Contractor failed to perform the works: the customer's procedure in Kazakhstan

This usually comes up like this: the deadlines have passed, the site is at a standstill, the contractor does not answer the phone, and nobody is returning the advance paid. Sometimes the situation is milder — the works are ongoing but behind schedule, and it is unclear whether to wait or act. In both cases the decision depends on what the contract says and on whether the performance deadline has fallen due.

In this article you will learn which documents and correspondence to collect first, how to draft a letter of demand, which court to file the claim with and what claims can be made beyond the return of the advance. We will separately cover interim measures and the typical mistakes that cost the customer its position before the trial even starts.

Contractor failed to perform the works: where to start reviewing the situation

The situation where a contractor has failed to perform the works usually comes as a surprise: the deadlines have passed, the site is at a standstill, and contact with the contractor is becoming less and less regular. Before sending letters of demand and claims for the return of the advance, it is worth calmly going through the documents. Construction contracts are governed by the Civil Code of the Republic of Kazakhstan, and it is the terms of the contract that determine whether the contractor's obligation has fallen due by the time your doubts arise. Rushing here does harm: a demand made before the performance deadline is easy to challenge.

The first thing to do is reread the contract. Find the scope of works, the start and completion dates, the procedure for handing over the result, the terms on stage-by-stage acceptance and on how the parties record performance. These clauses often hold the answer to whether there is a delay under the contract or the contractor is still working within the agreed term. If the deadlines in the contract are vague, rely on the stages agreed by the parties and the correspondence.

• Reread the contract: scope, deadlines, acceptance stages, procedure for recording performance.
• Check the calendar for the moment the deadline falls due: whether there is delay or the deadline has not yet expired.
• Draw up an inspection report of the object with the date and signatures, and record photos and video.
• Collect the payment documents confirming the transfer of the advance.
• Keep all correspondence with the contractor: email, messengers, letters.
• Collect the internal documents on the object: passes, logs, internal memos.

When the contractor has not performed the works and the deadline has not yet expired

The deadline for the works in a works contract determines whether the customer has acquired the right to demand return of the advance. Until the deadline falls due, it is too early to speak of a breach. Before it expires, it is reasonable to remind the contractor of the need to perform. When the deadline falls due and the result has not been delivered, delay arises. From that moment one may demand return of the unworked advance, a penalty if it is provided for, or withdraw from the contract and demand compensation for losses. The claim is sent in writing, with a calculation of the amount and a deadline for a reply. If there is no reply, the dispute is resolved in court.

If the deadline was extended by a supplementary agreement, the previous dates no longer matter, and delay is counted from the new date. It is important to check whether the agreement was signed by both parties and whether it changes the deadline for the works specifically, and not the payment procedure. Without an agreement, the contractor's reference to an extension of the deadline is not confirmed.

• Check the contract: the start and completion dates of the works, the procedure for extending the deadline.
• Establish whether the deadline for performance of the works has fallen due as at the current date.
• Send the contractor a written reminder before the deadline expires.
• After the deadline falls due, prepare a claim with a calculation of the unworked advance.
• Collect the correspondence, payment documents and evidence of non-performance.
• If there are signs that the contractor never intended to perform the works, file a fraud report with the police (Article 190 of the Criminal Code of the Republic of Kazakhstan).

Advance paid, contractor has not performed the works: legal grounds for the claims

An advance under a works contract is a preliminary payment that goes towards future works. Unlike a deposit, it does not secure performance and does not confirm the conclusion of the contract: when the obligation ends, it is returned to the paying party. If the works are not performed, the money loses its basis for retention and becomes an unworked advance.

A deposit is a means of security: the party responsible for non-performance loses it or returns it in double. An advance does not entail such consequences, so its return does not depend on fault for the failure of the works. The basis of the claim is the absence of counter-performance: payment was made, the result was not delivered.

• A works contract is governed by the Civil Code of the Republic of Kazakhstan.
• An advance is returned when the obligation ends, a deposit — under the rules on liability.
• After termination of the contract, the unworked advance is recovered as unjust enrichment.
• Termination of the contract removes the basis for retaining the money.
• For the claim it is sufficient to confirm payment and the absence of works.

Contractor has not performed the works: what to write in the claim

A claim to the contractor is drawn up in writing and signed by the customer or a representative under a power of attorney. The introductory part states the parties, the details of the works contract and the period for performance of the works. The descriptive part sets out the facts in sequence: conclusion of the contract, transfer of the advance, non-performance of the works and non-return of the amount. The consistency of the facts with the primary documents is checked before sending.

The reasoning part refers to the terms of the contract and the provisions of the Civil Code of the Republic of Kazakhstan on works contracts and on obligations. The operative part contains the return of the unworked advance and payment of a penalty, if it is provided for by the contract or by law, the deadline for a reply and the method of transferring the money. The wording must be specific, without alternatives that allow evasion of a response.

• name of the customer and the contractor, their IIN or BIN
• details of the contract for work and the date it was concluded
• amount of the advance paid and the date of payment
• specific works that were not completed on time
• demand for return of the advance and payment of a penalty
• deadline for reply and bank details for the transfer

Contractor failed to perform the works: options for pre-trial settlement

If the contractor failed to perform the works, it is worth going through pre-trial settlement before filing a claim. The Civil Code of the Republic of Kazakhstan governs contracts for work and allows the obligation to be amended or terminated by agreement of the parties. Conduct negotiations in writing: a letter of demand describing the scope breached and proposing to discuss return of the advance. Oral arrangements are not supported by any evidence.

The first option is an agreement to terminate the contract: it records the termination of the obligation and the fate of the advance. The second is a repayment schedule with amounts and payment dates, signed by the parties. It turns the dispute about whether the debt exists into a dispute about deadlines.

While the deadline for the works has not expired, there is no need to rush to file a claim — but correspondence, inspections and notifications should already be documented at that stage. It is precisely these documents that later decide the dispute.

Contractor failed to perform the works: gathering evidence before trial

If the contractor failed to perform the works, before going to court gather evidence of non-performance: the contract for work with all appendices, the agreed estimate, the technical specification, the works schedule, and acts of handover of materials and access to the site. Payment orders, receipts or acknowledgements confirm the advance was transferred. Any correspondence in messengers and by email discussing deadlines and scope also forms part of the case. It is better to keep it in its original form together with attachments and metadata, not just as screenshots.

Store electronic evidence so that it can be verified: export the chat in full with dates and participants, save emails in a format with headers, and make backup copies on a storage medium. Notarial provision of evidence — a protocol of inspection of the correspondence — makes confirmation easier, but does not replace the other documents. Photographs and video recordings of the site or of materials not supplied record the state of affairs as at a given date. Witnesses are useful for confirming an inspection and the progress of the works; the transfer of money under a transaction requiring written form cannot be confirmed by witness testimony (Article 153 of the Civil Code of the Republic of Kazakhstan).

• The contract for work and all signed appendices, the estimate, the technical specification.
• Payment orders, receipts or acknowledgements of the transfer of the advance.
• Correspondence in messengers and by email with attachments and metadata.
• Photographs and video recordings of the site, materials, and place of works.
• Written statements of witnesses with their contact details.
• Inspection reports drawn up with the participation of disinterested persons.

Keep both paper originals and electronic copies: the court assesses evidence as a whole.

The contractor failed to perform the work: which court and how to file a claim

A dispute over non-performance of work under a construction contract is considered taking into account the status of the parties and the amount of the claim. The Civil Code of the Republic of Kazakhstan governs construction contracts. If a party is an individual without entrepreneur status, the case is heard by the district court at the defendant's place of residence. Between business entities, the claim is filed with the Specialized Interdistrict Economic Court.

Jurisdiction is determined by the defendant's location; the contract may establish a different territorial jurisdiction, and a consumer is entitled to file a claim at their own place of residence as well. The amount of the claim affects the amount of the state duty at the rates of the Tax Code of the Republic of Kazakhstan. The Economic Court accepts cases between entrepreneurs regardless of the amount.

The contractor failed to perform the work: interim measures

If the contractor took an advance payment and failed to perform the work, a court judgment does not guarantee the return of the money: by the time it enters into force, the defendant may have neither an account nor any property left. Interim measures in a claim freeze the debtor's assets before they can dispose of them, preserving the possibility of actual recovery.

The measure is appropriate if the defendant is withdrawing money, selling property, closing accounts, or has unfulfilled obligations to other creditors. The application is filed together with the claim or during the proceedings; the court assesses whether the measure is proportionate to the claim and the risk of non-enforcement of the judgment.

• statements on accounts and information on the movement of money under the contract
• correspondence on deadlines, scope of work and return of the advance payment
• data on a change of director, address or composition of participants
• information on other claims and enforcement proceedings against the contractor
• documents confirming the contractor's ownership of property, if available

The contractor failed to perform the works: what is recovered in addition to the advance

Where the contractor has failed to perform the works, in addition to the return of the advance the customer is entitled to claim a penalty, interest for the use of money and compensation for losses. The contract for works is governed by the Civil Code of the Republic of Kazakhstan, and it is its provisions that determine the sanctions where the parties have not set them out themselves. A penalty may be contractual or statutory. Each claim must be justified separately.

Interest is charged on the amount of the unjustifiably retained advance based on the base rate of the National Bank of the Republic of Kazakhstan (Article 353 of the Civil Code of the Republic of Kazakhstan), for the period from the moment when the contractor was obliged to return the funds. Losses include actual damage and lost profit; their existence and amount are proved by the customer. If the works have been partially performed, the amount of the claims is reduced by the value of the accepted result.

• the amount of the unworked advance
• contractual penalty for delay
• statutory penalty, if the contract does not provide for one
• interest for non-performance of a monetary obligation (Article 353 of the Civil Code of the Republic of Kazakhstan)
• actual damage supported by documents
• lost profit, if its amount is justified

The contractor failed to perform the works: enforcement of the decision

After the decision enters into legal force, the court issues a writ of execution. It is submitted to a private court enforcement officer at the place of residence or location of the debtor or of his property. Enforcement proceedings are commenced on the basis of the enforcement document, and the debtor is given a period for voluntary performance; if it is not performed, enforcement moves to the compulsory stage.

The court enforcement officer sends requests to the authorised bodies to identify property: real estate, vehicles, bank accounts, shares in legal entities. If no property is found, on the application of the claimant a search may be announced for the debtor or his property. Property is subject to arrest, and accounts are blocked within the amount of the claim.

• Obtain the writ of execution after the decision enters into force
• Submit the writ to a private court enforcement officer
• Check the progress of the search for property and the arrests imposed
• Monitor the lifting of restrictions after the debt is repaid
• If there is no property — resume enforcement when new information appears
• If there is intent to embezzle the advance — report to the police under Article 190 of the Criminal Code of the Republic of Kazakhstan

The contractor failed to perform the works: common mistakes of the customer

Where the contractor has failed to perform the works, the customer often weakens his own position. The contract for works is governed by the Civil Code of the Republic of Kazakhstan: without a written document it is difficult to prove the agreed deadlines, scope and type of works. Oral agreements allow the contractor to reclassify the relationship as one-off services or to deny it, and claims for the return of the advance and a penalty hang in the air.

Payment in cash without a receipt is the second typical mistake. The transfer of money for materials or a stage of works without written acknowledgement by the recipient is almost impossible to confirm. A bank transfer or payment order with the reference "advance under a contract for works" records the fact of payment. A receipt separate from the contract must contain the details of the parties, the basis of payment and the signature of the recipient.

• No written contract was concluded — there are no agreed terms and deadline, and it is difficult to prove the contractor's obligation.
• Payment in cash without a receipt — it is impossible to confirm that the advance was handed over.
• No acts of completed works and no acceptance of stages — the fact of non-performance or improper quality is not proven.
• The correspondence has been deleted — evidence of agreements, notifications and demands is lost.
• The pre-action claim procedure has not been followed — if it is mandatory under the contract or by law, the claim will be returned.

Compliance with the written form, recording of payment and preservation of correspondence reduce the risk of refusal to protect the client's rights.