Agreements with subcontractors

according to the Civil Code and

Public Procurement Law

Renata Kozik, PhD Eng. Prof. of CUT

 Subcontracttors’ renumeration acording to Civil Code
(Article 647 1 )

Pursuant to Article 6471 § 1, the investor's joint and several liability will arise
when the subcontractor is notified to the investor along with the detailed
subject of the works performed by him.

This notification will require a written form, under pain of nullity.

Both the contractor and the subcontractor will be able to submit the
notification.

Article §1. The investor is jointly and severally liable with the contractor (general contractor) for the
payment of remuneration due to the subcontractor for construction works performed by subcontractor, if
the detailed subject of which was notified to the investor by the contractor or subcontractor prior to
commencing the performance of these works, unless the investor submitted to the subcontractors and
contractors an objection to the performance of these works by the subcontractor within thirty days from
the date of delivery of the notification to the investor
 Joint and several liability of contractors

Contractors' joint and several liability may result from:

 the law
 the contract
 Investors objections

 The above-mentioned presumption of the investor's consent will valid as a result

of an objection which he will be able to submit within 30 days from the date of
delivery of the notification.

 This objection will have to be notified to both the contractor and the
subcontractor in writing

 However, no objection will constitute a condition for the emergence of joint and
several liability,

 The investor's passivity after notification of third parties will mean his consent to
their participation in the construction process and thus responsibility for their
remuneration.
 Specification of the detailed scope of works performed
by the subcontractor already in the contract

 Pursuant to § 2 of Art. 647 it will also be possible to specify the detailed

scope of construction works performed by a specific subcontractor in the
main contract itself, the investor and the contractor will be able to
determine the scope of works of the given subcontractors already at the
stage of concluding the contract and thus skip the entire notification
procedure.
 The conclusion of such an agreement will be tantamount to the consent of
the investor, and its main effect - joint and several liability of the investor
for the payment of remuneration to this subcontractor.

§2. The notification referred to in § 1 (detailed scope of works entrusted to the subcontractor) is not
required if the investor and the contractor have specified in the contract concluded in writing under
pain of nullity, the detailed subject of construction works performed by the designated subcontractor
 Limitation of the liability

Art. 6471 § 3 introduces a limitation of the amount of remuneration due to

a subcontractor covered by joint and several liability of the investor.
The principle has been adopted that the upper limit of the liability that the
investor will be obliged to bear will be the amount of the contractor's
remuneration for a given scope of works, resulting from the notification or
the contract, respectively.
The investor will therefore be free from liability above this amount.

The investor is responsible for the payment of the subcontractor's remuneration in the amount specified
in the contract between the subcontractor and the contractor, unless this amount exceeds the amount of
the contractor's remuneration for construction works, the detailed subject of which results from the
notification or the contract referred to in § 1 or 2, respectively. In this case, the investor's liability for
the payment of the subcontractor's remuneration is limited to the amount of the contractor's
remuneration for construction works, the detailed subject of which results from the notification or the
contract referred to in § 1 or 2, respectively.
Responsibility for remuneration of further subcontractors

Pursuant to § 5 of that provision, the above-described regulations will

apply to the protection of further subcontractors' claims against the
investor, contractor and subcontractor.

§ 5. Przepisy dotyczące odpowiedzialności solidarnej stosuje się odpowiednio do solidarnej

odpowiedzialności inwestora, wykonawcy i podwykonawcy, który zawarł umowę z dalszym
podwykonawcą, za zapłatę wynagrodzenia dalszemu podwykonawcy.
Release from joint and several liability

 Contractual provisions contrary to Par.1-5 are invalid. " which

means, among others that joint and several liability cannot be

excluded.

 This cannot be done through appropriate provisions in the

contract
 Joint and several liability

 Provisions related to joint and several liability are mandatory, therefore any
contrary objections are ineffective.

 We are dealing here with solidarity which arises ex lege (by virtue of law).

 Therefore, the investor has an influence on who will perform the construction
works, even though the investor is not related to the subcontractor by any legal
relationship,
Protection of subcontractors in public
procurement law

SECTION VII The public procurement contract and

its performance

Chapter 5 Subcontracting
 Two types of subcontracting

Under the Public Procurement Law, two types of subcontracting can be

distinguished:
1. Subcontracting to confirm compliance with the conditions for
participation in a procedure or selection criteria (only with regard to
technical or professional capacity or financial or economic situation!),
As the provision of resources within the meaning of Art. 118 of the
Public Procurement Law;
2. Subcontracting in order to implement part of the subject of the contract
within the meaning of art. 462 of the Public Procurement Law.
 Variant 1

 The possibility for a contractor to use subcontracting "made available by a third party" in
the first option is conditional, in the case of services and works, on their actual (actual)
participation in the performance of the contract with regard to the conditions relating to
the contractor's education, professional qualifications or experience. A contractor who
relies on the capacity or situation of resource providers should submit an appropriate
commitment from the resource provider together with the tender. This declaration should
include providing it with the necessary resources for the performance of a given contract
or another subjective means of proof confirming that the contractor will have the
necessary reserves of these entities while executing the contract.
 In the above case, the Ordering Party is obliged to check whether there are grounds for
exclusion from this entity, which were provided for by the contractor. This is because this
entity will act as a subcontractor in the performance of that part of the contract to which
the condition for participation in the procedure (concerning the contractor) applied. This
is connected with additional obligations imposed by the legislator on the subcontractor -
e.g. submission of the specific statement.
 Variant 2

Subcontracting for the second option was regulated in detail in Chapter 5 of the PPL
Act.
 Pursuant to Art. 462 of the Public Procurement Law, the contractor may entrust the
performance of a part of the contract to a subcontractor.
 The contracting authority may request the contractor to indicate, in the offer, part of
the contract, the performance of which it intends to entrust to subcontractors, and to
provide the names of any subcontractors, if they are already known.
 Subcontracting in this approach is understood very broadly and may refer to any
part of the contract - not only to the scopes indicated in the first option
 Importantly, in this case, the contracting authority may (but does not have to!)
Examine whether there are grounds for exclusion referred to in Art. 108 and art.
109 of the Public Procurement Law, if provided for in the procurement documents.
 At the request of the contracting authority, the economic operator should submit the
declaration referred to in Art. 125 sec. 1 (Statement) or subjective evidence
regarding this subcontractor.
 a subcontract - definition

a subcontract – shall mean a written contract concluded

between the economic operator and the subcontractor and, in
the case of a contract for works other than from the fields of
defence and security, also between the subcontractor and
further subcontractor or between further subcontractors,
under which the subcontractor or further subcontractor
commits to perform part of the contract
 The features of a subcontract according to PPL

The features of a subcontract are:

a) written form,

b) payment,

c) subject: services, supplies or works

 Names of subcontrators

1. The economic operator may entrust the performance of part of the

contract to a subcontractor.

2. The contracting body may require the economic operator to indicate,

in the tender, parts of the contract which it intends to entrust to
subcontractors and to indicate the names of possible subcontractors if
they are already known.
 Contracts for works and services to be performed at a
place subject to direct supervision of the contracting body

In the case of contracts for

works and services to be
The contracting body may
performed at a place subject
to direct supervision of the examine whether there are
contracting body, the
grounds for exclusion of a
contracting body shall require
the economic operator to subcontractor that is not an
provide, before proceeding
entity providing resources,
with the performance of the
contract, the names, contact provided that the contracting
details and representatives of
body has provided for this in the
subcontractors involved in
such works or services, if procurement documents
already known.
 Grounds for exclusion against a subcontractor

the contracting body shall

require the economic operator to
replace the subcontractor within
If there are grounds for the time limit specified by the
exclusion against a
contracting body under the pain
subcontractor
of not allowing the
subcontractor to perform part of
the contract. .
Change or resignation from a subcontractor

Where a change or resignation from a subcontractor concerns the

entity whose resources the economic operator referred to, in order
to demonstrate compliance with the conditions for participation in
the procedure, the economic operator shall demonstrate to the
contracting body that the proposed other subcontractor or
economic operator itself fulfils them to an extent no less than the
subcontractor whose resources the economic operator referred to
during the procurement procedure
Documents to prove that there are no grounds for
excluding subcontractors

At the request of the contracting authority, a contractor that intends to

entrust the performance of part of the contract to subcontractors, in order
to prove that there are no grounds for excluding them from participation
in the procedure:

1) submits uniform documents regarding subcontractors, if the contract

value is equal to or exceeds the EU amounts

2) include information on subcontractors in the declaration if the

contract value is less than the EU threshold
 Key parts of the contract for construction works
 The legislator still leaves the contractor the freedom to choose
the part of the contract that will be entrusted to subcontractors
 The contracting authority may stipulate in the STC that key parts
of the contract for construction works or services must be
performed by the contractor personally (the contracting
authority does not have to demonstrate the specificity of the
contract)
 Therefore, in a situation where the contracting authority does not
use the above-mentioned powers, the contractor will be able to
entrust the performance of the entire contract to a subcontractor
or subcontractors
 Requirements for subcontract

In STC, the contracting authority also specifies the requirements

for a subcontract for works, the failure of which will result in the
contracting authority objection, respectively, if the contracting
authority specifies such requirements
 Payment of the contractor's remuneration depends on
the method of settlement and fulfillment of obligations
towards subcontractors (Article 447)
In the case of works contracts with performance period of more than 12
months, where the contract provides for payment of:

1) the remuneration payable to the economic operator in parts –

the condition for the payment by the contracting body of the second and
subsequent parts of the due remuneration for received works, shall be
submission of proofs of payment of the due remuneration to subcontractors
and further subcontractors, involved in the performance of the received
works;

The contracting body may indicate in the STC the percentage value of the
last part of the remuneration, which may not exceed 50% of the
remuneration due to the economic operator
 Payment of the contractor's remuneration, cont.

In the case of works contracts with performance period of more

than 12 months, where the contract provides for payment of :

2) the total remuneration due to the economic operator after

the completion of all works –
the contracting body is obliged to provide for granting of advance
payments (zaliczki), while granting further advance payments by
the contracting body requires proof of payment of the due
remuneration to subcontractors and further subcontractors,
involved in the performance of part of the contract, for which the
advance payment was paid.
Consequences for contractors in the event of failure to
provide proofs of payment

Where the economic operator fails to provide all the proofs of

payment, suspended respectively is:
1) payment of the remuneration due for the received works,
2) granting another advance payment — in part equal to the
sum of amounts resulting from unsubmitted proofs of
payment.
3. In the case referred to in para. 1 point 1, the contracting body
may indicate in the STC the percentage value of the last part of
the remuneration, which may not exceed 50% of the
remuneration due to the economic operator.
 The time limit for payment of the subcontractor’s
renumeration (463)

The time limit for payment of the subcontractor’s or further

subcontractor's remuneration provided for in the subcontract shall
not exceed 30 days from the date of delivery of the invoice or bill
to the economic operator, subcontractor or further subcontractor.

If the time limit for payment of the remuneration is longer than

30 days, the contracting body shall inform the economic operator
thereof and calls on him to modify that contract, subject to a
request for payment of a contractual penalty
 Prohibited clauses in subcontracts (463)

The subcontract shall not contain provisions shaping the rights and
obligations of the subcontractor, as regards contractual penalties and
provisions concerning the conditions for payment of remuneration, in a
manner which is less favourable to him than the economic operator’s
rights and obligations, as shaped by the provisions of the contract
concluded between the contracting body and the economic operator.
 Obligation to submit a draft of subcontract

An economic operator, a subcontractor or a further subcontractor of a

works contract intending to conclude a subcontract for works shall be
required, during the performance of the contract, to submit a draft of
this contract to the contracting body,

the subcontractor or further subcontractor is obliged to attach the

economic operator’s consent to conclude a subcontract with the content
consistent with the draft contract
 Objections to the draft subcontract

The contracting body, within the time limit to be determined in

accordance with Article 437 para. 1 point 2 shall submit in
writing, subject to nullity, objections to the draft subcontract for
works where:
1) it does not meet the requirements set out in the procurement
documents;
2) it provides for a period for payment of remuneration longer
than 30 days
3) it contains provisions inconsistent with
Failure to submit written objections to the submitted draft
subcontract, the subject of which are construction works, shall be
deemed to be acceptance of the draft contract by the contracting
authority. The contracting authority may not admit
subcontractors employed under unapproved contracts
True copy of the concluded subcontract is also checked

 The economic operator, subcontractor or further subcontractor

of a works contract shall submit to the contracting body a
certified true copy of the concluded subcontract for works
within 7 days of its conclusion.
 The contracting body, within the time limit, shall submit in
writing, subject to nullity, the objection to the subcontract for
works in the cases
 Failure to submit the objection to the submitted subcontract
for works, within the time limit shall be considered as
acceptance of the contract by the contracting body.
 In the case of contracts for works - subcontract for
supplies or services

 In the case of contracts for works, the economic operator,

subcontractor or further subcontractor shall submit to the contracting
body a certified true copy of the concluded subcontract for supplies or
services within 7 days of its conclusion,
 with the exception of subcontracts with a value of less than 0.5% of
the value of the contract and the subcontracts the subject-matter of
which has been indicated by the contracting body in the contract
documents.
 The exemption referred to in the first sentence does not apply to
subcontracts with a value higher than PLN 50,000.
 The contracting body may determine a lower value from which it will
be required to submit a subcontract.
 Direct payment in the event of non-payment to
subcontractors

In the case of contracts for works, the contracting body shall

directly pay payable remuneration due to a subcontractor or a
further subcontractor:

 who has concluded a subcontract for works approved by the

contracting body or

 who has concluded a subcontract for supplies or services

submitted to the contracting body,

in the case of failure to pay by the economic operator,

subcontractor or further subcontractor respectively
Contractor's written comments on the legitimacy of direct
payment of the subcontractor's remuneration

 The contracting body, before making direct payment, is

obliged to enable the economic operator to notify, in
writing, comments on the justification of the direct payment
of remuneration to the subcontractor or further
subcontractor.
 The contracting body shall inform about the time limit for
submitting comments, not less than 7 days from the date of
delivery of this information.
 The comments shall not refer to the deduction of the
economic operator’s claims against the subcontractor not
related to the performance of the subcontract.
 Payment of remuneration in the event of comments –
three options

In the case of submitting the comments within the time limit specified by the
contracting body, the contracting body may:
1) not to pay the remuneration directly to the subcontractor or further
subcontractor if the economic operator proves that such payment is
unjustified; or
2) submit to the court deposit the amount necessary to cover the
remuneration of the subcontractor or further subcontractor if there is a
fundamental doubt of the contracting body as to the amount of the payment
due or the entity to which the payment is due, or
3) make a direct payment of the remuneration to the subcontractor or further
subcontractor if the - subcontractor or further subcontractor demonstrates the
justification of such payment.
Consequences of multiple deposit - consequences

The necessity to make multiple direct payments to the

subcontractor or further subcontractor or the necessity to make
direct payments of more than 5% of the contract value may
constitute grounds for withdrawal from the contract.
Direct payment to the subcontractor - consequences

In the case of direct payment to the subcontractor or further

subcontractor, the contracting body shall deduct the amount
of remuneration paid from the remuneration due to the
economic operator.
The joint and several liability – Civil Code

The provisions of the Act of 23 April 1964 - Civil Code shall

apply to the joint and several liability of the contracting authority,
contractor, subcontractor or further subcontractor for the
performed construction works, unless the provisions of the Act
stipulate otherwise.
 The contract for works – subcontracts (art. 436)

Article 436.
The contract shall contain provisions specifying in particular:
4) in the case of contracts concluded for a period longer than 12 months:
a) the amount of contractual penalties charged to the economic operator for
non-payment or untimely payment of the remuneration due to
subcontractors for the change in the amount of remuneration referred to in
Article 439 para. 5,
The mandatory contents of the public contracts (Art. 437)

Article 437.
1. The contract for works shall also contain provisions concerning:
1) the obligation for the economic operator to submit to the contracting body
a draft subcontract for works and a draft modification thereof, as well as a
certified true copy of the concluded subcontract for works and its
modifications;
2) an indication of a time limit for the contracting body to raise objections to
the draft subcontract for works and to the draft of its modification or
objection to the subcontract for works and to its modification;
3) the obligation for the economic operator to submit to the contracting body
certified true copies of the concluded subcontracts for supplies or services
and their modifications;
4) the rules for the payment of the economic operator’s remuneration,
conditional on the presentation by him of evidence confirming the payment
of the due remuneration to subcontractors or further subcontractors;
 The mandatory contents of the public contracts (Art. 437)

5) the time limit for payment of remuneration to subcontractors or further

subcontractors;

6) rules for concluding subcontracts with further subcontractors;

7) the amount of contractual penalties, in respect of:

a) non-payment or untimely payment of the remuneration due to subcontractors or

further subcontractors

b) failure to submit for approval of a draft subcontract for works or a draft modification
thereof,

c) failure to submit a certified true copy of the subcontract or its modification,

d) non-modification of the subcontract with regard to the time limit for payment, in
accordance with Article 464 para. 10.

2. In the cases referred to in para. 1 points 1 and 3, the submitting economic operator
Thank you for your attention !!!