In my capacity as both an architect and a lawyer, I regularly engage with individuals who seek advice regarding agreements they’ve made with contractors. Despite the terms specified in the contract, individuals could encounter scenarios where the work fails to meet the required standards and specifications, or it remains incomplete, and in some instances, hasn’t even commenced. I’ve seen multiple situations where the critical elements such as elevator installation, aperture or tile work, and even the commencement of construction itself may still be pending due to various challenges faced by the contractor.
There are different ways how to respond in these situations and it all depends on the nature of contract.
When a promise of sale approaches its expiration date and the agreed-upon ‘shell/finishing works’ haven’t been completed, the course of action largely depends on the buyer’s preferences and whether there are genuine prospects for the vendor to finish within a reasonable timeframe. However, if the agreement pertains to a standard works contract (appalt), the situation shifts, as it centres on the significance of the defect or incomplete work. Here, it’s essential to assess whether the defect is substantial or not before proceeding.
Certainly, in an appalt, one potential deterrent is to incorporate a penalty clause. This clause is designed to discourage non-performance of agreed-upon tasks, particularly those with specific deadlines. Essentially, these clauses resemble pre-determined damages that become enforceable in case of a breach. Penalties are, therefore, intended to compensate for damages resulting from default.
Nevertheless, it’s important to note that a penalty clause would be deemed null if the principal obligation it relates to is also null. On the other hand, despite the existence of a penalty clause, a contracting party retains the right to seek performance of the obligation, but cannot pursue both performance and payment of the penalty simultaneously. Yet, there is an exception to this rule, that is to say when the penalty was agreed upon in the event of delays. Even so, penalties may be mitigated by the court if they are deemed disproportionate to the value of the principal obligation breached. This information is elaborated upon in a recent publication titled “Il-Penali f’Kuntratt.”
