Construction Delay Claims: The Owner's Instruments
Delay of a construction project is the most common form of dispute, and its resolution begins with one precise question: who delayed, and when. The Civil Code gives a full toolkit of claims in this field: the rules on the creditor's delay, the consequences of that delay, interest on late payment of a monetary sum, the right to withhold counter-performance, compensation of lost income, and limitation periods. Each of these instruments works only where the factual side of the dispute, the schedule, the orders and the written correspondence, is documented.
The Creditor's Delay: Who Answers
The first thing to establish in a delay dispute is whether there was delay on the creditor's side, the side receiving the works. Under Article 392 of the Civil Code, where the creditor delays the term, the debtor is answerable for non-performance of the obligation only if performance became impossible due to the debtor's intent or gross negligence. In the construction context this is critically important: if access to the site, handover of documentation or decisions were delayed by the receiving side, the contractor's liability is sharply circumscribed and the direction of the dispute changes.
The consequences of the creditor's delay are also defined, by Article 393 of the Civil Code: where the creditor delays the term, regardless of its fault, it must reimburse the debtor the excess costs incurred from keeping the subject of the contract, it bears the risk of accidental spoilage or destruction of the thing, and it no longer has the right to receive interest on a monetary obligation. These three consequences together create the economic correction applied to the delaying party.
Interest on Late Payment of a Monetary Sum
Where delay concerns a monetary payment, Article 403 of the Civil Code sets a clear rule: a debtor who delays the payment term of a monetary sum must pay for the delayed time the interest determined by the parties' agreement, unless the creditor, on another basis, may demand more. Charging interest upon interest is admissible only in a case directly envisaged by the contract. In construction disputes this norm extends to delays in advances, interim payments and settlements.
The Right to Receive Counter-Performance
An important protection in conditions of delay is the possibility of withholding performance. Under Article 406 of the Civil Code, where in a bilateral contract the debtor has the right to refuse the obligation imposed on it, and the circumstance giving it that right is caused by the creditor's fault, the debtor retains the right to receive counter-performance. This rule does not apply where the ground for the counter-performance arose at a time when the creditor was delaying acceptance of performance. In a construction relationship this instrument allows the temporary withholding of payments when the other side breaches its own obligations, but the exact conditions of the rule must be observed.
Compensation of Lost Income
The gravest consequence of delay is often the income the property failed to bring in on time. Under Article 411 of the Civil Code, damage must be compensated not only for the actually incurred pecuniary loss but also for lost income. Income is deemed lost which the person did not receive and which it would have received had the obligation been duly performed. In the case of a delayed production facility or residential block, this means that losses under the lease, sale or production plan must be substantiated in the claim.
The regime of time is decisive. Under Article 129 of the Civil Code, the limitation period for contractual claims is three years, and for contractual claims connected with immovables six years. The limitation period for claims arising from periodically performable obligations is three years. A construction dispute mostly concerns an immovable, so the six-year period often applies, but each claim must be qualified separately.
Frequently Asked Questions
Below we answer the questions most frequently raised on this topic.
Who answers if the receiving side delayed?
Where the creditor delays the term, the debtor answers for non-performance only if performance became impossible through intent or gross negligence. Moreover, the delaying creditor reimburses excess storage costs and bears the accidental risk for the thing.
May I withhold payment during delay?
Where in a bilateral contract the debtor may refuse its obligation and this is caused by the creditor's fault, the debtor retains the right to receive counter-performance. The rule does not apply where the ground arose while the creditor was delaying acceptance.
How is interest calculated on late payment?
The debtor must pay for the delayed time the interest determined by the parties' agreement, unless the creditor may demand more on another basis. Interest upon interest is allowed only if directly envisaged by the contract.
Can lost income be claimed?
Yes. Damage is compensated not only for the actual loss but also for lost income — the income the person would have received upon due performance.
What limitation periods apply to such claims?
Contractual claims are subject to three years, and claims connected with immovables to six years. Claims from periodic obligations carry a three-year period.
How We Help on Legal.ge
The Legal.ge team works on construction-delay claims: we analyse deadlines and the calculation of delay, prepare the claim and represent your interests in negotiation and in court.
Write to us on Legal.ge — we will assess your case on the basis of the legislation and plan the next steps.
Our team begins delay claims by reconstructing the factual chronology: we establish who delayed and when, apply the rules on the creditor's delay for a precise allocation of liability, calculate interest, assess lost income and maintain limitation control under the three-year and six-year regimes. Contact our specialists so that damage from delay is claimed fully and in time.