Ten-years’ Guarantee in Contracting Agreements

The expansion of the construction sector, whether between individuals or companies specialized in constructions, has led to the urgent need for a “Contracting Agreement” for the purpose of regulating the relationship between the employer, the contractor and the architecture engineer.

The Egyptian legislator obliged both the contractor and the architecture engineer under the Egyptian Civil Code to legally guarantee the building for a period of 10 years which is called the “ten-years’ guarantee”.

Whereas article no. (651/1) of the Civil Code stipulates that “the architecture engineer and the contractor shall collectively guarantee whole or partial demolition that may occur within 10 years for the building they have constructed of established a defective facility, even if the demolition results from a defect in the land itself, or the employer permitted the construction of defective facilities; unless the contracting parties agreed in this case that these facilities to remain for a period of less than 10 years”.

So, the legislator stipulates that the contractor and the architectural engineer collectively liable for whole or partial demolition of the building that may occur within 10 years.

Conditions of legal or ten-year guarantee

But does the legal or ten-years’ guarantee have conditions to prove the existence of the liability stipulated in the above-mentioned article?

First Condition:

Firstly, there is a construction agreement concluded between the employer, the contractor and the architectural engineer. In case of the non-conclusion of the construction agreement, the architectural engineer shall not be liable towards the employer by the ten-years’ guarantee but will be liable according to the general rules of the civil liability.

Second Condition:

As for the second condition, article (651/1) stipulates that the construction of a non-fixed facilities that are capable of being dismantled and installed are not subject to the ten-years’ guarantee. Building means the fixed and man-made constructed that rise above the surface of the ground, which individuals can move inside it and provides protection against the risks resulting from external natural effects.

Whatever the materials from which it was constructed, whether they are bricks, stones, concrete, plastic, or even mats and wood, provided that the building is fixed in its place and cannot be moved without damage or demolition.

The previous article did not specify the purpose of constructing the building, whether it is purpose for residential use or for carrying out a commercial, industrial, administrative or entertainment activity such as clubs and amusement parks. Also, the legislator stipulates that defects that threat the building’s durability and safety are guaranteed, as article (651/2) stipulates that “the guarantee stipulated in the previous paragraph includes any defects found in buildings and facilities that threaten the durability and safety of the building must be serious and hidden.”

The Court of Cassation ruled that:

“The agreement of hiring a manufacturer for a specific work by contracting or for a specific wage depending on the time of the work, is considered, according to the principle, terminated with the expiration of the obligations the manufacturer obliged with towards the principle by receiving the acceptable product and paying its price, but the Egyptian law similar to the French law, made the contractor and the architectural engineer are collectively liable for the defects affect the building within a period of 10 years, even if it arises from a defect in the land or from the owner’s permission to construct defective buildings, provided that the building in this last case is not intended by the contracting parties to remain less than 10 years (article (409) from the Civil Code corresponding to article (1792) of the French law). Thus, the law extends the warranty of the contractor and the architectural engineer after the buildings are received and their price is paid, contrary to what the Contracting Agreement in relation to the expiration of the guarantee obligation by receiving the building as acceptable in its apparent condition, and to accept the claim of this guarantee the alleged defect must affect the building’s durability and it must be hidden to the extent that the building’s owner was not able to discover at the time of the acceptable receive of the building. As for what was apparent and known, the contractor shall not be liable as long as the owner received the building without raising to reserve any granted rights.

(Appeal No. 57 of 8 JY, hearing dated 5/1/1939)

A question arise that are the land defects are an exemption from the liability?

According to article (651/1) the defect of the land is not considered as a reason for exempt the contractor and the architectural from the liability, as the contractor shall, and it is at the core of the work, carry out technical tests in advance in order to ensure the suitability of the land to build on it, and thus the occurrence of subsidence of the land on which the building was built due to rain, even if it was exceptional rain, it would not be considered a force majeure event, as such rain is considered as an expected event and the necessary precautions could have been taken.

What about building roofs on old buildings?

The defects in the old building are not considered an extraneous reason for the contractor not to be liable, since it was possible to examine the building and discover any defects thereon. This ruling is appliable as applied to the land’s defects.

Is the project’s owner mistake exempted from such liability?

The mistake of the project’s owner is not considered as a foreign cause for the contractor or the architectural engineer, unless the characteristics of the foreign cause are existed.

The contractor and the architectural are not exempted from the liability in case of executing wrong instructions from the employer or the employer interferes in the construction process through providing poor materials to be used in the construction.

A question arise that does the subcontractor is legally subject to the ten-years’ guarantee?

The legislator stipulated that the guarantee does not apply to subcontractors as article (651/4) of the Civil Code stating that “this article does not apply to what the contractor may have the right to recourse/claim against the subcontractors”, If the main contractor concludes a contract to assign the work to a subcontract such as sanitary and carpentry works, the subcontractor is not liable to guarantee the main contractor or the project’s owner except to the extent required by general rules.

As we mentioned at the beginning, according to article (651/1) of the Civil Code, the guarantee period against whole and partial demolition and ensuring that there are no defects that threaten the durability and safety of the building is 10 years, and this period is a period for testing the safety of the building and not a statute of limitations, and therefore suspension or interruption is not subject to it.

When is the guarantee starts? And when the guarantee claim is filed?

The warranty period begins from the date the project’s owner accepts the building without raising any reservation. In case any minutes submitted, the period is counted from the date the project’s owner received the building or from the date of the occupation. In case there are no minutes submitted, and it cannot prove the date of occupation of the building, the period is counted from the date of paying the contractor’s entitlements.

As for the period of filing a guarantee claim, the guarantee claim must be filed within 3 years from the date of the demolition or the discovery of the defect; otherwise, the guarantee claim will not be accepted, or according to the Court of Cassation ruled that the filing of a claim before the expiration of this period is a condition for accepting the guarantee claim.