The type of contract you should use for a construction project depends on whether you are a consumer or a business. Consumers use construction forms based on the rules in the Housing Construction Act (bustadoppføringslova) or the Craftsmen’s Services Act (håndverkertjenestelova), whilst businesses use NS 8405, NS 8406 or NS 8407. Are you planning to enter into a contract with a contractor but are unsure which type of contract is suitable for your project? In this article, we’ll go through how to choose the right type of contract, what you should clarify before contacting a contractor, and why standard contracts are a good starting point.
What should you clarify before contacting a contractor?
Before you even sit down with the contractor, you should have clarified what the project will involve, what your budget is, and what progress you want to see. The more precisely you can describe the scope of the work, the easier it will be to obtain comparable quotes and avoid unreliable or incomplete quotes from the contractor market.
Also read: Pitfalls in contract drafting under Norwegian law
Which type of contract should you choose?
The choice of contract type depends on whether you are a consumer or a business, and on the complexity of the project:
|
Situation |
Contract |
Area of application |
|
Consumer |
Construction Form 3425 |
The contractor is responsible for both the design and construction of a residential property or holiday home on a plot of land at the consumer’s disposal (the Housing Construction Act) |
|
Consumer |
Construction Form 3426 |
The contractor carries out work on the construction of a residential property or holiday home – minor building works (the Housing Construction Act) |
|
Consumer |
Construction Form 3501/3502 |
Agreement between a consumer and a tradesperson regarding work on immovable property, other than the construction of a new residential property or holiday home (Tradespeople Services Act) |
|
Business operator |
NS 8407 |
Standard contract for turnkey contracts – the contractor is responsible for both design and execution |
|
Business operator |
NS 8405 |
Works contracts – the client is responsible for the design |
|
Business operator |
NS 8406 |
A simpler version of NS 8405 – used for construction contracts of lesser complexity |
Choosing the right contract from the outset ensures a balanced distribution of liability and risk between the parties.
Why should you use a standard contract rather than a bespoke agreement?
Standard contracts have been developed over many years through industry practice and court rulings, and provide a tried-and-tested allocation of risk between the client and the contractor. If you use a homemade agreement, you risk important issues such as deadline extensions, changes and claims not being adequately regulated, which can lead to major practical problems should something go wrong with the project.
What else should the contract cover?
In addition to the type of contract, the contract should cover the scope and standard of the work, the price and payment schedule, progress with deadlines and daily penalties, procedures for change orders, complaint deadlines and any security to be provided by the contractor. We go through all these points in detail in ‘What must be included in a construction contract?’ – in this article, we have focused primarily on how to choose the right type of contract for your project.
Also read: Key elements to include in a construction contract
Need help with you construction contracts?
A good construction contract is about clarifying price, progress, changes and liability before construction begins – not after problems have arisen. By using a recognised standard contract tailored to your project, you lay a solid foundation for a good working relationship with the contractor. Do you need help reviewing or drafting the contract with your contractor? Contact us for a legal assessment before you sign.
Guide: Construction Contracts in Norway
Take a deep dive into Norwegian construction contracts and the legal framework with this comprehensive guide for foreign contractors doing business in Norway.
