Construction contracts and commercial disputes: how to prevent non-payment, delays and defective performance

In construction, many commercial disputes do not stem from declared bad faith. They arise from incomplete contracts, poor execution traceability and delayed reactions to the first signs of risk: unpaid invoices, exceeded schedules, disputed works, subcontractors failing to meet their obligations.

The short answer: non-payment, delays and defective performance are prevented primarily through well-structured contracts - plus clear evidentiary and notice mechanisms, proportionate penalty clauses and firm acceptance rules. Legal intervention must begin before the site grinds to a halt. This guide sets out concretely what the contract must contain, where the most costly errors arise, and how the clauses that matter should be calibrated from a legal standpoint.

A good contract is the primary recovery tool, not just a compliance document

Many companies treat the contract as a “starting” document - but in construction it is the main tool for defence, negotiation and debt recovery. All the more so in a volatile market (the volume of works fluctuated sharply in 2025, according to INS) with the risk of cascading non-payment. The nine areas the contract must regulate without ambiguity:

1. The subject matter and technical standard of the works
   What is to be performed, to what quality, under what documentation - with reference to the requirements of Legea nr. 10/1995 (Law no. 10/1995) on quality in construction.
2. Interim deadlines and the final deadline
   The execution schedule as a contractual document, not a decorative one.
3. Handover and acceptance conditions
   Stages, deadlines, the consequences of silence and of using the works.
4. The documents substantiating payment
   Statements of works, confirmations, certification deadlines - the invoice triggers.
5. The procedure for additional works and variations
   Who approves, in what form, with what impact on price and deadline.
6. The price adjustment mechanism
   ANAP has stressed that adjustment must be grounded in clear clauses or legal grounds - otherwise cost risk turns into litigation.
7. Penalty clauses and their limits
   Serious, but economically and legally justifiable - details below.
8. Suspension of works and termination
   A right of suspension conditional on notice and evidence; an express termination clause identifying the obligations concerned.
9. Liability within the subcontracting chain
   Who is liable for what, with what guarantees and what mechanism of recourse.

Interactive: evidentiary discipline from day one of execution

In most cases, the real dispute comes down to three questions: who actually caused the delay, who is liable for the defect, and what amount is due and provable now. The difference is made not only by the contractual wording but by evidentiary discipline - without it, even the company that is “factually right” loses time and money. Tick what you track systematically on active projects:

Seven categories of evidence to track from day one

• Commencement orders and any suspensions - documented, with dates
• Minutes of handover of the work front
• Signed statements of works - or refused in writing, with reasons
• Formal correspondence on delays, lack of materials, interferences, changes
• Photographs, site reports, site instructions - systematically archived
• Notices regarding defects, remedial works and compliance deadlines
• Evidence of additional costs and their impact on the schedule

The most costly area: subcontracting

In subcontracting agreements, disputes frequently arise over additional works carried out “on site” but not formally accepted for payment. The lack of traceability for extra works, delays and non-conformities is one of the most costly commercial errors in the sector. Require the implementation of an incident protocol on your projects.

Penalty clauses and termination clauses: legally calibrated, not copied

A common reflex is to introduce “tough” clauses in the hope that they discourage non-performance. In reality, a poorly drafted or disproportionate penalty clause can weaken the creditor's position, while a vague termination clause may miss precisely the swift effect intended.

Codul civil (Civil Code) · Decizia ICCJ nr. 73/2021 (ICCJ Decision no. 73/2021)

The rules that decide whether your clause will hold up

Under the Codul civil (Civil Code), the penalty clause and the termination clause must be drafted expressly and precisely: for the termination clause, the obligations whose non-performance triggers termination or rescission by operation of law must be clearly identified - particularly relevant in cases of repeated non-payment of statements of works, site abandonment, serious technical non-conformities, major delays or unjustified refusal to remedy defects.

As for penalty clauses, the court may examine whether the penalty is excessive: the Înalta Curte de Casație și Justiție (High Court of Cassation and Justice), through Decizia nr. 73/2021 (Decision no. 73/2021), clarified important aspects regarding the discussion of reducing a manifestly excessive penalty. Practical consequence: the penalty must be serious, but economically and legally justifiable - correlated with milestones, reasonably capped and with a precise calculation rule.

Quick test: does the clause work or does it create risk?

Clause 1: "Penalty of 1% per day of delay, uncapped, applicable to the total value of the contract, regardless of the stage affected."

Creates risk. The disproportionate penalty, not correlated with the main obligation, is exactly the profile that the court can analyse as manifestly excessive (see Decizia ICCJ nr. 73/2021 (Decision of the High Court of Cassation and Justice no. 73/2021)). Paradoxically, the "tough" clause weakens the creditor's position. The solid version: correlation with milestones, reasonable cap, precise calculation rule.

Clause 2: "Any failure to perform any contractual obligation entitles the other party to consider the contract terminated by operation of law, without any further formality."

Creates risk. Generic pactum commissorium, without the essential obligations expressly identified - exactly the wording that misses the intended quick effect. The solid version: precise enumeration of serious failures to perform (repeated non-payment, abandonment of the site, serious non-conformities) and the related notification procedure.

Clause 3: "The 5% retention for proper performance is released 50% upon acceptance at completion of works and 50% upon final acceptance, within 14 days of the signing of each minutes, conditional on remedying the non-conformities recorded."

Works. Deadlines, triggering documents and precise conditions - exactly what prevents the retention from becoming a "bargaining chip" after acceptance. General rule: any amount retained must have a documented and dated release route.

Clause 4 (in practice): Upon the first unpaid invoice, the contractor stops the works the next day, without notification - "to make them feel the pressure".

Creates risk. Unjustified or insufficiently notified suspension can turn the contractor from creditor into the party at fault - with penalties and damages in reverse. The right of suspension must be exercised conditional on prior notification and complete evidence of non-payment, in accordance with the contractual mechanism.

Anatomy of the prior notice: 6 elements that prepare the procedural step

A good notice is not limited to demanding money - it prepares the next procedural step and reduces room for artificial defences (including alleged quality defects invoked as an excuse for non-payment):

The structure of the notice that effectively triggers the pactum commissorium

"In construction, a good contract does not eliminate conflict, but it shortens the path to evidence, resolution and recovery."

- The principle consistently applied by Buju, Stanciu & Asociații in construction mandates

How Buju, Stanciu and Asociații work: three integrated layers

1. Contracts and subcontracting

Drafting, review and negotiation: construction contracts, subcontracting agreements, addenda for variations, time extensions and price adjustments, penalty clauses, guarantees, retentions, acceptance and termination.

2. Prevention and incident management

Concrete procedures for non-payment notices, challenging delays abusively attributed, preservation of technical and commercial evidence, response to claims regarding defective performance and preparation of the claim file.

3. Litigation and debt recovery

Representation in commercial construction disputes, debt recovery and payment orders, disputes over penalty clauses and pactum commissorium, claims for delays, defects and additional works, pre-litigation negotiations and controlled exits from the contract.

How BSA positions itself against market alternatives

Clients often compare this approach with large business law firms (Nestor Nestor Diculescu Kingston Petersen, Țuca Zbârcea & Asociații, Mușat & Asociații) or with teams oriented towards commercial disputes such as BMA Legal. All are serious options, with solid practices. The difference BSA pursues in this niche is the combination of construction contracts, operational prevention and rapid reaction in recovery - with an emphasis on immediate commercial utility, not just courtroom strategy. Like any self-positioning, it is worth verifying with concrete deliverables for your project.

The approach has a double lens: what protects you legally and what serves you commercially. A real victory does not just mean a favourable judgment in two years' time - it means reducing the loss now, maintaining contractual leverage and quickly recovering amounts when possible. For the complete framework of the first 24–72 hours following an incident, see our analysis on contractual prevention and the construction litigation plan.

Frequently asked questions

A contract under negotiation, a subcontractor running late, or a beneficiary who isn't paying?

The right moment to intervene is now, not after the project has stalled. See BSA's services for construction entrepreneurs and the framework for contractual prevention and litigation planning, then contact us for an applied analysis of your contract or ongoing dispute.

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Sources and references

Legea nr. 10/1995 (Law no. 10/1995) on quality in construction: legislatie.just.ro · Civil Code - penalty clause and the commissory pact: legislatie.just.ro · ICCJ - Decision no. 73/2021 (reduction of a manifestly excessive penalty): iccj.ro · ICCJ - 2024 Activity Report: iccj.ro · ONRC via Agerpres - 2025 insolvencies (7,553, +3.84%): agerpres.ro · INS - Construction works (2025 series): insse.ro · ANAP - clarifications on the adjustment of prices in works contracts: anap.gov.ro · European e-Justice Portal - payment order in Romania (certain, liquidated and due claims): e-justice.europa.eu · Buju, Stanciu & Asociații (BSA): Commercial legal practice for construction entrepreneurs · Contractual prevention and litigation planning

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. The sample clauses are illustrative; the actual wording depends on the risks, evidence and negotiation of each contract. Information about the firms mentioned comes from public sources.