Frequently Asked Questions
Search a question and read the short, guiding answer with its legal basis.
- FAQ4735Contract Disputes02 September 2026
How is the contract terminated where a prohibited act or conduct is established?
Establishing during performance of the contract that one of the prohibited acts or conduct listed in the Law has been committed brings into play the special termination provisions of Law No 4735. It must be established by concrete evidence that the act truly falls within the prohibition.
- FAQ4735Contract Disputes02 September 2026
Is a warning of at least ten days always required for termination under Law No 4735?
Where Article 20(a) of Law No 4735 is applied because the contractor has not performed its undertaking in accordance with the contract, the rule requiring a warning of at least ten days stating the reasons expressly is important. In cases under Article 20(b), such as prohibited acts or conduct, termination may take place without warning.
- FAQ4735Contract Disputes02 September 2026
In what circumstances may the contracting authority terminate the contract for the contractor's default?
The contractor's breach of contract must constitute one of the grounds for termination in Law No 4735 and in the contract. The warning, the period given, the continuation of the breach and the contractor's fault must each be checked separately against the documents. (See Public Procurement Contracts Law No 4735, Articles 20 to 22 and 25 to 26.)
- FAQContract Disputes02 September 2026
Before which court are disputes over progress payments and price adjustment heard?
Monetary claims arising from performance of the contract are mostly heard before the civil courts; however, the nature of the act challenged must be examined separately. Jurisdiction, venue and the conditions for bringing proceedings are determined by the particular contract.
- FAQContract Disputes02 September 2026
May interest or enforcement proceedings be claimed for an unpaid progress payment?
Default, interest and compulsory enforcement may arise in respect of a contractual debt that has fallen due and remains unpaid. Commencing enforcement before the amount and the date of maturity are settled may give rise to a fresh dispute.
- FAQ4735Contract Disputes02 September 2026
What should the contractor do if a dispute arises over the final account?
In the final account, the quantity survey, prices, increase in work, price adjustment and deductions must be compared item by item. The contractor must put the items it disputes in writing in due time and form and preserve its evidence.
- FAQ4735Contract Disputes02 September 2026
May a deduction be made from the performance bond at the time of a progress payment?
The purpose of the performance bond is to secure due performance of the contract. For a deduction to be made from the guarantee or from a progress payment, there must be a basis in the Law, the contract or an express claim.
- FAQ4735Contract Disputes02 September 2026
May a deduction be made from a progress payment because of tax or social security debts?
The set-off and deduction rules arising from tax and social security legislation may be applied to public payments. To whom the debt belongs, whether it has become final and the scope of the power of deduction must be checked against the current legislation.
- FAQ4735Contract Disputes02 September 2026
Which deductions may be made from a progress payment?
Deductions for the contract, tax, social security, guarantees, penalties and other deductions with an express basis in the legislation may be made from a progress payment. The amount and basis of each deduction and the period to which it relates must be clearly shown in the progress payment report.
- FAQ4735Contract Disputes02 September 2026
Where the work is increased, how are the price adjustment and progress payment calculated?
An increase in work made in due form becomes part of the contract and the quantities carried out are taken into the progress payment. The price adjustment is calculated separately by reference to the period in which the new quantities were carried out and the price adjustment method in the contract.
- FAQ4735Contract Disputes02 September 2026
How is a revised unit price reflected in the progress payment?
Where the conditions for a revised unit price arise, a new unit price is calculated for a particular quantity of the work item concerned. The calculation must be applied to the progress payment according to the type of contract and the formula in the General Specification for Construction Works.
- FAQ4735Contract Disputes02 September 2026
What is done where the wrong index is used in a price adjustment?
The index and coefficient appropriate to the nature of the work item are determined by the contract and the Principles on Price Adjustment. Where the wrong index affects the amount of the progress payment, the calculation table must be corrected and the dispute recorded in writing.
- FAQ4735Contract Disputes02 September 2026
In which contracts may an additional price adjustment be applied?
An additional price adjustment is not a continuing right; it applies to contracts falling within the scope of special statutory provisions. The date of the tender, the contract period, the work actually carried out and the conditions for applying must each be checked.
- FAQ4735Contract Disputes02 September 2026
If the contract states that no price adjustment will be given, may price adjustment be claimed later?
As a rule the price adjustment provision in the contract governs. However, where a special law or transitional provision enacted later grants a right to an additional price adjustment, the scope of that provision and the conditions for applying must be examined separately.
- FAQ4735Contract Disputes02 September 2026
How is price adjustment calculated in a public procurement contract?
Price adjustment is calculated according to the contract provision in force on the date of the tender and the Principles on Price Adjustment then applicable. A sound calculation is not possible unless the type of work, the indices, the month of application and the base index are correctly identified.
- FAQContract Disputes02 September 2026
What can the contractor do if the contracting authority delays a progress payment?
The payment period is set in the contract and the general specification. In the event of delay, the maturity of the debt, interest, default and, if necessary, enforcement or court proceedings are considered; the contractor must check the terms of the contract before suspending the work of its own motion.
- FAQ4735Contract Disputes02 September 2026
How must the contractor object to a progress payment?
The contractor must state expressly the quantity, price or deduction with which it does not agree, and must comply with any objection procedure in the contract. A written application matters in any subsequent dispute over the debt. To verify the calculation, the type of contract, the progress payment period, the index date, any increase or decrease in the work and any applications made must be…
- FAQ4735Contract Disputes02 September 2026
How must a progress payment report be prepared and what documents must accompany it?
The progress payment is prepared on the basis of the quantity of work actually carried out during the contract period and the contract prices. The measurement, timesheet, quantity survey, price adjustment and deduction documents must be consistent with the progress payment and capable of review. (See General Specification for Service Works, Article 42; General Specification for Construction…
- FAQ4735Tender Process Disputes01 September 2026
May a dispute over acceptance of construction works be taken to court?
Technical and financial acceptance disputes arising from performance of the contract are mostly of a private law character. The competent court must be determined according to the status of the parties and the nature of the act underlying the dispute.
- FAQ4735Tender Process Disputes01 September 2026
How does the contractor object to a provisional acceptance decision?
A contractor that does not agree with the refusal of acceptance or with the findings of deficiency must submit its reasons and technical documents to the contracting authority in writing. In any subsequent dispute, the distinction between the contract and the civil or administrative courts is determined separately.