A considerable share of major works is commissioned by a public entity: the state, a local authority, a public establishment, a motorway concession company. The modules on contractual transfer and on the insurer's delay assume throughout a private-law relationship between parties who negotiate. That relationship changes nature when one of them is public, and it changes enough that reflexes acquired on private contracts produce errors. It is not a question of drafting but of regime.
The first difference is that the contract is not freely negotiated. General administrative conditions fix the essentials of the relationship between the public entity and its contractor, and derogations are not slipped in discreetly: they must appear in a place provided for that, failing which they do not apply. The module on contractual transfer described limitation clauses negotiated between lawyers; here, a clause contradicting the general framework without having been properly derogated does not exist, whatever the parties' intention, and that is good news for the contractor as often as the reverse.
The service order is the instrument with no private equivalent, and its force must be understood. The public entity can, by unilateral decision, order works to continue, be modified, be interrupted or resume, and the contractor must comply even if it objects. The objection is made afterwards, by written reservation within a short period, and omitting that reservation amounts to acceptance. The module on notification described periods whose sanction required a prejudice; here the period is strict, and it runs from notification of a document somebody received and filed.
That power has a counterpart private law does not know and which favors the contractor. Where unforeseen physical conditions upset the contract's economy, or an unforeseeable external event makes performance excessively onerous, the contractor can obtain compensation where a private contract would hold it to what it signed. Those mechanisms are not insurance and do not substitute for it: they bear on excess performance costs, not on physical damage, and they are claimed from the public entity and not from an insurer. Confusing them means claiming from the wrong debtor.
Unilateral termination in the public interest is the third feature with no equivalent. The public entity can end the contract without fault by the contractor, against compensation, and that possibility transforms the module on the stopped site: the stoppage there results not from a failure but from a lawful decision, and the construction policy cannot tell the two apart. A site stopped by termination in the public interest falls within the interruption clause exactly like an abandoned site, with the same guarding and weatherproofing conditions, and nobody has a budget to meet them since the contract no longer exists.
The ten-year liability regime applies to public works as to others, with an important practical difference: litigation goes to the administrative court, whose timescales and procedure are not those of the civil courts, and expert determination proceeds differently there. The module on pre-financing structural defects takes on another color here, because public entities are, for some of their operations, exempt from the obligation to buy it. That exemption is a visible saving and an invisible risk, and the module on pre-financing describes exactly what follows: the owner funds and waits.
What to retain for action comes down to three checks at start-up. Read the applicable general framework and locate where derogations appear, because a clause not properly recorded there produces nothing. Organize the receipt and handling of service orders as a timed circuit, with a named person, since the reservation period is strict and runs from a notification. And check whether the operation falls within the pre-financing obligation, structure by structure as the corresponding module requires, because the exemption some public entities enjoy is not general and is not presumed.
A local authority builds an aquatic center and an adjoining administrative building, under a single 34 million euro public contract. In April the authority notifies a service order requiring a change to the water treatment system, which the contractor considers technically unsuitable; it complies and issues no written reservation. In July, unforeseen physical conditions, ground far more water-bearing than the boreholes indicated, require reinforced dewatering costing 1.8 million euros that was not provided for. In September the authority terminates the contract in the public interest, the project being abandoned for budgetary reasons; the site stops, guarding ceases in October. No pre-financing insurance was bought, the authority considering itself exempt. Four points must be handled: which, and with whom?
What is claimed from the authority must first be separated from what is claimed from an insurer, because the file mixes the two and claiming from the wrong debtor wastes time limits. The water treatment system is lost to the contractor: the service order had to be complied with, which it did, but the absence of a written reservation within the period amounts to acceptance, and the period is strict, with no prejudice to the authority needing to be shown. It is the only one of the four points where inaction has already produced its effect. The 1.8 million of dewatering falls under unforeseen physical conditions and is claimed from the authority: these are excess performance costs and not physical damage, no policy has anything to do with them, and asking an insurer for them would be the file's costliest mistake. Termination in the public interest gives a right to compensation, but above all it produces an effect nobody anticipates: the construction policy cannot tell a lawful stoppage from an abandonment, so the interruption clause operates with its guarding and weatherproofing conditions, at the very moment the terminated contract no longer funds anyone to meet them. As for pre-financing, the exemption is not presumed and is read structure by structure: an adjoining administrative building does not necessarily share the fate of the sports facility, and it is the same boundary the corresponding module described, running through projects instead of around them.
- 01The contract is not freely negotiated: a clause contradicting the general framework without a properly recorded derogation produces nothing, whatever the parties intended.
- 02A service order is complied with even when contested, and the objection is made afterwards by written reservation within a STRICT period: omission amounts to acceptance, with no prejudice to show.
- 03Unforeseen physical conditions and hardship are claimed from the public entity, not from an insurer: they are excess performance costs, not physical damage.
- 04Termination in the public interest stops the site without fault, and the policy cannot tell it from an abandonment: the interruption clause operates with its conditions.
- 05The pre-financing exemption some public entities enjoy is not general and is not presumed: it is read structure by structure, like the scope itself.