REALWorld Law



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



The parties are free to provide for any method of payment (lump sum, measurement, a schedule of payment, etc). Payment against measurement is most common.

The owner (maître d’ouvrage) shall either provide for a direct payment by the bank to the contractor in the event a loan was secured by the owner to finance the construction works or deliver a joint bank guarantee equal to the entire price of the contract to the contractor (entrepreneur) in order to secure the payment obligation owed to the contractor.

The owner is entitled to retain an amount not exceeding 5% of the entire price of the project in order to guarantee the remediation of any defects arising on the date of acceptance of the works. The contractor has the right to replace this retainer by a bank suretyship (cautionnement bancaire).