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Contract on work

photo:  (sxc.hu)

Information on the particulars of a contract on work.


A contract on work is a special type of contract. The labor relations between the client and the contractor are governed by Act No. 513/1991 Coll., the Commercial Code, as amended.

The provisions of the Labor Code do not apply to contractors having undertaken to carry out work under a contract on work. The contractor must pay health insurance premiums and may pay social security premiums and contributions to the state's unemployment policy (in this context, he/she is considered a self-employer). The contractor must further file his/her tax return with the competent financial office (for more information on tax returns, see ”Business in the Czech Republic”) and pay work compensation tax (= income tax).

Under a contract on work, the contractor undertakes to implement work and the client undertakes to pay a price for the implementation. In this context, "work" means the completion of a structure (unless governed by a purchase agreement), the assembly of an object, maintenance thereof, agreed repairs and modifications or the tangible result of another activity. "Work" always means the completion, assembly, maintenance, repairs of or modifications to a structure or a part thereof.

The contractor is obliged to implement the work at its own costs and risk within the agreed time (the contractor may contract another person to implement the work but is still held liable for the work).

The client bears the risk of damage to the objects purchased to implement the work and remains the owner of said objects until they are incorporated into the work.

The contractor is responsible for items accepted from the client for the purpose of their processing in implementing the work or for the purpose of repairs or modifications (under Section 540 of the Commercial Code).

The client is obliged to pay the price arranged for in the contract or calculated in the manner stipulated in the contract (pursuant to Section 536 of the Commercial Code). If the price is set on the basis of a budget that is not binding under the contract, the contractor may claim an increase in the price by the amount of costs reasonably incurred by the contractor in excess of the costs included in the budget (under Section 547 of the Commercial Code).



Added: 04.01.2010

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