A smartly drafted design contract is the cornerstone of successful construction, but the legal nuances of contracts are often overlooked by clients and cause costly litigation later. At the Smart Construction Conference 2025, attorneys Marina Lapidus and Elvi Tuisk from RASK Law Firm explained what is worth paying attention to.
The client should ensure that their rights are already protected in the design contract, the designer's tasks are precisely defined, and the designer's liability is not unreasonably limited compared to the general legal regulation.
The client should ensure that their rights are already protected in the design contract, the designer's tasks are precisely defined, and the designer's liability is not unreasonably limited compared to the general legal regulation.
The content and scope of the contract must be precisely defined
The first important decision is to define the subject matter of the design contract, i.e. which specific design works must be stipulated in the contract. Insufficient definition can cause later disagreements, for example, if the question arises whether certain parts of the project - structures, interior architecture or technical systems - are included in the subject matter of the contract or not.
It is also important to define specific project stages, which are the preliminary design, main design and detailed design. If you go to a builder with a preliminary design, there is a high probability that you will end up with disputes, because it is very difficult to determine the construction cost based on the preliminary design. Then the initial price offered by the builder may seem very favorable, but later the main design will involve price changes and additional work.
It is also important to define specific project stages, which are the preliminary design, main design and detailed design. If you go to a builder with a preliminary design, there is a high probability that you will end up with disputes, because it is very difficult to determine the construction cost based on the preliminary design. Then the initial price offered by the builder may seem very favorable, but later the main design will involve price changes and additional work.
How to avoid unexpected construction costs?
To avoid later disputes when pricing construction work, it is recommended to write down the target price for construction in the contract, which will give the designer a clear budget framework. The designer wants to offer the best solution based on the initial task - the best and most innovative technology and materials. At the same time, this may turn out to be a much more expensive solution than the client expected, and subsequent redesigns may be requested as additional work for additional money. Often, the client and the designer can have very different views on the construction price, and a target price would save both of them time.
In addition, from the client's perspective, it is always safer to set a binding price for design work in the contract, which includes all foreseeable work, including those that the designer should have foreseen when doing the work.
Payment for work should be based on the completion of specific work stages, not on a calendar-based schedule. However, for contractual penalties and claims for damages, it would be good to write down the details with a specific date, which will later give the client a basis to assess whether there is a delay that justifies the use of a sanction.
In addition, from the client's perspective, it is always safer to set a binding price for design work in the contract, which includes all foreseeable work, including those that the designer should have foreseen when doing the work.
Payment for work should be based on the completion of specific work stages, not on a calendar-based schedule. However, for contractual penalties and claims for damages, it would be good to write down the details with a specific date, which will later give the client a basis to assess whether there is a delay that justifies the use of a sanction.
Designer's liability
When regulating the designer's liability, it is not always worth going along with the liability limitations offered by the designer and the general terms and conditions of the standardized design contract Liability must remain within the maximum extent permitted by law. The limitation period for claims against the designer is five years, and the law allows for claiming both direct material damage and loss of profit from the designer. Contracts often limit the designer's liability by setting a shorter limitation period, and compensation for damages is restricted to the fee paid to the designer or to the amount paid out under liability insurance. When such limitations are applied, the client should be especially cautious, and when agreeing to the limitations, must consider the potential risks and, if necessary, reflect them in the pricing.
Copyright should not be ignored
Copyright is often overlooked in design contracts. However, it should be taken into account that all drawings, sketches, etc. are protected by copyright through the personal and proprietary rights of the designer. When concluding the contract, it must be agreed which proprietary copyrights will be transferred to the client and whether and how the client can use the designer's personal copyrights, including, for example, changing the project. The right to change the prepared project is the most important thing to keep in mind. This means that even changing the color, height, etc. or developing the project further requires the consent of the specific designer. If the transfer of rights or the right to use them is not fixed, this can lead to serious legal and financial consequences.
In conclusion, the Estonian proverb "measure nine times and cut once" applies here too. Clear and precise formalization already in the design contract prevents later costly disputes and helps achieve the desired construction quality and, most importantly, the safety of the building.
In conclusion, the Estonian proverb "measure nine times and cut once" applies here too. Clear and precise formalization already in the design contract prevents later costly disputes and helps achieve the desired construction quality and, most importantly, the safety of the building.