Contract for work

Introduction

A contract for work is a form of contract in which one party (the contractor) undertakes to create a certain work, while the other party (the customer) undertakes to pay remuneration for it. The contract for work and services is a widely used contractual instrument in many legal systems and is frequently used in the construction industry, in the creation of software or in the provision of services.

Definition and delimitation

In Germany, the contract for work and services is governed by Sections 631 et seq. of the German Civil Code (BGB). It is characterized by the fact that the contractor owes a concrete result, the so-called work. This can be the production or modification of an object, but also an intangible work such as software or an expert opinion.

The contract for work and services must be distinguished from other types of contracts, in particular from the contract for services. Whereas in the case of a contract for work and services the focus is on achieving a specific result, in the case of a contract for services the obligated party merely owes the performance of the agreed activity without any specific result being owed.

Essential elements of a contract for work and services

1. performance of the contractor

The contractor undertakes to create a specific work. This can be the production of a thing, the provision of a service or the creation of an intangible work.

2. remuneration of the customer

The Customer undertakes to pay remuneration for the work created. The amount of remuneration can either be specified in the contract or be based on the usual remuneration.

3. acceptance

An essential element of the contract for work is the acceptance of the work by the customer. With the acceptance the customer declares that he accepts the work as being in accordance with the contract. From this point in time, the risk and ownership of the Work shall pass to the Purchaser.

Rights and obligations of the contracting parties

1. rights and obligations of the entrepreneur

The Contractor shall be obliged to perform the Work properly and in accordance with the Purchaser’s specifications. He is entitled to the agreed remuneration and can demand it after completion and acceptance of the work.

2. rights and obligations of the customer

The Purchaser is obliged to accept the Work provided that it complies with the contractual agreements. He has the right to inspect the work and complain about any defects. He is obliged to pay the agreed remuneration.

Liability for defects

A central topic in the law on contracts for work and services is liability for defects. If the purchaser discovers defects in the work after acceptance, he shall in principle be entitled to rectification of the defect or rebuilding of the work. Should the rectification of defects fail or be unreasonable, the customer may, under certain circumstances, withdraw from the contract or demand a reduction of the remuneration.

Special features of certain types of contracts for work and services

1. construction contracts

In the case of construction contracts, which are a sub-type of the contract for work and services, special regulations often have to be observed. In particular, the agreement of construction times, the regulation of supplements and the securing of warranty claims play a major role here.

2. software creation contracts

In the IT sector, contracts for work and services are often structured as software development contracts. Here, regulations regarding the acceptance of the software, the warranty and property rights (copyright) are of particular importance.

Concluding remarks

The contract for work is a versatile legal instrument that is used in many areas. The exact form of the contract and the rights and obligations of the parties may vary depending on the nature of the work and the agreements of the parties. It is advisable to seek legal advice when drafting a contract for work and services in order to best protect one’s own interests and minimize legal risks.