Section 2613 of Act No. 89/2012 Coll., the Civil Code, as amended (hereinafter as the “CC“), deals with the frustration of the performance of the work, stating that “if the client frustrates the performance of the work for which the client bears liability, the contractor is entitled to the price for the work decreased by the costs saved by the non-performance of the work.”
First of all, we would like to point out that the CC deals with the concept of “frustration of work“, e.g. in § 2600 or § 2603, as well as with the concept of “frustration of performance of work” in § 2613. According to the commentary literature, it can be concluded that the difference lies, among other things, in the fact that according to § 2600 CC and § 2603 CC it is stipulated that the contractor is not liable for the frustration – i.e. the liability of the client and/or a third party may be imposed, whereas § 2613 CC directly requires the liability of the client for the frustration of the execution of the work.[1] The difference in the provisions is also reflected in the consequences of such a failure, since a failure under Section 2613 CC does not a priori terminate the contract as such, as confirmed by the case law of the Supreme Court referred to below, whereas a failure under Section 2600 CC and Section 2603 CC terminates the contract for work.[2]
The above-quoted provision of Section 2613 of the CC is aimed at situations where the client, by the conduct for which he is responsible, prevents the proper performance of the work, while the contractor retains the right to payment of the price for the work (although reduced), but is at the same time released from the obligation to perform the work itself. In this case, we can therefore speak of a deviation from section 2610(1) of the Civil Code, according to which the right to payment of the price of the work only arises upon performance of the work. As a result, Section 2613 CC is in itself punitive in nature towards the client.
As is usually the case with similarly strict provisions, they provide considerable scope for judicial interpretation. For the purposes of this text, we have therefore selected several key topics, which we discuss below with a focus on the relevant recent case law of the Czech courts, in particular the Supreme Court of the Czech Republic.
The question of what is meant by the contractor being entitled to the price for the work reduced by “what the contractor has saved by not performing the work” poses interpretative difficulties. The Supreme Court has commented on this to some extent when it approved the following interpretation of the lower courts.[3] The facts of the dispute were that the parties had entered into a contract whereby the defendant, as contractor, undertook to carry out the work of supplying and installing a swimming pool for the plaintiff, as client. The defendant later withdrew from the contract and, pursuant to section 2004(1) of the CC, the parties were obliged to reimburse each other for what they had mutually performed. In addition, however, the lower courts held that the defendant, as the contractor who had not failed to perform the work, should have been entitled to payment of the price of the work within the meaning of section 2613 CC, since the defendant had withdrawn from the contract on the ground that the plaintiff had defaulted in paying the second advance and in providing assistance (on the application of section 2613 CC in the event of withdrawal, see below). According to the Supreme Court, the defendant was not obliged to deduct from the price of the work the costs of the manufacture of the swimming pool, since ‘the manufactured swimming pool could not be sold to a third party and had to be disposed of, so there was no scope for the defendant to save any of the deposit paid within the meaning of section 2613 CC‘. A contrario, therefore, it should be held that if an item procured by the contractor for the purpose of carrying out the frustrated work is used by the contractor in the context of another contract, it is a cost saved by not carrying out the work and as such should be deducted from the price for the work due to him under section 2613 CC.
However, from the point of view of the practical procedure in the application of § 2613 CC, we consider important the opinion expressed in another decision of the Supreme Court.[4] In the present case, the Supreme Court found the appeal admissible to resolve the question whether, in the case where the contractor, after withdrawing from the work contract (in the present case due to the client’s non-cooperation), demands payment for the work already performed, can this claim be successfully asserted by a claim for monetary compensation due to the contractor within the meaning of section 2613 CC, or must such a claim be assessed and subsequently settled as unjust enrichment consisting in a pecuniary benefit to the client pursuant to section 2991 et seq. CC. The Supreme Court has therefore distinguished between the procedure under section 2613 CC and section 2991 et seq. of the CC on unjust enrichment, while not allowing for their combination or complementarity and interplay, as we discuss below.
The procedure pursuant to Section 2991 et seq. CC on unjust enrichment is only applicable when the work contract has been withdrawn, i.e. the legal title on the basis of which the performance was performed has ceased to exist. According to the current interpretation of the Supreme Court, if the contractor asserts its claim after the withdrawal from the work contract, i.e. after the termination of the obligation (contract), it should do so only with reference to the provisions of Section 2991 et seq. of the Civil Code regarding unjust enrichment.
On the other hand, the Supreme Court understands § 2613 CC in the sense that its application is possible only during the duration of the obligation under the work contract, i.e. without its termination (typically by withdrawal from the contract due to its breach by the other party). According to the Supreme Court, the contractor’s obligation to perform the work is extinguished by the failure to perform the work within the meaning of section 2613 CC, and the client’s obligations are reduced to payment of the price of the work adjusted by what the contractor has saved by not performing the work.
The aforementioned distention currently adopted by the Supreme Court is all the more crucial because in the past it was a relatively common practice of lower courts to approve the procedure where the contractor withdrew from the contract (e.g. pursuant to § 2591 CC for failure of the client to provide cooperation) and at the same time claimed against the client for payment of the price of the work pursuant to § 2613 CC.[5] However, such a procedure will no longer be possible in the light of the aforementioned case law of the Supreme Court.
However, the difference in the procedure under Section 2613 CC or Section 2991 et seq. of the CC on unjust enrichment has another consequence, which is reflected in who will bear the burden of proof in any court proceedings.
According to the Supreme Court, in the case of application of the procedure pursuant to Section 2613 CC, the burden of proof regarding the amount of the claim for payment of the price of the work is surprisingly borne primarily by the client (usually as the defendant). By contrast, if the right to the payment of unjust enrichment is claimed, the burden of proof is normally on the plaintiff as the impoverished party, which in this context is the contractor.
Thus, having the burden of proof under section 2613 CC primarily on the part of the client as to what the contractor has saved potentially creates a situation where the burden of proof is borne by the party who will often (and logically) have very limited or no information. To mitigate the impact of this rule, the Supreme Court therefore refers to the so-called duty to explain, stating that “if the party burdened with the burden of proof then presents at least the ‘fulcrums’ of the facts, thereby increasing the likelihood of its factual assertions, the opposing party’s duty to explain kicks in; failure to do so will result in an assessment of the evidence against the party who has failed to comply with the duty to explain.”[6]
Conclusion
Section 2613 CC appears at first sight to be a clear and unproblematic provision in terms of its interpretation and application. However, it is clear from the foregoing that, even in view of its strictness, it is associated with a number of pitfalls, for the resolution of which the interpretation shaped by case law is and will continue to be crucial. It is interesting to see, however, that the interpretation of the rule contained in section 2613 CC continues to take shape and it certainly cannot be said that has been completely settled. This is true both of the decisional practice of the lower courts and the appellate practice of the Supreme Court. Typically, in relation to the issue of the (incorrect) application of Section 2613 CC, as discussed above, it has become clear that the consequences of the case law interpretation for claims relating to the failure to perform a work can indeed be substantial.
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[1] See HORÁK, Pavel. § In: HULMÁK, Milan et al. Civil Code VI. Contract Law. Special part (§ 2055-3014). 1st edition. Prague: C. H. Beck, 2014, p. 1096, marg. no. 3.
[2] Ibidem p. 1097, marg. no. 3.
[3] See the judgment of the Supreme Court of the Czech Republic of 14 November 2023, Case No. 23 Cdo 2680/2023.
[4] See the judgment of the Supreme Court of the Czech Republic of 20 December 2023, Case No. 24 Cdo 430/2023-225.
[5] See e.g. the judgment of the Municipal Court in Prague of 1 September 2022, Case No. 22 Co 122/2022 or the judgment of the District Court in Kolín of 25 April 2023, Case No. 11 C 319/2022-44.
[6] See the judgment of the Supreme Court of the Czech Republic of 16 December 2011, Case No. 22 Cdo 883/2010.
JUDr. Miloš Kulda, Ph.D., attorney at law – kulda@plegal.cz
Mgr. Nikola Tomíčková, junior lawyer – tomickova@plegal.cz
27. 2. 2025