Subcontracting

Subcontracting

Problem definition: it is a very common problem. You have performed work on a construction site as a subcontractor, but the main contractor (i.e. the one who commissioned you) fails to pay your invoice. Is there a possibility to obtain your money in another  rway?

The answer to this problem statement and question is unambiguously yes, but there are a number of conditions. For example, you must respond in time and the main contractor may not yet be declared bankrupt.

Article 1798 of the Dutch Civil Code provides for the possibility for a subcontractor to request payment of his invoices directly from the builder / client.

As a subcontractor, you have your own right to do so, albeit imperfect (i.e. you have to actually bring the claim to enforce your right).

However, the claim can be brought only when the main contractor fails to pay you, and not immediately.

You must also take into account that the claim will only be successful if it is instituted at a time when the main contractor has not yet been paid by the builder / client.

If you submit a timely direct claim, the client can no longer pay the main contractor in a liberating way.

If he does so, he will have to pay a second time (and therefore also to you as a subcontractor).

However, if the main contractor has already received payment, and you are only then making a direct claim, then the builder / client will not be obliged to pay a second time and you can only address the main contractor.

It is also important that the direct claim also applies to further subcontractors, e.g. If you as a subcontractor, in turn also appoint a subcontractor, the subcontractor appointed by you will have a direct claim against the main contractor, who in such cases is then regarded as the principal.

An important advantage for the subcontractor for filing a direct claim is that it can be filed completely free of form, as the Court of Cassation ruled in a judgment of 25/03/2005.

A direct claim can thus be made very easily, and the only requirement is that a written question must be addressed to the builder / client. This can be done by registered letter, which is recommended to avoid any problems with proof, but can also be done by fax, e-mail or regular letter.

The direct claim further applies to all types of subcontractors.

An overly strict interpretation of the law could lead to the conclusion that only subcontractors who have executed immovable works could claim the direct claim of Article 1798 of the Civil Code. In my view this is not correct. The activity of the subcontractor is not limited to immovable works, so that the direct claim in favor of the subcontractors does not only apply to the subcontractors in construction works.

The benefit of the direct claim is an advantage that every subcontractor must have.

Finally, it should be emphasized that the direct claim must, in any event, be brought before the main contractor who has financial difficulties is declared bankrupt. The direct claim must have reached the client / builder at the latest the day before the bankruptcy judgment, so that you can avoid concurrence with other creditors.

After all, if that is the case, and you have not filed the direct claim, the claim of the main contractor against the client becomes a mass claim, in which you as a subcontractor can no longer intervene. Where Article 1798 of the Civil Code can therefore offer the subcontractor an important instrument for subcontractors to collect their invoices, this does not always provide sufficient certainty. It should be noted that as a subcontractor you are not completely without protection even in the event of bankruptcy.

After all, in the event of the bankruptcy of the main contractor, a subcontractor who carries out immovable works also has a privilege from the unpaid subcontractor, and this for a period of five years from the date of the invoice (cf. Article 20.12 ° Mortgage Law. ).

For the sake of completeness, reference should be made to future law in the context of this contribution.

After all, from 01.01.2017, a more extensive article 1798 of the Civil Code will come into effect, adding to the existing article the following text :

“In the event of a dispute between the subcontractor and the contractor, the client can deposit the amount in the Deposit and Consignment Office or on a blocked account in the name of the contractor and subcontractor with a financial institution. The client is obliged to do so if he is requested to do so in writing by the main contractor or the subcontractor. ”

In the future it will therefore no longer always be possible to pay directly to the subcontractor, but both the subcontractor and the main contractor can request in writing that the sum be deposited with the deposit and consignment office.

This will especially apply in cases where there could be discussion between the main contractor and the subcontractor regarding the works performed by the subcontractor.