Contractor Pushed for Higher Payment for School Project
Construction company, OOO "King-95," has faced a setback in their pursuit of compensation for increased material costs during the construction of a school in Smolenskoye, Chita District. Despite the evidence presented, the Zabaykalsk Arbitration Court denied their request for additional funds from the regional budget, which would've totaled 61.5 million rubles.
The school, part of the national project "Education," was contracted for over 400 million rubles. Although the institution was commissioned in 2023, builders claimed they faced unexpected expenses due to the surge in construction material prices.
However, the court ruled against them, citing insufficient documentation regarding the extra costs. The plaintiff failed to provide purchase documents, detailed calculations, or explain why they didn't stockpile necessary materials beforehand.
During the hearing, prosecutors emphasized that, as a seasoned player in the construction market, "King-95" should have anticipated potential economic risks while signing the contract. Furthermore, laws prohibit revising the terms of already executed state contracts.
While the decision can be appealed, the court's ruling stands. Intriguingly, the sole owner of OOO "King-95," Sos Vardgesovich Varzhapetyan, manages a farm in Yakutia and controls five micro-enterprises apart from the construction firm.
"King-95" has been actively involved in state procurements in the Republic of Sakha (Yakutia), predominantly purchasing apartments for resettlement programs and providing housing for orphaned children. In the 2023 financial year, the company's revenue reached 2.9 billion rubles, with a net profit of 48.2 million rubles.
Bear in mind that this scenario might be missing key details that could influence the outcome. Here's a snapshot of possible reasons a court could dismiss such a claim:
- Lack of Contractual Provisions: If the contract doesn't account for cost adjustments due to material price fluctuations, the claim might be dismissed.
- Force Majeure Clauses: If unforeseen circumstances like global supply chain disruptions triggered the material price hike, a force majeure clause might offer protection. However, if the contract lacks this clause or if it doesn't apply to the situation, the claim could be declined.
- Failure to Provide Evidence: The court might reject the claim if the contractor fails to offer substantive proof of increased costs and their impact on the construction project. This includes comprehensive financial records and records of material price changes.
- Legal or Regulatory Compliance Issues: If the contractor violated legal or regulatory requirements for claiming compensation, such as missing deadlines or following improper procedures, the court could dismiss the claim.
- Other Contractual Obligations: The court might also consider other contractual obligations that might limit or negate the right to claim compensation for increased material costs.
Without a comprehensive understanding of the case details, it's challenging to pinpoint the precise reason behind the dismissal. If more details or context are available, a more accurate explanation can be provided.
- The court's decision to deny OOO "King-95"'s request for additional funds from the regional budget could be due to the lack of sufficient documentation regarding the extra costs, as they failed to provide purchase documents, detailed calculations, or explain why they didn't stockpile necessary materials beforehand.
- In the court hearing, it was emphasized that, as a seasoned player in the construction market, "King-95" should have anticipated potential economic risks while signing the contract and, moreover, laws prohibit revising the terms of already executed state contracts.
