Construction Contracts in Kuwait: Decennial Liability, Delay and Dispute Resolution

A practical guide to construction contracts: their types, decennial liability and its scope, delay penalties and extensions of time, variations and price adjustment, handover and dispute resolution.

Most construction disputes arise not from bad faith but from a hastily drafted contract: a completion date with no extension mechanism, variations with no controls, handover with no record. Prevention here costs far less than litigation.

The golden rule: whatever is not recorded in writing at the time — a variation order, a suspension, a site obstruction — is hard to prove later, however true it may be.

Types of Construction Contract
Obligations of the Parties
Decennial Liability
Delay and Liquidated Damages
Variations and Price Adjustment
Provisional and Final Handover
Termination and Suspension
Dispute Resolution
Contact

1) Types of Construction Contract

The Civil Code governs the contract of works, and in practice it takes several forms:

Lump sum: a fixed price for the whole of the works.
Unit price: the price calculated on quantities actually executed.
Design and build: the contractor takes on design as well as execution.
Subcontracting: with its own rules on liability and recourse.

Practical effect: the type of contract determines who bears the risk of increased quantities and price movement — the first question examined in any dispute.

2) Obligations of the Parties

The contractor

Executing the works to specification and good practice.
Complying with the period and the programme.
Site and workforce safety.
Guaranteeing the quality of materials used.

The employer

Handing over the site free of obstruction.
Paying instalments when due.
Responding to execution queries in time.
Not impeding the progress of the works.

A key defence for contractors: the employer's delay in handing over the site or certifying payment applications is a legitimate ground for an extension of time and for resisting liquidated damages.

3) Decennial Liability

The contractor and the architect are jointly liable for whatever occurs within ten years of handover: total or partial collapse, or a defect threatening the strength and safety of the building.

The guarantee engages public order, so no agreement may exclude or reduce it.
It extends to defects in the ground, even where the employer approved the design.
The period runs from final handover of the works.
Claims are subject to a special limitation period running from the appearance of the defect or the collapse.

Essential point: a contractual clause excluding decennial liability is void and of no effect, because the guarantee concerns the safety of life.

4) Delay and Liquidated Damages

Delay damages are a penalty clause fixed by agreement, and the court may adjust them:

Reducing them where excessive or where the obligation was partly performed.
Refusing them where the contractor proves the delay is not attributable to it.
Increasing them where actual loss exceeds the stipulated sum in defined cases.

Legitimate grounds for extension include: late handover of the site, material variation orders, delayed certification of payment applications, and force majeure.

Procedurally: notify the employer in writing and at the time of every cause of delay. Late notice weakens an extension claim even where the cause is genuine.

5) Variations and Price Adjustment

A contractor is not entitled to payment for additional works save under defined controls, chief among them approval by a variation order.

Record the variation order in writing before execution.
Define its effect on both price and time, not price alone.
Where the design changes materially, rebalancing the contract is examined under its terms.

A recurring warning: executing additional works on a verbal instruction is the single commonest reason contractors lose their entitlements.

6) Provisional and Final Handover

Provisional handover

Records completion of the works together with a schedule of observations; the maintenance period runs from it.

Final handover

Occurs after the observations are addressed and the maintenance period expires; decennial liability runs from it.

Important: handover without reservation may forfeit claims for patent defects, but it does not forfeit claims for latent defects or decennial liability.

7) Termination and Suspension

Contractual termination under the express termination clause.
Judicial termination for material breach.
Suspension of works on non-payment of certified applications, subject to notice requirements.
Account settlement and a schedule of works executed and materials on site.

Rule: unilateral suspension without valid notice may itself become a breach for which the suspending party answers.

8) Dispute Resolution

Amicable settlement recorded in documented minutes of agreement.
Engineering expertise to schedule the works and quantify entitlements.
Arbitration where a valid arbitration clause exists — best suited to the technical nature of the dispute.
Litigation before the courts in the absence of an arbitration clause.

Why arbitration here? Construction disputes are technical by nature, and appointing an engineering arbitrator saves years of successive judicial expertise. See our guide to arbitration and alternative dispute resolution.

Facing a construction dispute — delay, variations, or structural defects? Contact Attorney Meshari Obaid Al-Enezi — Yumnaak Law Firm — to review the contract and assess your position.