The Supreme Court will review a provision in ABFF 04

On September 23, 2024, the Supreme Court granted partial leave to appeal regarding the interpretation of a provision in the standard contract ABFF 04, General Provisions for Property Management and Related Services. The issue under review is whether clause 31 in ABFF 04 means that a housing cooperative that has made a claim for damages against its manager must submit the claim in writing within three months from the discovery of the damage to retain the right to compensation.

ABFF 04 is a standard contract intended for ongoing property management work. The standard contract ABFF 04 is similar to the standard contracts AB 04, ABT 06, and ABK 09 but is adapted for recurring services such as operation, maintenance, and service tasks.

The relevant clause 31 in ABFF 04 reads as follows:

"Claims for rectification of defects, price reduction, penalty, or other damages, claims, etc., must be made in writing no later than three months after the delay, defect, or damage has been discovered."

The provision thus states that claims must be made within a certain time. However, the provision does not explicitly state what happens if claims are not made within this time.

In the case where the Supreme Court has granted leave to appeal, a housing cooperative has made a claim for compensation against its manager, and the parties had agreed that ABFF 04 would apply as general provisions.

Both the Malmö District Court (through an interim judgment on April 14, 2023, in case no. T 12682-19) and the Court of Appeal for Skåne and Blekinge (through a judgment on November 24, 2023, in case no. T 1774-23) concluded that the housing cooperative had not made its claim for damages against the manager within three months after the alleged damage was discovered. Both the district court and the court of appeal considered that the meaning of the provision in clause 31 in ABFF 04 is that claims for damages not made within three months after the damage is discovered are time-barred. The lower courts therefore considered that the housing cooperative had lost its potential right to compensation due to the statute of limitations.

By its decision to grant leave to appeal, the Supreme Court has decided to address the issue of whether the provision in clause 31 in ABFF 04 means that a party must submit its claim in writing within three months after the damage is discovered to retain the right to compensation.

In the standard contracts AB 04, ABT 06, and ABK 09, there are several provisions that state that a party has an obligation to notify the other party in various situations. For example, ABK 09 chapter 6 § 6 states that the consultant must promptly notify the client in writing if the agreed budget cannot be maintained. However, the provision does not specify any consequences (legal effects) if the written notification is not made promptly.

Furthermore, the standard contracts contain an obligation for the client to promptly notify the contractor in writing when the client discovers defects or damage due to defects, and the client is liable for the additional cost that a late notification causes the contractor (see chapter 5 § 15 in AB 04 and ABT 06 as well as ABK 09 chapter 5 § 5). These provisions thus state that notification must be made "promptly" and that if this is not done, the client must bear the additional cost incurred due to the late notification. However, the provisions do not explicitly state that liability for additional costs is an exclusive consequence.

If the Supreme Court in the case where leave to appeal has been granted concludes that clause 31 in ABFF 04 means that a claim for damages is time-barred if not made within three months, despite this not being explicitly stated in the provision, one might question whether such a consequence for late notification could also be interpreted into the mentioned provisions in AB 04, ABT 06, and ABK 09.

There are also other provisions in the AB contracts with similar content to those mentioned above (see, for example, AB 04 chapter 2 § 9). What the Supreme Court concludes in the case where leave to appeal has been granted may thus have implications for how various provisions in the AB contracts should be interpreted. Since the proposals for the new standard contracts that will replace AB 04 and ABT 06, which have been sent out for consultation, contain corresponding provisions to those mentioned above and the proposals do not clarify whether legal consequences in provisions for, for example, late notification are exclusive, the Supreme Court's review will also be significant for the new proposals if this is not clarified after the proposals have been out for consultation.