Obligations of contractors of building or engineering projects

THE exercise of the profession of the contractor of building or civil engineering projects is regulated by law in a way that prohibits the assignment of the execution of a project to a non-registered and holder of an annual license contractor of the class and category to which the project belongs. The nature of the contractor’s profession presupposes prior experience and building or civil engineering expertise, perception and ability to study architectural plans and static reports, use of proper materials, compliance with specifications and knowledge of other relevant factors for the construction of safe buildings and the execution of good building projects. For this reason, it is required that the contractor, whether a physical or legal person, is registered with the Council for the Registration and Control of Building and Civil Engineering Contractors and to have an annual valid license for the class of the project he will execute. A contractor is a physical or legal person, which by profession undertakes to execute or executes a building or civil engineering project, including the undertaking of labour only, for a specified amount or percentage remuneration or for any other lawful consideration. The class of a registered contractor means one of the five classes in which contractors are classified for the purpose of acquiring an annual license and project class means one of the five classes in which projects are classified according to their type and extent in the case of building projects or according to their total value in the case of engineering projects.

Law 29(I)/2001 regulates the registration and control of contractors of building and civil engineering projects and provides that no one may assign or allow the execution of any building or civil engineering project by a person, who is not a registered contractor and does not hold, at all material times, an annual licence of the class and category in which the project belongs, article 25. Moreover, it provides that every agreement, whether verbal or in writing, concerning the commissioning of the execution of a building or civil engineering project to a non-registered contractor, or to a registered contractor, who is, however, not in possession of a valid annual licence for the respective class of the civil engineering or building project is void, article 30(1). Such nullity may in the case of an already registered contractor be remedied retrospectively, if such registered contractor obtains from the Council within three months from the day of the conclusion of the agreement an annual licence for the building or civil engineering project of the class stipulated in the agreement, article 30(2).

The strictness of the legislation is shown by the decisions that have been issued by the Supreme Court, as in C.A. 185/2019 dated 12.6.2020, regarding a first instance decision under appeal. The Supreme Court suspended the execution of the decision on conditions in order for the appeal to be heard regarding the fact that the first instance court did not consider the consequences of the contractor not being registered. In addition, it did not examine the provisions of article 30(1) which invalidates any agreement for the assignment of the execution of a building or civil engineering project to a non-registered contractor. The first instance court focused on examining the law’s requirement for a written and signed agreement. In particular, article 38(1) requires that every contract, under which a registered contractor undertakes on his own, or together with others, to execute a building or civil engineering project of a value exceeding €17.086 shall not be valid and legally enforceable against the other party, for whose account the project is to be executed, unless the contract:- (a) is in a written form and has been signed by the person, who will execute the project as well as by the other contracting party, for whose account the project shall be carried out, and (b) describes the project to be executed.

The nullity of a building agreement which is contrary to the Law, apart from the criminal liability of the parties, does not create any rights either to the contractor or to the employer, since it is illegal and no Court will award any remedy in the event of a claim. It affects both the contractor for his remuneration if the employer owes him money for work done, as well as the employer if he suffers loss or damage due to defective works. When the Court finds that the Law is violated, regardless of who raises a claim, either through an action or through a counterclaim, it will dismiss it with no order as to costs, so that none of the parties will gain a benefit against the other from the illegality.