Explanation of Article 471

Explanation of Article 471

The article refers to situations that may arise in a contract for work concluded on the basis of a lump sum rather than a unit-based estimate. The first paragraph clarifies the ruling in cases where the prices of materials used in the work increase, labor wages rise, or additional expenses are incurred during the course of the work, and the contract is based on an agreed design for a lump sum fee. In such cases, the contractor is not entitled to claim any increase in the agreed fee, even if the prices of materials used in the work rise, labor wages increase, or other expenses occur. This is because the contractor has accepted the work on this basis and bears the costs that may exceed the agreed fee between them, and because the intention of the contracting parties was to complete the work for the agreed lump sum without regard to price changes or cost increases.

The second paragraph clarifies the ruling in the event of a modification to the design or an addition required by the work, such as discovering that the land on which the building is to be constructed requires more excavation. The contractor is not entitled to claim an increase in the fee, even if the increase is apparent, because the assumed situation here is contrary to the situation outlined in Article (470) - where the fee is agreed upon as a lump sum and not by unit measure. Therefore, this fee is not subject to modification, neither increase nor decrease, as this reflects the will of the contracting parties. The employer intended for the fee to be lump sum to ensure a stable position without being surprised by any increase, and the contractor accepted this for the same reason; the intention of the contracting parties in determining the fee as a lump sum is that if the actual costs increase for the contractor, he cannot revert to the employer, and conversely, if those costs decrease, the employer cannot demand a reduction in the fee.

The paragraph exempts two cases where the contractor is entitled to claim an increase in the fee if a modification or addition to the design occurs, which are: The first case: If the modification or addition is due to the employer's error, such as providing the contractor with incorrect information about the dimensions desired for the building. The second case: If the employer authorizes the modification or addition, and in this case, he must agree with the contractor on the fee for that modification or addition; otherwise, the contractor is not entitled to claim an increase in the fee.

The third paragraph explains the impact of general exceptional circumstances on the contract for work; as the contract for work is one of the contracts to which the theory of "general exceptional circumstances" or "emergency circumstances" applies, due to its deferred nature, given the time gap between the conclusion and execution of the contract. If general incidents occur, and these circumstances are exceptional, such as war, epidemic, or sudden regulation, and it was not possible to foresee these exceptional incidents at the time of the contract's conclusion, leading to increased costs for the contractor or loss for the employer, and making the fulfillment of the obligation burdensome for either party without becoming impossible, causing the contractual balance to collapse between the employer and the contractor, and changing the basis on which the fee was estimated in the contract for work, the ruling in this case, respecting the contract between the parties and the binding force of the contract, is that the court restores the burdensome obligation to a reasonable extent to achieve a rebalancing of the parties' obligations, including ruling to extend the execution period, or ruling to increase or decrease the contractor's fee, and it may rule to annul the contract between the parties if the contractual balance cannot be restored between them.

What is included in the third paragraph is merely an application of the general rule of this theory stipulated in Article (97); and in applying the provisions of the emergency circumstance to the contract for work, the provisions of that article must be taken into account; noting that the contract for work is distinguished from other contracts in that the system grants the court the authority to annul the contract, unlike other contracts, due to the nature of this contract, which may not allow for restoring the contractual balance between the parties.

According to what is stipulated in Article (97), the provisions of the general exceptional circumstances established in the system are of public order, which cannot be agreed upon otherwise.

Related To

Article 471

1. If a service contract is concluded to execute an agreed-upon design plan for a lump sum fee, the contractor may not demand any increase in fees, even if there is an increase in the prices of the materials used in the work, the wages of workers, or other expenses.

2. The contractor may not demand any increase in fees if an amendment or addition is made to the design plan, unless such amendment or addition is made due to the client’s fault or is made with his permission and he agrees to the increase in fees.

3. If there is any disruption to the balance of contractual obligations of both the client and the contractor due to general exceptional circumstances that could not have been anticipated at the time of concluding the contract, and the basis upon which the estimate was determined becomes no longer valid, the court may, upon consideration of the circumstances and the interests of the parties, order restoration of the contractual balance, including extending the execution period or increasing or decreasing the fees, or it may order termination of the contract.