Construction contract claims in Bulgaria: acceptance, delay, variations and guarantees

Iva Petkova, attorney · Updated 24 September 2026 · 8 min

What rights contractors and employers have under a construction contract in Bulgaria, how delay and additional works are proved, when a guarantee can be called, and the time limits for claims on private projects and public contracts.

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Construction disputes are seldom decided by a single document: a court or arbitral tribunal compares the contract with the protocols, statutory site acts and correspondence produced during the works. The legal framework is the contract for works (Arts 258–269 of the Obligations and Contracts Act), the Spatial Development Act and its ordinances and, for public contracts, the Public Procurement Act.

Acceptance, defects and payment

The contractor works at its own risk and must deliver work fit for its ordinary or agreed purpose (Arts 258 and 261 of the Obligations and Contracts Act). If the design or materials supplied by the employer are unsuitable, the contractor must warn the employer at once, or it is liable for the resulting loss; if the employer does not make the necessary changes, the contractor may withdraw from the contract (Art. 260).

The employer must accept work done in accordance with the contract, inspecting it and raising all its objections, and must notify defects that are hidden or appear later as soon as they are discovered. Without objections, the work is deemed accepted (Art. 264). For defects, the employer may require free repair, the cost of repair or a price reduction, and if the work is unfit for its purpose, it may terminate. For construction works these rights expire after five years (Art. 265).

Payment is due for accepted work, and where unit rates apply, the amount is fixed on acceptance (Art. 266(1)). The employer’s objections should therefore be specific and in writing, and the contractor must be able to prove it invited acceptance. The guarantee (defects liability) periods agreed in the contract run separately, from the date the works are put into service, and may not be shorter than the minimum periods in Ordinance No 2 of 2003, for example 10 years for newly built structures (Art. 160(3) to (5) of the Spatial Development Act).

Delay, suspension and termination

An employer that fails to provide the cooperation needed, for example by not handing over the site, the design or the necessary approvals, is in default as creditor: the risk passes to it, the contractor is released from the consequences of its own delay, and the necessary costs fall on the employer (Arts 95 and 96 of the Obligations and Contracts Act). If amounts due are not paid, the contractor may withhold performance until they are (Art. 90). A suspension should be announced in writing and recorded in a form 10 act, and the resumption in a form 11 act, under Ordinance No 3 of 31 July 2003 on acts and protocols during construction.

The employer’s main remedy is the contractual penalty for delay, which we cover in a separate guide on contractual penalties. If it becomes clear that the contractor will not finish on time or as agreed, the employer may terminate without waiting for the completion date (Art. 262(2)), and for good reason it may also withdraw, paying the costs incurred, the work done and the profit the contractor would have made (Art. 268). A contractor that is not paid may terminate after a written warning giving a reasonable period to pay (Art. 87). On termination, the state of the works should be recorded jointly before a new contractor moves in.

Additional works and modifications under Article 116

With a private employer, additional works can be agreed freely, but the dispute is usually about proof: who ordered them and at what price. A written instruction from someone who can bind the employer and a signed protocol of quantities are safer than verbal directions on site.

A public contract may be modified only on the grounds in Article 116(1) of the Public Procurement Act. For additional works needed because of unforeseen circumstances where a change of contractor is not possible, and for modifications required by circumstances the employer could not have foreseen, price increases may not exceed 50 per cent of the original contract value in total (Art. 116(2)). Where inflation has substantially raised the prices of key materials and services, the price may be adjusted under a methodology approved by the Council of Ministers if funding is available, subject to a separate 50 per cent cap (Arts 116(3) and 117a).

Performance and advance payment guarantees

Under a public contract, the performance guarantee may not exceed 10 per cent of the contract value, and the advance payment guarantee equals the advance and is released within three working days after it is repaid or recovered (Art. 111(2) and (3) of the Public Procurement Act). The contractor chooses between cash, a bank guarantee and an insurance policy (Art. 111(5) and (8)), although an insurance policy is allowed only for guarantees up to EUR 255,645.94 (BGN 500,000) (Art. 111(7) of the Public Procurement Act), and the terms for retaining and releasing the guarantee are set in the contract.

Under a bank guarantee, the bank undertakes in writing to pay in accordance with the conditions of the guarantee itself (Art. 442 of the Commerce Act). With a guarantee payable on first written demand, the bank as a rule checks only whether the demand meets those conditions, and whether the call was justified is argued afterwards between the parties. The contractor should therefore watch the expiry date and wording of the guarantee, and the employer should make its demand before expiry.

The records that decide disputes, and FIDIC contracts

Acts and protocols drawn up under Ordinance No 3 have evidential force (Art. 1(4) of the Ordinance). The documents that matter most are usually:

• the protocol opening the site (form 2 or 2a), whose date counts as the start of construction (Art. 157(1) of the Spatial Development Act)
• the site instruction book with the instructions of the designer and the site supervisor
• the acts for covered-up works (form 12), for damage caused by force majeure (form 13) and for suspension and resumption (forms 10 and 11)
• the form 15 certificate by which the works are handed over to the employer
• protocols of quantities, letters, notices and programmes

Interim payment certificates, often called ‘form 19’ in practice, are not among the Ordinance’s forms and are governed by the contract. If a party refuses to sign a joint act or fails to attend, the other party invites it in writing, and if no representative appears within 24 hours after the time stated, the absent party is replaced by the authority that issued the building permit (Art. 170(2) of the Spatial Development Act).

Large infrastructure contracts often follow FIDIC forms, but mandatory Bulgarian law still applies to them. The most common mistake is a missed notice: under the 1999 edition, the contractor must notify the Engineer of a claim for extension of time or additional payment no later than 28 days after it became aware, or should have become aware, of the event, and under the 2017 edition the same period also applies to the employer’s claims. Under the contract conditions, a late notice forfeits the claim. Before arbitration, disputes go to a dispute board (DAB, DAAB since 2017), whose decision is binding; under the 1999 edition a party that disagrees must give a notice of dissatisfaction within 28 days, or the decision becomes final.

Limitation and the choice between court and arbitration

The claim for payment is time-barred five years after it falls due (Arts 110 and 114(1) of the Obligations and Contracts Act). Interest and contractual penalties for breach are time-barred after three years, and for a penalty for delay the period runs from the last day on which it accrues (Arts 111 and 114(4)). Limitation is also interrupted by acknowledgement of the debt (Art. 116), so a signed protocol in which the debtor acknowledges the amount serves both as evidence and as protection against limitation.

Disputes go to the state courts unless the parties have agreed in writing on arbitration (Art. 7 of the Arbitration Act). A dispute with a consumer, such as an individual who has commissioned repairs to their home, cannot be referred to arbitration, and a seat abroad is possible only if one of the parties is based abroad (Art. 19 of the Civil Procedure Code). Arbitration in Bulgaria is conducted by permanent institutions entered in the Register of Arbitrations and by foreign arbitral institutions, and in an international commercial dispute also by a tribunal set up for that dispute alone (Art. 4 of the Arbitration Act); an award made by an unregistered arbitral body is void. An arbitral award is final and may be set aside by the Supreme Court of Cassation only on the grounds listed in the Act, by an action brought within three months of receipt (Arts 47 and 48).

The team at Petkova & Minkov Law Firm includes lawyers with experience in construction and infrastructure contracts and in public procurement. We work in Bulgarian, English, Russian and German, from an office next to the Palace of Justice in Sofia.

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