The Contract for Works and the Contractor's Obligations in the Light of the Civil Transactions Law and the Egyptian Civil Code

The contract for works is among the contracts bearing upon work. It is a nominate contract whose provisions the civil codes govern — the Civil Transactions Law of the Kingdom of Saudi Arabia and the Egyptian Civil Code among them. Islamic law has likewise governed its provisions through contracts close to it as presently framed, such as istisna' and the hire of services. Article 124 of the Mejelle defines istisna' as a contract with craftsmen for the making of a thing, the worker being the maker, the buyer the orderer, and the thing the article made.

What a contract for works is

Article 646 of the Egyptian Civil Code defines it as "a contract by which the contractor undertakes to make a thing or perform work against remuneration". Article 461 of the Civil Transactions Law adds to that definition the requirement that "the contractor be neither subordinate to the employer nor his representative".

It is a consensual, synallagmatic contract whose conclusion requires no particular form, and it is an onerous contract. Consent in it bears upon two matters: the thing to be made or the work to be performed by the contractor, being one of the contracting parties; and the remuneration undertaken by the employer, the other contracting party.

A single distinction separates the contract for works from the contract of employment, noted by the Egyptian Court of Cassation: the existence of a right of direction and supervision in the latter and its absence in the former. (Hearing of 31 March 1962, Technical Bureau collection, year 13, civil, p. 324.) It is distinguished from the contract of mandate in that mandate bears upon legal dispositions, whereas the contract for works always bears upon material acts. The contractor, in performing the material work, is neither the representative of the employer nor subordinate to him, but works independently.

The contractor's obligation may validly be to carry out the work with materials of his own or with materials supplied by the employer, under Article 462 of the Civil Transactions Law. The basis of the contractor's liability differs accordingly, which calls for the contractor's obligations to be set out in some detail against this background.

The contractor's obligations

a. Undertaking to furnish the work, the employer furnishing the materials; or undertaking to furnish both work and materials

This is provided for in Article 647 of the Egyptian Civil Code and Article 462 of the Civil Transactions Law. The contractor must carry out the work entrusted to him according to the terms of the contract. It may be agreed that he perform the work and undertake to furnish the materials himself, or that the employer furnish them.

Where there are no terms, custom must be followed. He must also deliver the thing to the employer upon its completion. Where the contractor does not carry out the work entrusted to him, he cannot escape liability except by proving an extraneous cause preventing him from performing the obligation binding upon him. It avails him nothing to prove that he did what he could to perform his obligation, so long as the end was not achieved, as the Egyptian Court of Cassation has held. (Cassation, 28 December 1967, vol. 18, p. 1916.)

b. Liability for the quality of the materials and their warranty where the contractor has undertaken to furnish them

This is provided for in Article 648 of the Egyptian Civil Code. Article 463 of the Civil Transactions Law provides that "where the employer stipulates that the contractor furnish the materials, in whole or in part, the contractor is responsible for meeting the terms and specifications agreed, if any; failing which he is bound that they be fit for the purpose intended according to custom".

Where the contractor furnishes the materials, the contract is a mixture of sale and works: the works bear upon the labor and are governed by its provisions, while the sale bears upon the materials and is governed by the provisions of sale. This is what the foregoing articles provide. The contractor warrants that the terms and specifications agreed are met, if any; failing which he is bound that they be fit for the purpose intended according to custom, under the Civil Transactions Law, or is responsible for their quality and must warrant them, under the Egyptian Civil Code.

The sale here is suspended upon a condition precedent, namely the completion of the making of the materials. Once made, the sale becomes absolute, ownership passing to the employer even before delivery, and the contractor warrants latent defects. Before the condition is fulfilled the materials remain the contractor's property. As to the obligation to warrant latent defects, the provisions suited to istisna' apply. The contractor is bound, where the materials lack the qualities he assured the employer they possessed, or where they carry a defect diminishing their value or their usefulness, to warrant that defect even where he did not know of it. This is the approach suited to the text of the Civil Transactions Law. The contractor does not, however, warrant defects the employer knew of at the time the thing was completed, or which he could have discovered himself had he examined it with the care of a reasonable person.

Where the employer takes delivery of the thing and discovers a defect the contractor warrants, he must notify him within a reasonable period, failing which he is treated as having accepted the thing with its defect. Where the employer notifies the contractor of the defect in due time, he may claim under the warranty against him. Where the parties have not agreed upon the quality of the materials, recourse must be had to custom or to the circumstances of the contract; failing which the materials must be of average grade, under the foregoing articles and Article 133 of the Egyptian Civil Code.

c. Care of the materials where the employer furnishes them

Where the employer furnishes the contractor with the materials, the contractor must take care of them, preserve them, and exercise in this the care of a reasonable person. Falling below that measure, he is responsible for their destruction, damage, loss or theft. Where their preservation calls for expenditure, the contractor bears it. The burden of proving the contractor's negligence — that he did not exercise the care of a reasonable person in preserving the thing and caused the destruction or damage of the materials — falls on the employer, the contractor's liability being contractual. The contractor may repel it by proving that he exercised the diligence of a reasonable person.

The contractor is also bound to observe the rules of the trade in using the materials the employer has furnished, to render the employer an account of what he has used them for, and to return what remains of them. Where any of those materials becomes unfit for use through his negligence or his lack of technical competence, he is bound to restore the value of that thing to the employer. What has been explained above concerning the contractor's negligence applies here: the employer bears the burden of proving that the contractor's lack of technical competence caused the materials to become unfit for use. The contractor may repel liability by proving that he carried out the work according to the rules of the trade, or that the matter is attributable to an extraneous cause.

The contractor must furnish what he requires to complete the work by way of tools and additional plant, at his own expense, unless the agreement or the custom of the trade provides otherwise, under Article 649 of the Egyptian Civil Code and Articles 463 and 464 of the Civil Transactions Law, unless otherwise agreed.

d. Completing the work according to the terms of the contract and within the period agreed

This is provided for in Article 465 of the Civil Transactions Law, and the provisions of the Egyptian Civil Code run to the same effect. The contractor must complete the work at the time agreed and according to the terms of the contract. Where there is no agreement, completion must be within a reasonable period. This is an obligation of result, and liability is repelled only by proving an extraneous cause; it does not suffice for the contractor to plead that he exercised the care of a reasonable person. Liability is negatived where he proves that the delay came from the employer — as by delay in furnishing the materials, in obtaining the licenses, or in paying the instalments due to the contractor.