The construction sector in Lithuania is one of the most complex and controversial. Contractors meet in court, disagreeing on constantly changing work volumes, strict deadlines, technical requirements, and changes in legal regulations. However, legal practice shows a clear trend that most disputes arise from much simpler issues – disorderly documents, verbal agreements, incompletely filled out acts, and unproven facts. As AVOCAD lawyer Kamilė Šemeklytė notes, in construction disputes, it is not the party that has done the most that wins, but the party that can prove what it has done, when it has done it, and under what conditions.
The work will "speak for itself" – the biggest myth in construction
First of all, according to the lawyer, people in construction often trust each other and rely on intuition or verbal agreements. As a result, certain tasks are assigned simply on the belief that the result will be good.
Although legislation does not prohibit the conclusion of verbal contracts, in practice this poses a significant risk. Regardless of the relationship between the client and the contractor, the scope of work, or the price, it is always recommended to conclude a written contract and to formalize all additions, changes, work schedules, and other agreements in writing.
Civil procedure provides for a clear rule: each party must prove the circumstances on which it bases its position. This means that both the contractor and the customer will have to provide evidence in the dispute, rather than just abstract arguments.
In the absence of written contracts, schedules, or agreements, verbal agreements become mere interpretations of the parties when a dispute reaches court, which are usually favorable only to the party presenting them. As a result, the parties' positions diverge, and the court cannot confirm or refute such verbal statements because they do not have sufficient probative value. This can be critical when making a final decision in a case.
In such situations, the court relies solely on objective, written evidence, and verbal agreements are therefore irrelevant. "The court has no way of determining the actual situation when agreements were verbal. It cannot confirm the scope of work, price changes, or deadline extensions if there is no written evidence. Therefore, a party that relies solely on a verbal agreement is considered to have failed to prove its position," notes the AVOCAD lawyer.
This can have serious consequences: for example, the entity may be obliged to perform certain works, even though it was agreed verbally that they would no longer be performed. This is why verbal agreements in construction are one of the biggest risks.
Additional work – only with a written order
Secondly, written documents are very important throughout the entire duration of the contract. Although the contract usually specifies a specific price for the work, calculated by the contractor after evaluating all the project documentation, in practice there is often a need to change solutions or perform additional work.
This means that the cost of the work also increases, but although it seems that the contractor automatically acquires the right to remuneration, since this is additional work, nevertheless, the specifics of the legal relationship between the parties may mean that, in the absence of a written agreement between the parties on the additional work, the contractor will have performed the additional work at its own risk and expense and will not be entitled to payment for this additional work.
The lawyer points out that if the client and contractor sign a written contract for work, the client, as an experienced professional, usually ensures that the contractor has been provided with all project documentation and a clear, unambiguous task. In such a case, the contract price is considered final and unchangeable, and includes all work necessary to complete the project fully and properly in accordance with the documents provided by the client.
Therefore, if the parties do not agree in writing on additional work, the contractor may lose the right to remuneration for the work performed, as the customer may point to the provision of the contract stipulating the contractor's obligation to assess the entire task and project documentation, its solutions and to assert that this should not be considered additional work and that this work was included in the contract price, and therefore the customer is not obliged to pay for the work performed.
Inaccurate or unchangeable work schedules
Thirdly, another acute problem in construction is delays in the performance of construction works, which are associated with significant losses. In order to ensure the shortest possible delays and the least possible losses due to the contractor's delays, when concluding a contract for work, the parties to the contract should not forget to record the schedule for the performance of the work in writing. "A written schedule will not only allow the client to control the construction process, but will also allow the client to take all measures to minimize potential losses," says Kamilė Šemeklytė.
A written schedule for the performance of contract works approved by both parties will facilitate the burden of proof in legal proceedings, which will not only allow the customer to prove that the contractor failed to comply with the schedule for the performance of works (if such a delay on the part of the contractor occurred), but will also facilitate the progress of the work for the contractor itself.
Often, more than one contractor works on a construction site. In such cases, it is important not only to know the completion date of the work, but also when the work will be handed over to the next contractor. If one subcontractor is late, the next contractor cannot start their work on time. This means that the second contractor is not to blame for the delay in the overall project and cannot be held liable for any related losses.
Therefore, according to the lawyer, the work schedule approved by both parties becomes very important—it allows to clearly determine which contractor violated the deadlines. This helps both in assessing losses due to delays and in resolving disputes in court, as proving the case becomes simpler and clearer.
Admission acts – an important legal moment
Fourth, according to AVOCAD's lawyer, it is very important to emphasize that the parties must not only agree in writing on the scope of work, price, deadlines, and other conditions, but also formalize the work performed in writing—its quantity, value, and the fact of its transfer. This is done by signing certificates of completion, which are signed by both the contractor and the client. These certificates confirm that the work has been delivered and accepted.
The Supreme Court of Lithuania has clarified that the acceptance certificate for completed works is a document confirming the performance of a contract for work, which records the results of the work performed by the contractor and the customer's willingness to accept it, with or without comments. In other words, this certificate confirms the fact that the work has been handed over and determines the rights and obligations of both parties after the handover.
First of all, the signed certificate gives the contractor the right to issue a VAT invoice and demand payment. However, it is important to understand that the certificate of completion is not a document that can be used to change the terms of the contract, including the contract price (unless the parties have agreed otherwise in the contract).
Secondly, the certificate of completion is also extremely important for the client. Legal regulations stipulate that the client has the right to refuse to accept the work, but such a refusal must be justified by clear reasons. Only a justified refusal means that the contractor does not acquire the right to demand payment.
Finally, the work acceptance procedure is closely related to the assessment of work quality. The Supreme Court has ruled that the compliance of work with requirements must be assessed at the time of acceptance. Therefore, the customer must act with due care and inspect the results of the work to check for obvious defects. The customer is not required to use special measures – a normal, reasonable inspection is sufficient.
Signing the certificate of completion is one of the most important stages of the construction process. Even if the relationship between the parties is based on trust, all work transfer and acceptance actions must be formalized in writing. Practice shows that relations remain smooth until disagreements or shortcomings arise – and that is when written documents become essential evidence," notes Kamilė Šemeklytė.
Even minor agreements on the construction site must be recorded.
Fifth, although it is recommended that both the contract and any amendments, additions, and transfers of work be formalized in writing, this is not always the case. Construction is a very dynamic process, and the need to refine solutions, give instructions, or clarify project details is a constant process. Therefore, verbal agreements on the construction site are convenient and often used, but they have no probative value.
According to AVOCAD's lawyer, in order to avoid disputes in the future, even verbal agreements that do not change the essential terms of the contract should at least be confirmed in writing. The simplest way is for the responsible persons of the client and the contractor to correspond by e-mail. This does not require official documents, but creates clear written evidence. Another very effective method is weekly production meetings between the client and the contractor, which should be minuted. Such minutes are extremely useful in the construction process. If the dispute does go to court, these documents would become important evidence, as they would clearly show what decisions were made, what work was agreed upon, and what the actual intentions of the parties were.
