What the contract price covers and what it does not

The Law of Obligations Act (võlaõigusseadus, VÕS) defines the contract for work through its result. The töövõtja (the contractor) undertakes to make or alter a thing or to achieve another agreed result (the work), and the tellija (the client) undertakes to pay a fee for it (§ 635(1)). The fee is therefore tied to the agreed work. Anything that falls outside the agreement needs a separate agreement or ends up in dispute.

The agreement is read under VÕS § 29. First, the parties' actual common intention is sought (subsection 1). If it cannot be established, the contract is interpreted as a reasonable person would understand it in the same circumstances (subsection 4). Account is taken, among other things, of the preliminary negotiations, the parties' conduct after the contract was concluded, the usual meaning of expressions in the relevant field of activity and practices (subsection 5), and contract terms are interpreted in relation to one another (subsection 6).

For the client, this has two practical consequences. The scope of the price is not written in one sentence but in all the documents together. And what the parties do on site or say at a meeting may later influence the interpretation of the contract, which is why agreements must be in writing.

The trend of decisions described in the Supreme Court's case-law review is uncomfortable for the client: the mere fact that work should have been in the tender, or was technically necessary, does not prove that it was in the price (Supreme Court civil chamber judgment of 19.12.2017, 2-15-15662/55, para 13; Supreme Court civil chamber judgment of 20.09.2017, 2-13-40856/124, para 14). In a dispute over the final invoice, the client therefore cannot rely solely on the argument that a professional contractor should have foreseen the work.

According to the same review, lisatööd (additional works) are works that fall outside the subject matter of the contract and require an agreement; without an agreement, there is no contractual basis for claiming a fee. The protection therefore works in both directions. The contractor cannot claim a fee under the contract for work that was not agreed, but where the work genuinely falls outside the subject matter, the client cannot require it to be done for the agreed price either. Without a clear contract, nobody wins: the result is a dispute settled on the basis of the documents and their interpretation. The distinction between additional work and changed work is covered in the article Additional work or changed work: why the difference matters.

The third trend concerns the client's own contribution. According to the Supreme Court's case-law review, the client is responsible for the conformity of the design it gives to the contractor (2-15-15662/55, para 19). If the design on which the price was based is deficient, it does not go without saying that the gap is filled at the contractor's expense. In that case, the client turns to its own designer under the contract between them.

The more precise the document on which the price is given, the less interpretation there is in the final invoice. The regulation on requirements for a building design (regulation no 97) divides design into three stages: eelprojekt (the preliminary design), põhiprojekt (the main design) and tööprojekt (the working design) (§ 5(1)). The content of each stage is described in the regulation, and that content also tells you how much of the price can be fixed on its basis.

The stages are also linked in law. A previous stage approved by the client becomes the binding brief for the next stage (§ 5(3)). If the contract is signed on the basis of the main design and the working design is prepared later, it is worth stating in the contract whether the refinements in the working design are included in the price, or in what case they are treated as a change. Which surveys and permits a design requires and how they affect costs is covered in the article on design, surveys and permits; what matters here is only that the uncertainty left by a missing survey reaches the price either as a reservation or as a later claim for additional work.

Even a precise design can be internally inconsistent, and a conflict is a price issue. Under regulation no 97, a design must be free of conflicts (§ 2(1)), and for conflicts between documents of the same stage, the seletuskiri (the explanatory memorandum, here called the specification) takes precedence first, then the drawings, then the other documents (§ 6(2)). The rule, its limits and why it pays to write the order into the contract itself are covered in the article When the drawings and the specification conflict.

The client cannot avoid disputes entirely, but can reduce the part of the contract that will need interpreting later. The terms below do this. They are questions of wording, not of pricing.

• The list of contract documents. The contract should name every document that determines its content: the main text of the contract, the special conditions, the design with its stage, version and date, the technical description, the price schedule, the tender, the record of questions and answers. A document that is not on the list should not be part of the contract; a document that is on it is, as a rule, part of the contract together with its notes.
• The order of documents. If the list contains several documents, the contract must say which of them prevails in the event of a conflict. Without this, the answer is left to the interpretation of the contract as a whole under VÕS § 29.
• The tender's reservations. The assumptions and exclusions in the tender's covering letter or in the notes to the price schedule may become part of the contract if the tender is a contract document. The client should read them and accept, delete or amend them before signing, not discover them with the first claim for additional work.
• Express exclusions and inclusions. The works that most often cause disputes are those on the boundary between the building and the plot: connections to utility networks, external networks, external structures and landscaping, demolition and opening up of existing structures, temporary site facilities, testing and as-built documentation. For each such item, the contract should show whether it is in the price, outside the price or for the client to organise.
• Client supplies and obligations. If the client supplies materials, equipment or preconditions for the works, the contract must say what the contractor does with them and what is in the price, for example installation, acceptance on site and connection.
• The change procedure. Since the subject matter cannot be complete, the contract must say how work that later proves necessary is handled: who may order it, in what form the agreement is made and when the work may start. The principles in this branch are described in the article on additional work and changed work, and the pricing side in the article on how a budget becomes a tender.

Before comparing several tenders, it is worth checking that they price the same subject matter; a separate article explains why two quotations are often not comparable. All the points above are gathered as questions in A construction contract checklist before signing.

If the contractor states that a piece of work is not in the price, the client's first step is to read the documents, not to argue about necessity. The question is whether the work is in the subject matter of the contract, and the answer comes from the contract documents, their order and the preliminary negotiations. It helps to ask the contractor to show which document it relies on and to compare that with the version of the design that was priced.

The second step is to keep the dispute and the work separate. If the work is necessary, the client may have it done, but should record in writing that it does not accept the work being treated as additional work and that the question of payment will be settled separately. Such a note in the ehituspäevik (the construction diary) or in the minutes of a site meeting prevents a later claim that the client tacitly agreed to an additional fee.

The third step is to decide at the right time. A dispute postponed until the final invoice is settled when the client no longer has levers or options. A decision taken before the work starts allows the client, if necessary, to change the solution or reduce the scope.

The following example is fictional and intended only to illustrate the reasoning. A client signs a contract to build a warehouse on the basis of the main design. The contract lists as contract documents the contract, the main design and the price schedule, but not the tender's covering letter. The design shows the stormwater connection up to the boundary of the property, but not beyond.

During construction, it turns out that the connection must be taken to the public network. The contractor presents this as additional work. The client argues that the connection was technically necessary and should have been in the tender. According to the trend of case-law, technical necessity alone does not prove that the work was in the price; what is decisive is what the documents show. Since the design showed the connection only up to the property boundary, the contractor's position is stronger. If the contract had contained the sentence "the price includes all connections to public networks", the situation would be the reverse.