Term
Contract for work
A contract to produce a defined result, with an agreed price, deadline and handover. On IT projects the definition of the work and the acceptance criteria decide, not the hours logged.
Updated
What it means
Under a contract for work the contractor undertakes to produce a result and the client to pay the price. The essential point is payment for a result, not for hours as under a mandate contract.
The definition of the work and the handover procedure decide everything. Without clear acceptance criteria, a dispute over whether the work is finished ends with an expert.
A contract for work differs from a sales contract in that the subject is made to order, to the client’s specification. Selling a finished standard product without modification is a sale. The distinction matters for liability for defects, the passing of risk and how long the specification can still change, and the Commercial Code regulates the two contracts separately.
How it works in practice
On IT projects splitting the work into stages with their own acceptance and payment works well. Risk falls on both sides, and a failed stage stops the continuation rather than the whole project.
The contract carries change-control rules, a contractual penalty for delay, a warranty, possibly retention money and an SLA for ongoing support.
When a job runs across the year end, we decide when revenue is recognised. If the work is handed over in one piece, the part done by the year end is shown as work in progress and revenue arises only on acceptance. With staged acceptance, revenue and VAT attach to each stage delivered, so the contract wording matters for the books too.
What to watch out for
A gap between the specification and what was delivered is the commonest source of disputes. Cheaper than arbitration or court is the rule that every change gets a written amendment with price and date.
Accepting work without reservations has consequences. A client who signs the handover protocol without recording visible defects finds it much harder to claim them later. Anyone accepting work under time pressure should record everything they see, however minor, with a deadline for each fix, so that the retained part of the price can be tied to it.
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