Explanation of Article 466
The article addresses what the employer is entitled to do if it becomes apparent during the course of work that the contractor is in breach of the contract terms. Although the delivery date has not yet arrived, the employer has the right to accept the work if it complies with the terms or to reject it. However, the article grants the employer the right to consider the contractor in breach if a defect appears in his work, even before the completion of the work or before the delivery date. This is to save both the employer and the contractor effort and time if the work is completed defectively or contrary to the terms.
The article stipulates that if it becomes apparent to the employer during the course of work that the contractor is in breach of execution, including breaching some of the contract terms and specifications, deviating from professional standards, executing the work defectively, or delaying execution, there are two scenarios:
The first scenario: The defect can be remedied, and the terms can be fulfilled. The second scenario: The defect cannot be remedied, and the terms cannot be fulfilled.
The first paragraph explains the ruling for the first scenario, which is if it is possible to remedy the defect and fulfill the terms. The employer can notify the contractor to comply with the contract terms and set a reasonable period for doing so. The notification can be by any agreed means or any legally prescribed means for notification, including filing a lawsuit or any other legal procedure as stipulated in Article (177), without requiring a specific form.
If the reasonable period set by the employer passes and the contractor does not correct the defect, the employer may choose one of the following two options:
The first option: Request specific performance according to Article (167) in the general rules, by asking the court to authorize him to complete or correct the work through another contractor at the expense of the first contractor. In urgent cases, such as if the contract involves repairing a building at risk of collapse, the employer may execute the work at the expense of the first contractor without court authorization. This is also permissible if there is an agreement between the parties that if the contractor delays, the employer may execute the work at the expense of the first contractor, even in non-urgent cases. If the employer executes the work without court authorization, whether in urgent cases or by agreement, he does so at his own risk. If he claims these expenses, the court verifies the conditions for executing the work specifically without its authorization and that the claimed expenses are within the customary limits.
The second option: Request contract termination. The general rules for judicial termination apply. The court, at its discretion, may refuse the termination request if the breach is not serious, applying Article (107). The court may also grant the contractor a grace period if circumstances require it in exceptional cases as stipulated in Article (275). The contractor may also avoid termination by promptly correcting the defect, unless there is a resolutory condition. If a resolutory condition exists, the court does not have the authority to assess the seriousness of the defect but rather to verify the occurrence of the resolutory condition, and its judgment would then reveal the termination, not create it.
The second paragraph explains the ruling for the second scenario, where it is impossible to remedy the defect. This scenario has two forms:
The first form: The work is executed defectively or contrary to the terms in a way that cannot be remedied, such as constructing a building with defective foundations that can only be corrected by demolishing the building.
The second form: The contractor delays starting or completing the work to the extent that it cannot be completed by the agreed date, whether the date was explicitly agreed upon or implicitly inferred from the contract circumstances.
In these two forms, the employer has the right to request immediate contract termination because the contractor has already breached his obligation in a definitive manner. The employer does not need to notify the contractor due to its futility or wait until the work is delivered defectively or late because the breach has already occurred. The court assesses whether the employer is justified in claiming that it is impossible to remedy the defect and whether the defect or delay is significant enough to justify termination.
In all the above, whether in the first or second scenario, the employer has the right to request compensation for the damage suffered due to the contractor's failure to fulfill his obligation, delay, or defective execution, whether the employer requests contract execution or termination. This is according to the general rules regarding the right of the contracting party to request execution with compensation for breach of obligation as stated in Articles (107, 170, 171).
Related To
Article 466
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If a contractor breaches the terms of the contract during the course of the work, the client may notify the contractor to comply with the terms and correct the work within a reasonable period set by the client. If such period lapses without correction, the client may assign another contractor to complete or correct the work at the expense of the original contractor, in accordance with the provisions of Article 167 of this Law, or may demand termination of the contract.
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The client may demand the immediate termination of the contract if the defect cannot be corrected or if there is a delay in the commencement or progress of the work whereby the work cannot be completed within the agreed-upon period.