Legal Alert – Recent Legal Praxis Regarding “YSE” General Conditions For Building Contracts
The Court of Appeal of Helsinki has in its recent decision interpreted section 13 of the YSE 1983 general conditions for building contracts (concerning liability during the guarantee period.) Section 13 of YSE 1983 is consistent with section 29 of the current YSE 1998 regarding the legal issue in question. The decision of the Court of Appeal is therefore applicable to the current YSE 1998 conditions. The decision of the Court of Appeal has legal force.
According to section 13 of YSE 1983 (and respectively section 29 of YSE 1998), the contractor is obliged at his own expense to repair any defects that emerge in his building work during the guarantee period, unless the contractor can demonstrate that the defects have occurred due to reasons beyond his control.
If the contractor delays in repairing the defects, the client is entitled to carry out the work at the expense of the contractor. However, the relevant section of YSE states that this can only take place after the client has given prior notice to the contractor in writing. In practice this has in many cases been interpreted to mean that the client is to give the contractor an order to repair (in Finnish korjauskehotus), before carrying out the repair work.
In the case in question, the client did not give the contractor any specific (written or oral) order to carry out the repair work. Based on this, the contractor argued that the clients claim for damages based on defects during the guarantee period should be dismissed.
The Court of Appeal determined that the contractor was to pay damages to the client, based on defects during the guarantee period. The court however adjusted the amount of damages, partly based on the clients failure to give the contractor the order to repair.
A relevant fact of the case is that the contractor performed the repair work himself, based on a separate contract. The contractor was therefore aware of the fact that repairs were being made and also in a position to monitor the defects.
The decision of the Court of Appeal of Helsinki reflects a trend in construction cases not to base decisions solely on formalities that would lead to the losses of rights of a party who otherwise would be entitled to damages. This trend is reflected in the well-known Supreme Court case 2008:19, as well as in an earlier Supreme Court case 1998:75.