IS IT POSSIBLE TO NEGOTIATE THE HANDOVER OF THE WORK IN THE CONTRACT BY MEANS OF A LEGAL FICTION?

The handover and acceptance of the work is a crucial moment for both the contractor and the client during the execution of the work. It is usually the handover of the work that is linked to the entitlement to payment of the price of the work, the contractor is also entitled to payment of the retention fee or a part thereof after handover of the work, and the warranty period, for example, very often starts from this moment.

In order to facilitate the handover of the work and to ensure that these described consequences of handover occur as soon as possible and in a manner that is easier to prove, work contracts tend to include provisions that establish legal fictions or presumptions of handover.

Previous case law of the Supreme Court made it impossible to establish such legal fictions (and presumptions) in connection with the handover of the work, on the grounds that a legal fiction or presumption can only be established by law and not by a contractual arrangement. In this connection, reference may be made, for example, to the judgment of the Supreme Court of 4 March 2018, Case No 32 Cdo 1287/2018, according to which it is held that "a legal presumption is a construction which can only be based on the law and which results in the necessity, under the conditions laid down by law, to assume unconditionally or conditionally the existence of something which it is not certain exists or even certain does not exist. Therefore, an agreement between the parties modifying the burden of proof, i.e. an institution of public civil procedural law, would be possible only if the Code of Civil Procedure allowed such a possibility. In the absence of statutory provisions providing for agreements on the burden of proof, such an agreement cannot be concluded."

However, this previous approach of the Supreme Court has changed as a result of the Supreme Court's judgment of 23 March 2022, Case No. 23 Cdo 1001/2021. In that case, the Supreme Court considered the following legal fiction of handing over the work agreed between two commercial corporations: "if the client fails to appear unjustifiably and repeatedly (at least twice) to accept the work or otherwise unjustifiably thwarts the final handing over of the work and the drawing up of the handover report, the work is deemed to have been duly and timely handed over".

The Supreme Court stated that legal fictions (as well as legal presumptions) of handing over the work agreed in the contract cannot be perceived as a priori invalid just because they are not based on the law, but it is necessary to examine in a particular case whether their use is not contrary to, for example, good morals or the law. The Supreme Court has thus departed from its previous approach, firstly because the fiction of acceptance of the work has already been established in the regime of Act No 89/2012 Coll., Civil Code, as amended, which is strongly based on the autonomy of the will as a fundamental principle, secondly because the previous approach has been criticised in the literature, or also because other legal systems allow the establishment of a legal fiction (or presumption).

Specifically, the Supreme Court stated that "It can thus be concluded that arrangements of the parties in a private law contract, which used certain typical expressions (e.g. "it is considered", "it is deemed", "it is assumed") to express a certain legal consequence foreseen by them, which in legal norms usually indicate that they are so-called legal presumptions or legal fictions, are not invalid only for this reason. Even in the case of such arrangements, it must be examined in each individual case to what legal effect the intention of the parties was directed and whether, in the particular circumstances of the case, such an arrangement is not prohibited by law or contrary to good morals."

The Supreme Court has then laid down certain criteria to be followed in assessing the validity or invalidity of agreed legal fictions (as well as legal presumptions) of the delivery of the work:

• the legal position in which the parties negotiated the arrangement (i.e. whether the contractor and the client were in the position of two entrepreneurs or whether one of the parties was in the position of a weaker party, whether a consumer or a weaker party entrepreneur),
• the legal effect of the parties' intention in negotiating the legal fiction,
• since the legal regulation of the delivery of the work is dispositive, whether the manner in which the parties departed from the dispositive legal regulation is not, in the circumstances of the case, prohibited by law or contrary to good morals.

It may then be advisable for the parties, when drafting in the context of a works contract, to set out within the definitions that if the contract contains the words:

• "deemed" then it means a rebuttable legal presumption,
• "deemed" or "deemed to be" then this expresses a legal fiction,
• 'it is understood that' then it is an irrebuttable presumption.

Such a provision in a works contract can then help to confirm the parties' intention that they actually intended the contract to embody a legal presumption (or fiction) of handing over the work with all the consequences that entails, and ultimately help to preserve the validity of the provision.