputable, the projects are big and the quality of work is perfect.
Construction contract is one of the most complicated types of contract in Russia. Its drafting and documenting must meet certain formal requirements in order to be valid. Construction contracts cover a very broad number of issues pertaining to the performance of works, supply of construction materials, instalment of equipment, and terms, schedules and stages of delivery of works. It is also necessary to stipulate in a construction contract such provisions as rectification of flaws that might be discovered after the project has been finished.
The core issues with documenting of construction contracts and supply contracts pertain to reckless drafting, for example, use of poor quality template documents all the way until they get tested in court. As a result, the signed construction contract not only fails to protect the interested party’s rights, but also does not fully match the purpose of its execution. Construction contracts often do not contain statutory material provisions, which may result in a possibility that the court would deem such contract as not concluded. Contracts often contain clearly unenforceable procedures of interaction between the parties (order of payment, provision of initial data, delivery of works, rectification of flaws).
DRAFTING EXCLUSIVE CONTRACTS AND NEGOTIATING THEM WITH THE COUNTERPARTY
There are situations, when even a template construction contract elaborated specifically for your company, may not suit you. For instance, when a counterparty is a big player in the market, which tries to dictate its own terms, or the transaction is so major and complicated that specifically designed protection mechanisms may be required. In this situation, our firm may help our clients draft and negotiate with the counterparty a contract that will match all the needs dictated to the client by the situation.
Our construction lawyers are always ready to participate in negotiations with your counterparty in order to help you move the negotiations to a successful signing but with proper protection of your interests at each and every stage of the process.
EVALUATING LEGAL RISKS
Legal risks in construction are often connected with non-observance by the companies of requirements of legislative acts and concluded contracts, legal errors in doing business, violation by the counterparties of legal acts and provisions of the contracts.
In order to avoid premature actions RVS LLC may offer quality service on evaluation of legal risks. As part of this service, a due diligence is made with respect to the contracts entered into by the client, the order of business, the actual performance and documenting of delivery of works under the contracts etc. A memorandum issued as a result of this service allows the client to choose the right strategy in a particular situation and to reshape the processes in the company to minimise further risks:
- draft templates of the contracts providing maximum protection of the company’s interests;
- elaborate procedure of delivery and acceptance of works that shall not be time consuming but shall provide the client with material advantages.