The “non adimpleti” exception in construction contracts.

What are these exceptions?

Although they are already well known, a brief reminder should be made before analyzing their role in construction contracts.

Thus, the exception of non-performance of the contract is the one that allows the debtor to be exonerated from payment while the counterparty does not perform. Or does not offer to perform the obligation to which it committed itself.

On the other hand, in the exception of contract not properly performed, what happens is a partial or defective performance. Allowing the other Party to refuse the performance of its obligation until the defects are rectified. Or the obligations are fully performed.

It is therefore, in synthesis, two exceptions that are only separated by the level of seriousness of the non-performance.

Regulation of these exceptions

Neither of these two exceptions is expressly regulated in our Civil Code. However, it could be said that they are based on the reciprocal obligations contained in Article 1,124 CC. This article contains the power to terminate the obligations when one of the parties does not fulfill what has been promised.

In addition to this article, the jurisprudence has been in charge of developing and configuring these two exceptions as a remedy for non-performance.

One of the cases in which these exceptions are most frequently invoked is in the context of construction contracts. We will see in the following point how the exceptions operate in this area and the requirements that must be met.

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Reception of works and the developer’s refusal to accept the works

The work contract has been defined by the Jurisprudence as an obligation of result and synalagmatic in nature. By virtue of which, obligations arise for both parties, including that of paying the price of the work.

Exception of contract not fulfilled or not adequately fulfilled in contracts for the execution of construction works.

Thus, as we announced, there are millions of promoters who refuse to accept the works, alleging defective and useless execution. This also implies the refusal to pay for them. However, is the existence of mere defects sufficient for any of these exceptions to prosper? Or, must they have certain importance or transcendence?

Valencia’s Provincial Courts in its Judgment 32/2013 analyzes these exceptions in the framework of construction contracts. Being its relevant points the following:

1.- In order to obtain a judgment of acquittal based on the exception of non-performance of the contract:

• The defendant must prove that the quantitative amount of the damage originated by the plaintiff’s non-performance has sufficient entity. And to such an extent that the other party is exonerated from its obligation.
• It is obvious that not every non-performance implies an exoneration of payment. Otherwise, it would introduce an imbalance in the benefits that is inadmissible.
• The debtor who invokes it must base it on a real and effective breach that has frustrated the purpose of the contract. Defective performance is not sufficient. This leads to the following exception.

2.- To reduce the amount of the work for contract not adequately fulfilled:

• It is necessary that what was poorly performed or omitted in that defective performance is of sufficient importance in relation to the rest well executed.
• This proof of defective performance corresponds to the defendant. And only in the case of being proved, it will be able to be solved applying the specific norms of the redhibitory action. Or of the reduction of the price.

Therefore, applied to the case in question, it is not sufficient to allege a failure to meet the final deadline and a deficient quality and incorrect execution. This inevitably leads to the fact that none of the exceptions raised can be upheld.

In the same line, the Judgment of the Provincial Court of Madrid No. 290/2015, reflects the success of these exceptions. Success, which is conditioned to the defects of the provision being of certain transcendence in relation to the purpose pursued. Also with the ease and difficulty of its correction, making them unsuitable to satisfy the interest of the other party. Therefore, as in the previous case, it will not be accepted when the performance lacks sufficient importance. And the interest of the one who receives it is satisfied.

Conclusions

• The non-performance and non-performance exceptions operate as a solution to contractual breaches.
• Its only difference lies in the level of seriousness of the breach.
• Although they are not expressly regulated in the CC, they are based on article 1124 CC. And also, in the configuration that has been developed by the Jurisprudence over the years.
• It is very common to invoke these exceptions in the context of construction contracts. However, the requirements for their admission are quite strict, since not every breach implies an exoneration from payment.
• In short, it is not sufficient to allege deficient quality and incorrect execution of the works.
• A party will only be exonerated from its obligation to pay if the non-performance of the other party has frustrated the purpose of the contract. (Exception of unfulfilled contract)
• The amount of the price may only be reduced if what has been poorly performed is of a certain amount in relation to what has been well performed. (Exception of contract not properly performed).
• And in both cases, it must be accredited by the defendant who invokes the exception.

If this article has been of interest, we also suggest you to read the following article published on our website:

What are the options when an obligation is breached?