REALWorld Law

Construction

Payment

How are payments to contractors, design consultants and subcontractors normally structured?

Belgium

Belgium

Most contracts determine a payment schedule whereby payment instalments are due in proportion to the progress of the works. Some contracts foresee the circumstance where the contractor is required to submit pro forma statements by way of a payment procedure or structure, which is to be approved by the architect or principal within a set period, after which the contractor can accordingly submit his invoice. In this case the works can be put on hold if payment is withheld.

The Law of 9 July 1971 which governs house construction and the sale of houses to be or being built, contains a number of specific mandatory provisions which deal with payments and which are to the benefit of purchasers.

When specific conditions laid down in articles 35/6/1-5 of the act of 12 April 1965 regarding the protection of remuneration are met, the principal could be held jointly liable for serious breaches of the legal obligations to pay salary to employees committed by its direct contractor, and in some cases even by the subcontractor of its direct contractor. This joint liability could be avoided by making specific, legally defined written arrangements between the principal and its direct contractor, eg by adding a specific clause to this effect in the service agreement with the direct contractor.