Practical completion: aclaraciones contractuales
What is practical completion?
A certificate of practical completion marks the point at which the Contractor has completed his contractual obligations and can hand over the works to the client. Practical completion gives rise to a number of events and parties to the contract should be aware of these. For most building contracts they can be broadly summarised as follows:
- Possession of the site transfers to the employer as does the risk of damage to the works and third party liability.
- Liquidated damages for delay claims will crystallise.
- Defects liability period commences.
- Payment of one half of the retention fund falls due to the contractor.
- No further instructions may be issued for variation works or rectification of works besides those appearing during the defects liability period.
- The sub-contractors protection under the main contract all risks policy may be brought to an end.
Given the substantial significance of practical completion for all concerned it is not surprising that architects and contractors often argue as to whether or not practical completion has been achieved. Where a dispute occurs the first point of reference is usually the contract.