The "Good Faith" Gap: Why (Finnish) Construction Contracts Don’t Reward Flexibility

In many jurisdictions, acting in good faith to save a project’s timeline is a virtue. In the Finnish construction sector, however, it can be a costly legal trap. At Eskola Legal, we recently resolved a dispute that serves as a vital lesson for any firm operating in—or exporting to—the Finnish market and operating under local terms and regulations.

Secure payment by written agreement

Our client, an industrial subcontractor, faced a common dilemma: preparatory site work by the main contractor was flawed, doubling the required man-hours for the subcontractor. To deliver on time, the subcontractor notified all parties of the increased scope and continued working under a verbal agreement.

Once the project was delivered, the main contractor and developer disputed the additional invoices, citing the lack of written variation orders.

The Legal Reality in Finland

Under Finnish construction law and the General Conditions for Building Contracts (the “YSE 1998”), “necessary work” is not synonymous with “payable work.” Without a signed contractual annex or a formalized variation or additional works order before the work is executed, the subcontractor often bears the full financial risk of the additional scope.

Key Takeaways for International Partners

When your client engages in Finnish construction or engineering projects, ensure they adhere to three non-negotiable steps:

• The Deviation Trigger: Identify and document site deviations the moment they occur.
• The Signature Rule: Tools should not hit the ground until a variation or additional works order is signed. Verbal agreements are effectively non-existent in high-stakes disputes.
• Annexes over “Good Faith”: Use standardized contractual annexes to bridge the gap between project reality and the original lump sum.

The Strategic Insight

If a partner is unwilling to sign a variation or additional works order when they need your expertise to solve a crisis, they are highly unlikely to sign it once the additional scope is already delivered.

About Eskola Legal

Attorneys Eskola Legal Ltd is a Helsinki-based business law firm that aims to provide reliable and efficient legal services to companies of all sizes. We provide pragmatic, hands-on legal support for our domestic and international clients with a strong focus in contract and corporate law, intellectual property rights and dispute resolutions matters. We support our clients in making sustainable and well-considered decisions in everyday situations as well as at demanding turning points.