The problems of the subcontractor
1.Major projects are carried out by major building promoters and major contractors. The latter in turn work with many subcontractors. These in turn can call on sub-subcontractors.
All these subcontractors, especially in the first chain, are often confronted with extensive contracting agreements, take it or leave it.
2. Considering that between companies, the freedom to contract prevails, clauses can often be found in it, which means that the possibilities to act are very limited.
Since the recent legislative changes (in force from 1.12.2020), certain clauses that contain the representation of any arbitrariness and positions of power may be more challenged (see Opportunities for small businesses against abuse of dominant positions ).
3. An important control is the financial control. A nice-sounding name of a company, a beautiful website, can disguise financial weaknesses. Check the annual accounts carefully before entering into a contract. If the own funds are insufficient, it is best to request collateral, e.g. of affiliated companies, suretyship from the director (rarely obtainable), transfer of a claim best to be registered in the pledge register.
In difficult times, this can’t be forced on all the time.
When the contractual conditions provide for the accrual of the interest (of your contractual conditions, or at least those of the law of arrears for companies), a certain automatic protection already exists. (see payment arrears for companies)
A timely response is also desirable. When an invoice is not paid, remind the other party . When more than 1 invoice is not paid with more emphasis and announce that you will be obliged to suspend the execution of the works (check again your contractual conditions here, normally you have ENAC).
Also important is the presence of separate moments of delivery of the works (at least the provisional ones) that are carried out, so that the risk is transferred and as a rule the payment of the largest part of the contract price can follow. The main contractor will normally also deliver these parts of works together with the client, so that the latter can also obtain payment.
4. When important material are also sold in the contracting works, the presence of a retention of title clause in your own invoice conditions is certainly recommended.[1]
Check that the main agreement is not in conflict with it, if so certainly bring this up.
It is a real certainty. If destroyed or alienated, the claim acquires a privilege. If changed to another good, the subcontractor can assert his claims to this (art.750 J.C.
In the event that the sold goods have become immovable (by incorporation) and the immovable property in which they are incorporated has meanwhile been sold, the retention of title clause will only apply if the retention of title is entered in the pledge register.
5. When the main contractor does not pay various subcontractors, something is going on. Either there are real problems, or the bankruptcy is being prepared.
As a subcontractor , you then have a direct claim against the client if this is announced in good time ( at least by registered letter ) , ie before the bankruptcy ( art.1978 of the Civil Code ) . see Subcontractor direct claim
The latter then also has a privilege (art.20,12° mortgage law) on the payment of the invoices by the principal to the main contractor (replaced at that time by the curator). This only applies for 5 years after your own invoices
6. If the main contractor has not made a bill, there may be one or more crimes (such as organization of fraudulent inability[2]. It can also lead to the personal responsibility of directors for serious errors. (see Liability of directors in the event of bankruptcy).
The Paulian claim (which, however, will have to be submitted by the curator), is an important aid for this. As a result, the claim is submitted directly to the client or other third party who was or should have been aware of his financial indirect beneficiary.
The curators react very differently. There are those who are over-active. There are those who do not perform at all or too little.
They are instructed to immediately check whether certain creditors have not been paid preferentially in recent months. The latter can make these payments non-opposable (so payment must be returned) so that equality between the creditors is restored. He must also check whether no crimes have been committed and, if so, he/she must inform the prosecutor, who can initiate criminal proceedings .
Even the curator may incur responsibility if he fails to act to realize assets or establish claims.
[1] The intent of working the insolvency and the failure to pay the debt must not take place at the same time ( Cass.7.11.2018 (P.18.0662.F),Nullum Crimen april 2020 pag. 189
[2] cfr. H.Cambresier,D.Nicolas, Impact dde la réforme des sûretés mobilières pour les entrepreneurs du secteur de la construction, Construction Law Magazine, 2/2020, pag. 97 e.v.