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Additional works and lump-sum remuneration under Polish law

Ten artykuł jest dostępny także po polsku. Dieser Beitrag ist auch auf Deutsch verfügbar.

„We agreed on a lump sum, so nothing more is due.” Most Polish construction payment disputes begin with that sentence. Behind it stands a position widely treated as self-evident: since the contractor accepted a lump-sum price, it bears the cost of everything that turns out to be necessary to complete the works — including works the employer’s designer failed to foresee. This article explains why that position does not survive legal analysis, where it came from historically, what economic damage it causes, and which claims are actually available to a contractor.

Starting point: what Article 632 § 1 of the Civil Code actually says

The provision reads: „Jeżeli strony umówiły się o wynagrodzenie ryczałtowe, przyjmujący zamówienie nie może żądać podwyższenia wynagrodzenia, chociażby w czasie zawarcia umowy nie można było przewidzieć rozmiaru lub kosztów prac” — if the parties have agreed on lump-sum remuneration, the contractor may not demand an increase even if the extent or cost of the works could not have been foreseen when the contract was concluded.

Formally this is a provision on the contract for a specific work (umowa o dzieło). It does not apply directly to a construction works contract, because Article 656 § 1 of the Civil Code refers to the rules on works contracts in three matters only: the consequences of the contractor’s delay, warranty for defects of the structure, and the employer’s right to withdraw before completion. Lump-sum remuneration is not among them.

The dispute over whether the analogy is admissible ran through the case law for years until it was settled by an extended panel of the Supreme Court:

„Provisions of Articles 629 and 632 § 2 of the Civil Code may be applied by analogy to a construction works contract.”

— resolution of a panel of seven judges of the Supreme Court of 29 September 2009, III CZP 41/09, OSNC 2010, No. 3, item 33

That resolution matters more than it first appears. An analogy is not a mechanical transfer of a provision — it is the transfer of the evaluation behind it. It is legitimate only where that evaluation fits the new situation. Precisely here Polish practice made an error that still costs contractors millions.

The dominant position and its price for the contractor

Let us begin with what is settled and correct. The Supreme Court describes the essence of a lump sum as follows:

„A lump sum consists in agreeing in advance on the amount of remuneration as an «absolute» sum, with the parties’ express or implied consent that the contractor will not claim higher remuneration.”

— judgment of the Supreme Court of 14 March 2008, IV CSK 460/07, LEX No. 453070

To the same effect the judgment of 25 March 2011, IV CSK 397/10 (LEX No. 1129144), where the Court stressed the „absolute and rigid character” of this form of remuneration, and earlier the judgment of 20 November 1998, II CKN 913/97 (LEX No. 138655). So far so good — the price is rigid.

The dominant position, however, goes one step further. It holds that the lump sum relates not to the works described in the contract but to the result — a functioning structure. Everything that proves necessary to achieve it is said to be covered by the price from the outset, even if the documentation did not provide for it. This is also the prevailing view in the literature, where it is accepted that the lump sum covers in advance the entirety of the works actually needed to erect the structure and that its amount is independent of the actual outlays and costs. In its most far-reaching form the argument runs that lump-sum remuneration inherently excludes any settlement of so-called additional works, because the agreed equivalent relates to the subject matter both known and unknown at the time of contracting (see R. Szostak, Samorząd Terytorialny No. 3/2009, pp. 76 and 80).

Courts repeat the formula in almost identical wording:

„[T]he establishment of lump-sum remuneration for construction works excludes the possibility of claiming payment for additional works only where those works are a natural consequence of the construction process and follow from it in a natural way. Moreover, they concern situations which a contractor holding the technical documentation should foresee as necessary to perform even though the documentation does not provide for them. This follows from the professional character of the activities performed by the contractor and the corresponding level of knowledge and professional experience.”

— judgment of the Court of Appeal in Gdańsk of 12 March 2014, V ACa 846/13, LEX No. 1488615

Note the core of that formula: the contractor is to foresee necessary works even though the documentation does not provide for them. The consequence is far-reaching — the contractor bears financial responsibility for the gaps in someone else’s design, and does so irrespective of fault. The role thereby assigned to it is closer to that of a clairvoyant than of a professional, since it is expected to foresee what a specialist design office did not.

This is no mere technicality — the scale of the problem

One might treat this as an interpretive quarrel of interest only to lawyers. That would be a mistake. This single rule of construction has measurable economic effects across the entire industry.

Insolvency statistics during a boom

Polish construction has long been marked by a high susceptibility to insolvency — and that during a record boom. Insolvencies in the sector rose steadily: from 49 cases in 2007 to 98 in 2010, 143 in 2011 and 218 in 2012, remaining thereafter at well over a hundred a year (figures from the annual Coface reports on business insolvencies in Poland). Those statistics capture formal proceedings only — they exclude companies wound up or suspending operations. At the peak, construction companies together with their suppliers accounted for roughly two-thirds of all corporate insolvencies in Poland.

Set against the economic背景 this produces a paradox. It happened alongside EU support of some PLN 245.5 billion in the 2007–2013 perspective and construction and assembly output rising from PLN 91.25 billion in 2005 to PLN 191.28 billion in 2011 (Central Statistical Office data). Instead of prosperity the industry experienced a wave of bankruptcies. Foreign contractors, drawn in by the post-accession boom and the investments accompanying Euro 2012, began withdrawing from the Polish market. Polish contractors, wherever they could afford it, shifted towards the private sector, where they are not at the mercy of unilaterally imposed public contract templates. The sector’s dependence on public contracts was considerable — it was estimated that around 63 % of all Polish construction companies take part in public tender procedures (J. Bizon-Górecka, J. Barczewska, Controlling i Rachunkowość Zarządcza No. 2/2010, p. 5). The value of court disputes with the General Directorate for National Roads and Motorways alone exceeded PLN 10 billion in that period.

The 2013 diplomatic intervention

The scale of the problem is confirmed by the June 2013 démarche of six ambassadors, who drew the Polish authorities’ attention to the one-sided allocation of risk in public contracts: the deletion from FIDIC templates of clauses protecting the contractor, poor payment discipline, and a rigorous liquidated damages policy. In their view the number and value of construction disputes evidenced „fundamental and systematic challenges connected with the execution of major infrastructure projects in Poland”. The governmental reply was straightforward: the contractors had only themselves to blame, having knowingly offered prices that did not cover their costs.

Why this is a systemic argument, not an anecdote

The „own fault” thesis deserves to be taken seriously, because in individual cases it is sometimes accurate. As an explanation of a mass phenomenon it cannot be sustained. We would have to assume that an entire construction sector — including international groups with years of experience in other markets — is incapable of pricing its own bids. If we reject that assumption as absurd, only one conclusion remains: the causes are systemic and lie in the design of the rules.

The mechanism is easy to reconstruct. If the contractor must cover all works necessary for the result, it should price in a contingency for unknown risks. The market does not allow this, because the cheapest bid wins. Whoever prices honestly stops winning tenders and loses liquidity. Whoever wins often does so below the real level of risk. The system therefore rewards underpricing while simultaneously encouraging the employer to economise on documentation: the less it discloses in the description, the less it pays. The imbalance finally produces pathological conduct on the contractor’s side — installing materials inferior to those specified, or even abandoning the site to limit losses.

Where this came from: an interrupted transformation

The present state is neither accidental nor the fault of the courts. It has a clear historical explanation, without which it is hard to understand why the construction works contract is described as one of the most poorly regulated nominate contracts in the Polish Civil Code.

When the Civil Code was being drafted in the 1960s, the overwhelming majority of construction-related transactions took place in the so-called socialised sector — between State entities or entities dependent on the State. The construction works contract entered the Code as a contract type reserved for those relations. Building law consistently assumed that an individual investor undertakes a construction project solely to satisfy his own housing or building needs; commercial construction by private entities was excluded by design. Disputes were decided not by the ordinary courts but by specialised arbitration commissions.

Most importantly for our subject: the Code provisions were only a skeleton. The real rules governing cooperation between employer and contractor were contained in sub-statutory instruments — general contract conditions issued by the Council of Ministers and by individual ministers. It was those instruments that regulated risk allocation in detail, including the risk of an unforeseen extension of the scope of works, and did so in a broadly balanced way. A measurable illustration: under the arrangements introduced by the Regulation of the Minister of Construction of 20 May 1949, based on a framework contract supplemented by general conditions, the contractor was protected against increases in labour and material costs, and the risk of unforeseen works was capped at 5 % of the contract value. Above that threshold the cost returned to its source. Settlement was then made on unit prices, not on a lump sum.

It is worth noting that the lump sum itself is neither new nor accidental in Polish law. An equivalent of today’s Article 632 § 1 was already contained in the Code of Obligations of 1933. Contemporary writing, however, construed it narrowly and practically: the lump sum was to serve simple works of predictable extent, where labour input and the value of materials can easily be estimated in advance — the examples given were a made-to-measure suit or a shoe repair (F. Longchamps de Berier, Zobowiązania, 1939, pp. 548 et seq.). The court could then increase the lump sum or dissolve the contract after weighing the interests of both parties and the requirements of good faith. Transferring that construction to multi-million infrastructure contracts, whose subject matter nobody can describe exhaustively in advance, is an extension its authors never contemplated.

The systemic transformation abolished the socialised economy units and turned the construction works contract into an ordinary civil law contract available to anyone. With it came the repeal of the entire body of sub-statutory rules that had secured that balanced allocation of risk. The legislature simultaneously postponed comprehensive regulation „for the time being”, convinced that this contract required fresh regulation and that preparing a draft would be time-consuming. The provisional arrangement proved more durable than any definitive one. More than thirty years later comprehensive regulation still does not exist and the Code provisions on construction works contracts remain rudimentary.

Two further factors deepened the imbalance. The first is the legacy of the principle of real performance of obligations, which under the previous system privileged the employer: the contractor was to perform at the agreed price and had no instrument for changing it. The second is public procurement law, whose emphasis was placed on the immutability of the price offered by the contractor. Far less attention — if any — was given to whether the design handed to the contractor is fit for execution and complete. The legislature concentrated on preventing abuse in the award of contracts so heavily that the question of a balanced allocation of risk between employer and contractor receded into the background.

The conclusion is uncomfortable but hard to refute: as regards the allocation of the risk of unforeseen works, the pre-transformation rules were more favourable to the contractor and better balanced than the present state of the law. The seed of the deterioration in contractors’ position is a legislative omission, not the case law.

Why the dominant position fails on legal analysis

Below we take it apart. It rests on eight assumptions and none withstands confrontation with the wording of the provision or with the system of the Code.

1. A lump sum concerns the remuneration, not the performance

This is the source error from which all the others follow. A contract has two sides: the performance side (what is to be done) and the remuneration side (how the price was calculated). Choosing a lump sum settles only the second — it says that the price was fixed in advance rather than after execution. It says nothing about how broad the scope of works is.

The scope of performance follows from the contract and its annexes and is established by construction. The Code requires that in contracts one should „rather examine what the concurrent intention of the parties and the aim of the contract were, than rely on its literal wording” (Article 65 § 2 of the Civil Code), and in a construction works contract the material for that exercise is broad, because „the documentation required by the relevant provisions forms an integral part of the contract” (Article 648 § 2). The lump sum can therefore sensibly cover only what the parties described. Fixing the price is not fixing the scope.

2. The scope must not be defined by the general name of the task

In practice the scope covered by the lump sum is often determined not from the design and specifications but from the general name of the task in the contract’s opening clause — a typical formula reads roughly: „reconstruction of municipal road No. … in the locality of M., section II from km 0+757.80 to km 1+353.77″. The effect is that everything that turns out to be needed for that reconstruction is treated as covered by the price from the outset.

A scope so understood becomes an open category to which further works can always be added even though nobody priced them. The name of the task is not a description of the subject matter of the contract — it is a label. Applied consistently, that method would allow the employer to introduce far-reaching changes within an unchanged lump sum, including to the finishing standard or the type of materials, since all of them fall within the generally defined aim of the investment. The „result” so understood ceases to be the boundary of the obligation and becomes a bottomless pit.

3. The argument from the wording: „extent or cost of the works”

Article 632 § 1 itself names precisely the risks that pass to the contractor: the unforeseeable „extent or cost of the works”. These are two specific risks — quantity risk (the measurement turned out larger) and price risk (materials, equipment and labour became more expensive). Both concern the same works. The provision says nothing about the risk of performing new works not provided for in the subject matter of the obligation.

In other words: the lump sum covers higher costs of producing the work where the work remains unchanged. If the content of the performance or the contractually defined circumstances of its execution change, the principle of immutability loses its point of reference, because the „work” is no longer the same work. Extending that rule to works not described in the contract goes beyond the wording of the provision.

4. Disregard of responsibility for design

The statutory division of roles is clear: the contractor hands over a structure „performed in accordance with the design and with the principles of technical knowledge”, while the employer is obliged, among other things, to „hand over the construction site and provide the design” (Article 647 of the Civil Code). Since the design comes from the employer, the employer bears responsibility for design. The dominant position simply omits this element — and as a result the contractor pays for defects in documentation it did not create. The outcome is an arrangement in which one party decides on the technical solutions while the other bears the financial consequences of errors in those solutions.

The observation is not new. It was formulated in Polish legal writing as early as 1961, long before the present legal framework. It was pointed out then that arbitration practice consistently adhered to the principle of tracing liability back to the party who caused the harm, that is to its source, and that by the same logic it is the designer, not the contractor, who should answer for defects of the design — even if those defects come to light only in a structure erected by someone else’s hands and only there become an economic fact. A warning was also given as to the systemic effect: the fight against poor design work will bear no fruit as long as the true culprit can hide behind the screen of the contractor’s liability. Searching for design defects at a moment when the documentation is already complete, and when the entire effort of the participants ought to be directed at the swift and economical execution of the works, is neither the best nor the most economical method of eliminating them (E. Kulesza, Państwo i Prawo No. 12/1961, pp. 1016 et seq.).

It would be hard to describe today’s Polish construction sites more accurately. An observation made over sixty years ago remains valid — and its author wrote it under rules that allocated risk more favourably to the contractor than those in force now.

5. Uncritical transfer of evaluations from the contract for a specific work

Here resolution III CZP 41/09 returns, together with the question whether the evaluation underlying the rule on works contracts fits a construction works contract. In the model of a contract for a specific work, design and execution lie in one pair of hands. The customer presents a general idea and the contractor — as the specialist — decides what steps are needed to produce it. Since it chooses the route to the result itself, it is logical that it bears the consequences of its own errors in that choice. The evaluation behind Article 632 § 1 therefore fits a (detailed) contract for a specific work.

In a construction works contract the roles are separated. The design comes from the employer and the contractor is merely to execute it properly — as the phrase „in accordance with the design” in Article 647 expressly indicates. Transferring to that model a risk rule developed for a party enjoying full design freedom is an error. The analogy is justified where the contractor actually designed the task — and in Polish contracts that is the exception, not the rule.

6. No-fault liability introduced through the back door

Polish law of obligations bases contractual liability on fault. The debtor is liable for damage resulting from non-performance or improper performance „unless the non-performance or improper performance is a consequence of circumstances for which the debtor is not responsible” (Article 471), and is responsible — unless otherwise provided by statute or by the legal act — „for failure to exercise due diligence” (Article 472), measured in business activity by its professional character (Article 355 § 2).

Yet under the dominant understanding of the lump sum, fault ceases to matter. The contractor bears the financial burden of every divergence between design and construction reality — up to the boundary of the functional result — even where no reproach whatsoever can be made against it. That is strict liability, introduced not by the legislature but by construction of the law. In a fault-based system this calls for special justification, and none has so far been offered.

7. Splitting liability for one and the same cause

This is best seen by juxtaposing two consequences of a single event. A defective employer’s design usually produces two effects at once: the need to perform works that were not provided for, and delay to the construction.

Delay is settled under the rules on default — the debtor is not in default where the delay „is a consequence of circumstances for which the debtor is not responsible” (Article 476, second sentence), and liquidated damages are stipulated for non-performance or improper performance (Article 483 § 1) and share the fate of the general conditions of contractual liability. The contractor is not liable for such delay, because the fault lies with the employer.

For additional works arising out of that very same defective design the contractor — on the dominant view — is liable without fault, because it „agreed to a lump sum”. The same cause, two opposite outcomes. It would be hard to find clearer evidence that something in this construction is wrong.

8. No guarantee can be derived from a lump sum

The final argument concerns the claim that by accepting a lump sum the contractor gives an implied „guarantee” that it will perform all necessary works for that price. Article 632 § 1 contains no statutory guarantee — it allocates to the contractor the quantity and price risks, nothing more. A contractual guarantee is of course admissible within the limits of freedom of contract (Article 353¹), but it requires a clear intention. The Code sets a high bar even for an ordinary extension of liability: „A debtor may by contract assume responsibility for non-performance or improper performance of an obligation on account of specified circumstances for which he is not liable by operation of law” (Article 473 § 1). The circumstances must be specified, not implied.

No guarantee intention can be derived from the mere fixing of the price. Construing the parties’ declarations under Article 65 leads to the opposite conclusion: the contractor is willing to perform, for the agreed price, the works arising from the documentation — not to insure the employer against the consequences of defects in the employer’s own design.

Case law moving in this direction

This criticism is not an isolated voice in the literature. For years the case law has been producing decisions that adopt the same distinction.

Most interestingly, the limit to the dominant position is drawn by the very judgment that expresses it most fully. Having repeated the formula about works being a natural consequence of the construction process, the Court of Appeal in Gdańsk immediately qualifies it:

„However, it is not justified to expect a complete exclusion of the possibility of claiming remuneration for additional works, particularly where the technical documentation, which is the basis on which the contractor calculates its remuneration, contains errors preventing the performance of the task so as to achieve the assumed final effect.”

— judgment of the Court of Appeal in Gdańsk of 12 March 2014, V ACa 846/13, LEX No. 1488615

In that case the surveying documentation concerning the route of the sewage and storm-water installations proved defective, and the need for additional outlays emerged only on entering the site. The Court held that since the employer had made available data on which the lump sum was calculated in a manner not corresponding to reality, „the lump-sum remuneration agreed by the parties does not cover the works in question”. The reasoning matters most, because it goes to the heart of risk allocation:

„Were a different assumption to be adopted, a dishonest employer could establish payment terms favourable to itself while being aware of the necessity of those works and without informing the contractor of them (by omitting them from the documentation or describing them defectively), where the contractor could not have foreseen the need to perform them.”

— judgment of the Court of Appeal in Gdańsk of 12 March 2014, V ACa 846/13, LEX No. 1488615

That is a systemic argument, not an equitable one. The dominant position rewards the employer who economised on design and shifts that saving onto the contractor. The Court saw that such a construction creates an incentive to describe the subject matter of the contract unreliably — and for precisely that reason declined to adopt it.

A second signal comes from the case concerning sanitary installations in 127 flats for PLN 2,725,620 net. During the works the site inspector ordered the cutting of chases which the detailed design did not provide for and without which, as the courts established, the contract could not have been performed. There were 720 of them. The Supreme Court held the refusal of payment unfounded:

„The construction of lump-sum remuneration — as is also emphasised in the literature — does not therefore exclude a claim by the contractor for remuneration for works not covered by the contract.”

— judgment of the Supreme Court of 9 October 2014, I CSK 568/13, LEX No. 1541043

The Court also rejected the objection of a lack of professional diligence, noting that „the claimant does not hold design qualifications in respect of the installations forming the subject matter of the contract”. That is precisely the argument about responsibility for design.

A third signal is the symmetry of the price. The Supreme Court accepts that a lump sum may be reduced:

„[W]here the contractor has not performed all the works for which lump-sum remuneration was stipulated in the contract, that remuneration is subject to proportionate reduction corresponding to the extent of the part not performed, which does not negate the lump-sum character of that remuneration.”

— judgment of the Supreme Court of 25 March 2015, II CSK 389/14, LEX No. 1657595

If the price is tied to the scope so firmly that reducing the scope reduces the price, consistency requires that exceeding the scope should increase it. A position under which the lump sum is flexible only in the employer’s favour cannot be defended.

Fairness requires noting a more cautious voice. In its judgment of 8 March 2018, II CSK 325/17 (LEX No. 2497992), the Supreme Court took a more restrictive approach to settling works outside the lump sum. The case law is therefore not uniform, and the outcome of a particular case depends on how precisely the boundary between works covered by the contract and works outside it can be demonstrated.

A map of claims: what works and what is a dead end

Contract, variation order or documented agreement

The safest route. The Code itself assumes that „additional works or works necessary to perform the contract, accepted in writing by the employer” arise on site — that is the wording of Article 649³ § 1 on the payment guarantee. Outside public procurement, the absence of written form does not bar proof between entrepreneurs (Article 74 § 4); in public procurement the contract and any variation require written form on pain of nullity (Article 432 of the Public Procurement Law).

One argument tends to be overlooked in disputes. The parties often agree on the scope of works but not on the price, because the employer refuses to discuss money. That need not defeat the agreement. Since the Supreme Court has allowed Articles 629 and 632 § 2 to be applied by analogy to construction works contracts, consistency calls for the analogy to extend to Article 628 § 1, which resolves the parties’ silence on price: where the parties have determined neither the amount of remuneration nor the basis for establishing it, it is presumed in case of doubt that they had in mind the usual remuneration for work of that kind.

Unjust enrichment and undue performance

Where works were performed outside the contract, or the agreement proved invalid, the case law opens the way to recovery of their value:

„[W]here the invalidity of the contract, on account of non-compliance with the required form, precludes awarding that equivalent as remuneration, there is no obstacle to taking the equivalent value of those works into account under the provisions on unjust enrichment, since the defendant was indisputably enriched by their value.”

— judgment of the Supreme Court of 2 February 2011, II CSK 414/10, LEX No. 738545, citing the holding of the judgment of 7 November 2007, II CSK 344/07

Judicial increase of the lump sum

This concerns works covered by the contract whose cost has overturned the calculation as a result of an unforeseeable change of circumstances. It requires proof of the threat of gross loss and ends in a judgment reshaping the contract.

Delimitation: Article 632 § 2 and the rebus sic stantibus clause of Article 357¹

This distinction determines the choice of the basis of claim and is often blurred even in pleadings. Both provisions respond to a change of circumstances, but they do so differently.

The most important limit is common to both: neither provision serves to settle works that the contract did not cover. The change of circumstances must be an external event independent of the parties, and defects in documentation do not meet that condition — they exist from the moment of contracting and originate in the employer’s sphere. The Supreme Court puts it unequivocally: „a material change of circumstances within the meaning of Article 632 § 2 of the Civil Code concerns exclusively an external event, independent of the parties, which they were unable objectively to foresee at the date of concluding the contract. Circumstances dependent on the parties are excluded under this provision” (judgment of 21 February 2013, IV CSK 354/12, LEX No. 1311808). For additional works arising from a defective design the proper routes remain agreement, unjust enrichment or damages.

Damages

Where the source of the costs is the employer’s improper performance of its obligations, above all the provision of defective documentation (Article 471). This also covers losses that settling the works alone will not compensate — standstills, prolonged maintenance of site facilities, redesign costs.

Pre-contractual liability — an apparently obvious route

Since the employer provided, at the tender stage, documentation that did not permit a reliable bid calculation, liability for breach of information duties before conclusion of the contract suggests itself. In practice this route rarely delivers. The contractor would have to show culpable infliction of damage at the contracting stage and then — harder still — that with reliable information the contract would have been concluded on terms more favourable to it. Yet an employer who stipulated a lump sum assumed from the outset that the price covered everything, including unforeseen works. It is difficult to argue that it would have agreed to pay more. We treat this basis as supplementary rather than as the backbone of a claim.

Negotiorum gestio — why it will not work

It is tempting to treat works performed outside the documentation as the management of another’s affairs without mandate and to claim reimbursement of justified expenditure with interest. That construction founders on the requirement of acting without mandate, that is without legal title. A contractor performing works necessary to deliver a functioning structure does have a legal title — it follows from its own obligation to achieve the result. Those works are not covered by the price, but they fall within what it owes.

And here the core of the whole problem returns. The duty exists on the performance side and has no counterpart on the remuneration side. The gap between the two cannot be closed by the rules on managing another’s affairs — one must reach for the instruments described above.

Can this risk be shifted by contract?

Given the statutory allocation of risk described above, a practical question arises: may the employer simply stipulate that all consequences of defects in the documentation burden the contractor? Up to a point, yes — but a limit exists, and in public procurement it has recently moved in the contractors’ favour.

Starting point: freedom of contract and subjective equivalence

The parties „may arrange their legal relationship at their discretion, provided that its content or purpose is not contrary to the properties (nature) of the relationship, to statute or to the principles of community life” (Article 353¹), and a legal act contrary to those principles is invalid (Article 58 § 2). Polish law knows no general prohibition on shifting to the contractor risks which the statutory model places on the employer. The principle of subjective equivalence applies: the mere absence of objective balance between the performances does not suffice to challenge the contract. If the contractor knowingly assumed an increased risk, could estimate it and price it in, the contract is valid even if it turns out to be unfavourable.

First limit: the risk must be capable of being calculated

The problem begins where the risk cannot be calculated. Take an example from tender practice: the employer commissions the removal and disposal of soil without having carried out geotechnical investigations. With slight contamination, disposal costs a few dozen zloty per tonne; with heavy contamination, ten or more times that. At ten thousand tonnes the spread between the two scenarios runs into millions. A bidder with a few weeks to prepare its offer, and no right to bring a drilling rig onto someone else’s land, cannot price that. It is not assuming a calculable risk — it is placing a bet.

In our view a requirement of calculability of risk should apply in such situations. The assumption of risk is effective only in so far as the contractor is able to produce a calculation that is economically defensible and compatible with the purpose of the procedure, namely obtaining comparable bids. Where the employer shifts every conceivable risk without specifying any of them, comparability of bids becomes a fiction — each bidder guesses differently and the winner is the one who guessed most optimistically or knowingly gambled.

Second limit: exploitation of a stronger position

Here the principles of community life come into play. Imbalance of performances alone does not suffice to challenge a contract, but the assessment changes where a contract of objectively harmful content was concluded through the deliberate exploitation of one party’s stronger position. Freedom of contract presupposes self-determination, and where one party dictates the terms while the other may only accept them or leave the market, there is no self-determination. The argument carries particular weight against public entities, which in civil law relations should appear as an equal partner rather than draw on the advantage flowing from their position as organiser of the procedure.

Third limit: standard form versus individual negotiation

Polish law does not provide for extensive content review of standard terms between entrepreneurs. That does not make the way a clause came into being irrelevant. A clause imposed unilaterally in a standard form, shifting to the contractor the consequences of defective design on the employer’s side, is in our view difficult to defend — it shifts the risk of one’s own error onto the other party, and does so in a manner that excludes negotiation. An assumption of risk negotiated individually, expressly named and prominently set out, is assessed differently. A simple proportion applies: the more unknown risks the contractor is to assume, the higher the requirements as to the precision and detail of the clause. A general formula will not carry the transfer of a risk undefined as to type and magnitude.

Fourth limit: a general clause does not displace a specific provision

If the employer imposed a specific technical solution which proved defective or incomplete, a completeness clause does not change that. A blanket provision does not extend a scope described in detail — otherwise every design error would be remedied at the contractor’s expense by virtue of a single sentence in the contract. Doubts that cannot be removed by construction burden the author of the text, and the standard form of a tender contract is drafted by the employer.

Practice: a clause that reached the appeals chamber

This is seen most sharply in public procurement. A classic example is a clause from a tender for the reconstruction of a tramway track, under which the contractor was to declare that it had verified and confirmed the completeness, accuracy and sufficiency of the design documentation and, at the same time, to waive in advance all claims arising from its errors, inconsistencies and deficiencies — including claims for increased costs and for extension of time. In 2011 the National Appeals Chamber held that such a provision burdened the contractor with a risk that could be neither established nor priced when the bid was submitted, and ordered its removal. The court hearing the complaint took the opposite view, pointing out that the contractor was free not to bid — and that position prevailed in practice at the time.

Today the outcome would be different, because the legislature has spoken. Draft contractual provisions may not provide for „the contractor’s liability for circumstances for which the employer bears sole responsibility” (Article 433(3) of the Public Procurement Law), and the subject matter of the contract is to be described „in an unambiguous and exhaustive manner” (Article 99(1)). A clause shifting to the contractor the consequences of defects in the employer’s documentation collides directly with that prohibition. It is one of the strongest arguments now available to a contractor in a dispute with a public entity.

What decides the outcome of a case

The burden of proof lies with the contractor (Article 6 of the Civil Code). It must show that the disputed works went beyond the scope of the contract, that it performed them, what their value was, and that the employer benefits from them. The first of these is the hardest and is won by setting the design, specifications and bill of quantities against the actual scope of works.

Cases of this kind are decided by documents from the construction period, not by testimony given years later. Instructive is the warning from case IV CSK 460/07: the contract provided that any additional works would be determined on the basis of a protocol of necessity and, as was established, „the contractor did not apply for a protocol of necessity to be drawn up”. The claims were dismissed.

The employer’s perspective

The foregoing does not mean that every claim for payment for additional works is well founded. The line of defence runs through showing that the disputed works fell within the described scope, that the discrepancies were apparent at the bid stage and were not reported, or that the conditions of enrichment were not met. The cheapest prophylaxis, however, lies earlier — in complete design documentation, a precise description of the subject matter of the contract, and a prompt written response to the contractor’s notifications. A notification that is ignored returns in litigation as evidence that the employer knew and nonetheless ordered the works to proceed unchanged.

There is also the employer’s own interest in this change of perspective. A dispute over several hundred thousand zloty fought for a few years costs the budget more than reliable documentation before the tender, and a contractor driven to the edge of profitability ceases to be a partner capable of completing the investment. Shifting risk is therefore often a false economy.

Frequently asked questions

Can lump-sum remuneration be changed at all?

For works covered by the contract — only exceptionally, by a court judgment under Article 632 § 2, upon proof of an unforeseeable change of circumstances and a threat of gross loss. For works outside the scope of the contract the question is not one of „changing” the lump sum but of separate remuneration or recovery of the value of the works.

Can payment for additional works be claimed without a variation order?

Yes. The case law permits a claim for the value of the works under Articles 405 and 410 of the Civil Code, including against public entities. It must, however, be proved that the works went beyond the contract, and their value must be established.

Does a clause stating that „the lump sum covers all costs” settle the matter?

No. Such clauses are construed like any other contractual provision, and doubts that cannot be removed burden their author. Nor do they transfer the designer’s responsibility to the contractor, which would require specified circumstances within the meaning of Article 473 § 1.

Does being a professional mean I should have foreseen the gaps in the design?

Professional diligence under Article 355 § 2 does not create duties for which the contractor has no competence. The Supreme Court rejected such an objection against an installation contractor, pointing to the absence of design qualifications in the relevant discipline (I CSK 568/13). The duty of verification covers defects apparent without design expertise — not a review of someone else’s design.

If the problem is systemic, is it worth fighting my case at all?

It is, for two reasons. First, the case law is not uniform, and a line favourable to contractors exists and is well established in the judgments cited above. Second, the outcome depends above all on the evidence from the construction period, and that is in the contractor’s hands. These cases are most often lost not on the construction of the provision but on missing documents.

Conclusions

Three layers of this analysis lead to the same conclusion.

At the doctrinal level, a position equating a lump sum with a guarantee to perform everything necessary cannot be reconciled with the wording of Article 632 § 1, with the division of roles under Article 647, or with the fault-based construction of contractual liability. It is the price that was fixed, not the scope of the performance.

At the systemic level we are dealing with a structurally defective allocation of risk between the parties. This is not the result of individual rulings but of a legislative omission: the instruments that divided the risk of unforeseen extension of scope in a balanced way were repealed and replaced by nothing. The construction works contract thus remains one of the most weakly regulated nominate contracts of the Civil Code, even though it serves one of the largest construction markets in Europe. The courts try to mitigate the harshest effects by reaching for the clause on extraordinary change of circumstances, but this is treatment of symptoms — a construction designed as an exception for special situations cannot replace a missing general rule.

At the economic level the result is a wave of insolvencies during a record boom, the withdrawal of foreign contractors and pressure to reduce quality. If we reject the thesis that an entire sector is incapable of pricing its work, the causes must be recognised as systemic.

For the practitioner, however, the conclusion is concrete and encouraging. A line of case law favourable to contractors exists, is well established and can be used today — provided that the classification of the works is carried out reliably and that the documentation from the construction period is complete. The law changes slowly, but the outcome of an individual case depends above all on what the parties managed to document.

Sources

Legislation: Act of 23 April 1964 — Civil Code (consolidated text, Journal of Laws 2024, item 1061); Act of 11 September 2019 — Public Procurement Law (consolidated text, Journal of Laws 2024, item 1320).

Case law: resolution of a panel of seven judges of the Supreme Court of 29 September 2009, III CZP 41/09 (OSNC 2010, No. 3, item 33); judgments of the Supreme Court of 20 November 1998, II CKN 913/97 (LEX No. 138655); 7 November 2007, II CSK 344/07 (LEX No. 388844); 14 March 2008, IV CSK 460/07 (LEX No. 453070); 2 February 2011, II CSK 414/10 (LEX No. 738545); 25 March 2011, IV CSK 397/10 (LEX No. 1129144); 21 February 2013, IV CSK 354/12 (LEX No. 1311808); 9 October 2014, I CSK 568/13 (LEX No. 1541043); 25 March 2015, II CSK 389/14 (LEX No. 1657595); 29 October 2015, I CSK 901/14 (LEX No. 1818856); 8 March 2018, II CSK 325/17 (LEX No. 2497992); and the judgment of the Court of Appeal in Gdańsk of 12 March 2014, V ACa 846/13 (LEX No. 1488615).

Literature: F. Longchamps de Berier, Zobowiązania, Poznań 1939, pp. 548 et seq.; E. Kulesza, Państwo i Prawo No. 12/1961, pp. 1016 et seq.; R. Szostak, Samorząd Terytorialny No. 3/2009, pp. 76 and 80; J. Bizon-Górecka, J. Barczewska, Controlling i Rachunkowość Zarządcza No. 2/2010, p. 5; commentaries on Articles 632 and 647 of the Civil Code.

Materials and data: joint démarche of the ambassadors of 14 June 2013 concerning the conditions for implementing infrastructure investments in Poland and the reply of the Minister of Economy of 11 July 2013; annual Coface reports on business insolvencies and restructurings in Poland; Central Statistical Office data on construction and assembly output.

Quotations from Polish judgments and legislation have been translated by the author. All translations are unofficial.

State of the law: 26 July 2026.

Author: Artur Barczewski PhD — Polish attorney-at-law (radca prawny), conducts construction payment disputes for contractors and employers alike. About the author · Discuss your case →