Sooner is not always better

In contracts, the precise formulation of deadlines and the need for one or both parties to comply with them can prevent surprises in the form of an obligation to take early delivery or make early payment.

In Poland, contracts for the supply of goods, construction contracts, and other commercial contracts typically specify the time for performance as “by” such and such date, “within” so many days or months, or simply “on” a certain date. But in the case of long-term projects, the problem may not be delay, but early performance, particularly in major construction projects and other ventures involving a number of interconnected tasks performed by various parties.

Under the Polish civil law, doubts concerning the deadline for performance under a contract are resolved in favour of the debtor (Civil Code Art. 457). This rule means that the debtor may tender its performance earlier than the date specified in the contract as the last day for performance, but the creditor may not demand that the debtor perform before the deadline. And if the debtor decides to perform before the deadline, the creditor must accept the tendered performance. This means more specifically that the buyer must accept early delivery of a purchased item (Art. 535), the investor must accept early delivery of a building (Art. 647¹), and the party commissioning performance of a work, such as a design, must accept early delivery of the work (Art. 643).

This method of interpretation will generally be accepted if nothing else follows from the other provisions of the contract, for example when the time of performance is stated to be “within 30 days,” “within 5 months” or “by 15 July 2014,” or simply as “Delivery: 15 July 2014.” This rule applies to all contracts, regardless of the value, the manner in which the contract was concluded, or whether or not the contract is governed by the Public Procurement Law.

But early performance of a non-monetary obligation may prove problematic for the other party to the contract. First, the performance may simply not be needed yet, as for example in the case of delivery to the building site of materials to be used in work long in the future, or delivery of machinery that cannot be installed yet, or goods for which there is no room yet in the warehouse. If the buyer tries to refuse acceptance, the buyer will fall into default and may be exposed to claims for damages (Civil Code Art. 486). Second, such performance basically gives rise to a duty to pay on the part of the buyer, and the duty of the seller to issue an invoice, even though the buyer may have made certain assumptions in its budget concerning when the payment would be made or when the revenue-earning costs would be incurred.

One solution is to provide for a date of performance that is reserved to the benefit of the creditor. Then the creditor can require the debtor to perform before the deadline, but will not be required to accept an early tender of performance by the debtor over the creditor’s objection.

In the case of development projects and other complex undertakings, the best solution, and one that takes into account the interests of both parties, may be to reserve a deadline for the benefit of both parties. In that case the buyer will not be entitled to require performance before the deadline but will also not be required to accept a tender of early performance. Solutions indirectly allowing one or both parties to perform within a certain time frame are also possible. These options should be considered in order to avoid problems connected with early performance of non-monetary contractual obligations.

Małgorzata Cyrul-Karpińska, Infrastructure & Transport Practice and Public Procurement & Public-Private Partnership Practice, Wardyński & Partners