The draft bill on quality assurance in construction (Kwaliteitsborging voor het Bouwen) remains a bone of contention, for both advocates and opponents. In a pressing letter sent to the Dutch Senate on 28 June, the four major municipalities stood up to quality assurance by a private provider. Following the debate on the draft bill on 4 July, Minister Plasterk agreed to discuss the objections in Cabinet. The act itself is not expected to enter into force before 1 January 2019.
The main aim of the draft bill is to improve building quality. According to legislators, this will help improve the commissioning party's position towards to the contractor. The bill proposes rules that would make it easier for the contractor of construction work to be held liable for hidden defects.
The idea that contractors should vouch for the quality of their work certainly has its merits. At the same time, construction practice benefits from simple and unambiguous regulations. The draft bill however would appear not to deliver this.
The draft bill adds a fourth paragraph to Article 7:758 of the Dutch Civil Code regulating completion and subsequent liability. Current regulations exonerate the contractor in this case: it is not liable for faults that the commissioning party should have discovered at the time of completion. When construction work is subcontracted, this basic principle no longer applies: the contractor is liable for defects not identified on completion unless they cannot be attributed to the contractor. For consumer commissions, it is not possible to deviate from this to the detriment of the commissioning party. In the case of other commissioning parties on the other hand, this is possible providing that such a deviation is expressly included in the contract.
The proposed regulation raises several key questions. Most particularly, the fact that the contractor is liable for defects that have not been discovered. The question is what these defects are. In practice the case will remain that undiscovered defects wanting to be remedied will be indicated on the official report issued on completion. It then remains unclear whether there will be room to indicate that other defects have or have not been discovered and with whom the burden of proof should lie. A defect cannot be reported because it has not been noticed, but it is also possible that it has simply been accepted. Anyway, it will become more important for the contractor to explicitly include accepted defects in the official report.
The enactment of this draft legislation will also have an impact on the model contracts often used in practice. For example, the rules on liability in the Woningborg and SWK purchase and contracting agreements with guarantee and deposit schemes will need to be adapted since they will not be compatible with the mandatory nature of paragraph 4 of Article 7:758. The impact on construction contracts used by professional parties remains to be seen. However, commissioning parties are likely to opt for the proposed regulation rather than the hidden defects rule in the general terms and conditions often used for construction contracts, such as UAV 2012 and UAV-GC 2005. It will no longer be possible to hide deviations from statutory regulations in general terms and conditions; they will need to be stipulated explicitly.
Logically, the parties responsible will wish to mitigate these new risks. There will be a need for new insurance products to cover this kind of liability. However, just like their counterparts directly involved in construction, insurance companies also have an interest in statutory regulation that is clear and unambiguous.