Defects noted before acceptance: the project owner's levers (Art. 1222 Civil Code)

A building site in progress, works carried out contrary to good building practice, a contractor that does not return to site despite the meeting minutes: the situation is commonplace, the right reflexes are less so. Many project owners (maîtres d'ouvrage) wait for acceptance of the works (réception) to record reservations, for fear of blocking the project or of exposing themselves to a demand for a payment guarantee. That is a misjudgement. Before acceptance, the project owner has a more aggressive contractual arsenal than afterwards, provided it is used in the right order and on solid evidential foundations. This guide sets out the levers available in the face of defects before acceptance of the works: formal notice (mise en demeure), performance at the debtor's expense under Article 1222 of the French Civil Code, price reduction, termination of the contract, how these fit with summary proceedings for an expert appointment (référé-expertise) under Article 145 of the Code of Civil Procedure, and the treatment of the retention of guarantee.

Before acceptance, the project owner has no statutory warranty: only the contract

Acceptance is the event that triggers the statutory warranties. Until it has taken place, Article 1792 of the Civil Code (ten-year liability), Article 1792-3 (two-year warranty of proper functioning) and Article 1792-6 (completion warranty) are out of play. A project owner who relies on ten-year liability on a site that has not been accepted is relying on the wrong basis and is exposed to a plea of inadmissibility.

The applicable regime is the ordinary contractual liability of the contractor under a works contract, based on Articles 1231-1 et seq. of the Civil Code and on the contract for the hire of work (Article 1710 and Article 1779, 3° of the Civil Code). The contractor owes an obligation to achieve a result as to the conformity of the work with the terms of the contract, with the technical standards (documents techniques unifiés) it refers to and with good building practice. It is released only by an external cause.

This characterisation has three immediate operational consequences.

First, limitation. The claim is time-barred after five years from the day on which the project owner knew, or ought to have known, the facts enabling it to act (Article 2224 of the Civil Code, Article L. 110-4 of the French Commercial Code for dealings between professionals). It does not benefit from the ten-year period.

Second, insurance. Structural damage insurance (assurance dommages-ouvrage) taken out under Article L. 242-1 of the French Construction and Housing Code does not, in principle, respond before acceptance. The text nevertheless provides for a decisive exception, examined below, which makes use of the policy conditional on termination of the contract preceded by an unsuccessful formal notice.

Third, the balance of power. Before acceptance, the project owner keeps control of payments, the ability to refuse the work, the retention of guarantee that has not been released and the possibility of having a third party carry out the work. After acceptance, only claims for compensation remain, against a contractor that may already be on its knees. The choice is therefore one of timing before it is one of law.

The trap of tacit acceptance

Any strategy of withholding assumes that involuntary acceptance is avoided. Acceptance may be tacit where the project owner's unequivocal intention to accept the work can be inferred from taking possession combined with payment of almost the whole of the price. A project owner who occupies the premises, operates them or re-lets them while paying the final interim statements runs the risk of tacit acceptance without reservations, which clears the apparent defects and moves the debate onto the ground of the statutory warranties.

Moreover, the contractor may seek judicial acceptance. It is accepted that the court may order acceptance, where appropriate with retroactive effect to a completion date, where the work is in a condition to be accepted and the project owner's refusal is abusive. Blocking a site without a documented technical reason therefore exposes the project owner to an effective counter-attack.

Formal notice: the act on which every other lever depends

Formal notice is not a contractual courtesy. It is the condition for opening performance at the debtor's expense (Article 1222), unilateral termination (Article 1226), price reduction (Article 1223) and the exception provided for in Article L. 242-1 of the Construction and Housing Code. How it is drafted determines the admissibility and effectiveness of everything that follows.

As to form, it takes the form of a summons to perform or an act amounting to a sufficient demand (Article 1344 of the Civil Code). In practice: a registered letter with acknowledgement of receipt, backed up by an email to the site manager, or an act of a commissaire de justice (bailiff) where the financial stakes justify an incontestable certain date.

As to substance, it must include:

• precise identification of the non-conformities and defects, item by item, with reference to the contract documents (technical specifications (CCTP), execution drawings, the technical standards (DTU) referred to) and not a generic statement about the poor quality of the work;
• a reminder of earlier findings (site meeting minutes, emails from the architect, reservations from the works coordinator (OPC), the technical inspector's report);
• a demand to carry out the remedial work, with a specific time limit that is justified given the nature of the works;
• an explicit warning that, failing performance within that time limit, the project owner will have the works carried out by a third party at the contractor's expense under Article 1222 of the Civil Code, and reserves the right to terminate the contract at the contractor's sole fault.

Express mention of the legal basis and of the intended sanction is what distinguishes an effective formal notice from a reminder of no consequence. Where the contract refers to standard NF P 03-001 on private building works contracts, the contractual provisions governing prior formal notice, its time limit and the termination procedure take precedence: they must be followed to the letter, failing which the termination will be held to be irregular.

Anticipating the response: the payment guarantee under Article 1799-1

Suspending payments invites a predictable response. Article 1799-1 of the Civil Code requires a project owner who enters into a private works contract to guarantee payment of the sums due to the contractor, where the contract value exceeds the threshold set by regulation. Where this guarantee is not provided, the contractor may, after an unsuccessful formal notice, suspend performance of the contract.

A project owner who freezes interim statements without having put the guarantee in place therefore gives the contractor a legitimate reason to abandon the site, and reverses the burden of breach. Checking compliance with Article 1799-1 is a prerequisite to any strategy of financial pressure.

Fixing the evidence: summary proceedings for an expert appointment under Article 145 of the Code of Civil Procedure

Before acceptance, evidence is fleeting. Work is covered over, the following trades come in, contractors leave the site, defects develop. Summary proceedings for an expert appointment (référé-expertise) under Article 145 of the Code of Civil Procedure are the central tool for preserving evidence.

If there is a legitimate reason to preserve or establish, before any trial, the evidence of facts on which the outcome of a dispute may depend, legally permissible investigative measures may be ordered at the request of any interested party, on application or in summary proceedings.

The threshold for admission is deliberately low: all that is needed is a future trial that is not manifestly bound to fail and an interest in preserving the evidence. The judge does not have to prejudge the merits of the claim. In construction matters, the legitimate reason is shown by site meeting minutes, time-stamped photographs, a technical inspector's report or an opinion from the project manager (maîtrise d'œuvre). The conditions of admissibility, the procedure and the framing of the expert's mission are set out in our article on summary proceedings for an expert appointment before a construction dispute.

Joining all the parties involved

The costliest mistake is to summon only the main contractor. The expert report can be relied on only against the parties to the proceedings. A project owner who later discovers that the origin of the defect is a design error or a subcontracting failure is left with a report that cannot be relied on against the party actually responsible, and has to start again.

The scope of the summons must therefore cover, depending on how the site was organised: the contractor holding the work package, the design project manager and the site project manager, the technical design office concerned, the technical inspector, the identified subcontractors, the supplier of the product in question, and the liability insurers of each. The marginal cost of an additional summons is out of all proportion to that of an expert investigation that has to be redone.

Drafting the mission

The expert's mission is not a form to be filled in. Where there are defects before acceptance, it must contain specific heads of mission:

• record the actual progress of the works and compare it with the contractual programme and the interim statements already paid;
• describe the non-conformities with the technical specifications (CCTP), the execution drawings and good building practice, and state whether the work is in a condition to be accepted;
• determine to whom the defects are attributable as between design, execution, subcontracting and materials;
• quantify the cost of the remedial works and the cost of completion by a third-party contractor, separately from the balance owed to the defaulting contractor;
• assess the loss caused by delay, including, as the case may be, loss of rent, the cost of financing, additional project management fees and the extension of the works insurance;
• give an opinion on whether the time limit and the cost of the performance envisaged by a third party are reasonable, so as to secure the application of Article 1222.

This last point is strategic: it turns the expert investigation into a means of validating the right to replace the contractor.

Supplementing with summary proceedings under Article 835 of the Code of Civil Procedure

Where the defects create imminent damage (a waterproofing failure in winter, instability of a temporary structure, a risk of worsening affecting neighbouring work packages), the judge in summary proceedings may order protective measures or measures to restore the position under Article 835, paragraph 1, of the Code of Civil Procedure, even where there is a serious dispute. Paragraph 2 also allows an interim payment to be obtained where the obligation is not seriously contestable. Before the commercial court, the basis is Article 873 of the same Code.

Performance at the debtor's expense: Article 1222 of the Civil Code

Resulting from Ordinance No. 2016-131 of 10 February 2016 reforming the law of contracts, Article 1222 of the Civil Code confirmed and widened the right of replacement, freeing it from the prior judicial authorisation that former Article 1144 required.

After formal notice, the creditor may also, within a reasonable time and at a reasonable cost, have the obligation performed itself or, with the prior authorisation of the judge, destroy what has been done in breach of it. It may ask the debtor to reimburse the sums committed for that purpose. It may also ask the court to order the debtor to advance the sums necessary for that performance.

The conditions to be met

Four conditions govern the application of the text. A contractual non-performance, which in the case of defects is characterised by non-conformity with the contract documents or with good building practice. A prior formal notice that has remained unsuccessful, except in a case of established urgency. A reasonable time, assessed in light of the nature of the works and the constraints of the site. A reasonable cost, which is the real ground of dispute.

The cost is reviewed after the event, when the project owner claims reimbursement. The defaulting contractor will argue that the replacement contractor was overpaid, that it carried out improvements rather than simple remedial work, or that the project owner took advantage of the operation to upgrade. The answer is methodological: a documented competitive process involving at least two or three contractors, quotations itemised by work item and following the wording of the original technical specifications (CCTP), sign-off by the project manager, and a joint record of condition before and after the remedial work. Where a court-ordered expert investigation is under way, it is preferable to obtain the expert's opinion on the quotations before committing to the works.

Reimbursement, advance and set-off

The project owner may sue for reimbursement after having committed the sums, but it then bears the risk of the contractor's insolvency, a major risk in a sector where failures of construction companies remain numerous. Paragraph 2 of Article 1222 allows the court to be asked to order an advance of the necessary sums, which shifts the cash-flow risk onto the debtor. This application may be brought before the court hearing the merits and, where the obligation is not seriously contestable, before the judge in summary proceedings by way of an interim payment.

In practice, the project owner will often combine three mechanisms: setting off the cost of the remedial work against the unpaid balance of the contract, a judicial advance for the remainder, and a protective attachment over the contractor's receivables where the conditions of Article L. 511-1 of the French Code of Civil Enforcement Procedures are met, namely a claim that appears well founded in principle and circumstances likely to threaten its recovery. On the conditions and time limits specific to this measure, see our analysis of protective attachment carried out before judgment.

Destroying what has been done requires the judge's authorisation

Article 1222 draws a clear line between performance by a third party, which requires no authorisation, and destruction of what has been irregularly built, which requires the prior authorisation of the judge. Demolishing a non-conforming structure without that authorisation exposes the project owner to liability of its own and to the loss of the evidence of the defect. Where the remedial work involves significant removal, the application for authorisation must be made, where appropriate before the judge in summary proceedings, in parallel with the expert investigation.

Financial levers: suspension, price reduction, retention of guarantee

The defence of non-performance

Article 1219 of the Civil Code allows a creditor to refuse to perform its own obligation, even where it is due, if the other party's non-performance is sufficiently serious. The project owner may thus suspend payment of an interim statement. The seriousness requirement imposes proportionality: suspending the whole of a statement because of defects affecting a marginal item is self-defeating. The withholding must be targeted, reasoned in writing and quantified by reference to the estimated cost of the remedial work. Article 1220 also allows suspension in advance where it is clear that the other party will not perform when due and the consequences are sufficiently serious, provided that the suspension is notified as soon as possible.

Price reduction

Article 1223 of the Civil Code allows the creditor to accept imperfect performance and to seek a proportionate reduction in the price. If the price has not yet been paid, the project owner notifies its decision to reduce it as soon as possible, after formal notice; if it has already paid, it asks the court for the reduction. This lever is relevant for aesthetic non-conformities or shortfalls in the work that it would be disproportionate to remedy, for example a substitute material of a lower grade installed without a works order. It combines poorly with a claim for specific remedial work on the same item: the choice must be made item by item.

Retention of guarantee: what it really guarantees

The retention of guarantee (retenue de garantie) is governed by Law No. 71-584 of 16 July 1971. Interim payments under private works contracts may be reduced by a retention of up to 5% of their amount, contractually securing performance of the works so as to meet, where applicable, the reservations made at acceptance. The sums are held in escrow by an escrow agent, and the contractor may replace the retention with a personal and joint guarantee from a financial institution. Repayment falls due on expiry of one year from acceptance, unless the project owner has lodged a reasoned objection notified by registered letter.

The reach of this mechanism is often overestimated in the pre-acceptance phase. The retention is earmarked for the reservations made at acceptance: it is not intended to finance remedial work for defects noted during the works, and its base, capped at 5% of the interim payments, is rarely proportionate to the cost of major remedial work. Before acceptance, the right instrument of financial pressure is the defence of non-performance applied to the interim statements in progress, not the retention.

Two points of caution nevertheless need to be addressed while the works are under way. First, where a bank guarantee has been substituted for the retention, the project owner must check the period of validity of the undertaking and the way it can be called, which is often conditional on proof of reservations. Second, if the contract is terminated before acceptance, the fate of the escrowed retention must be settled expressly in the termination account, failing which the contractor will claim its return on the ground that there has been no acceptance.

Terminating the contract: sequence and consequences

Unilateral termination at one's own risk

Articles 1224 to 1226 of the Civil Code allow termination by notification from the creditor in the event of sufficiently serious non-performance. The sequence is strict: prior formal notice to perform within a reasonable time, express statement that failing this the creditor will be entitled to terminate the contract, then written and reasoned notification of termination, setting out the reasons for it. In urgent cases, the prior formal notice may be dispensed with, but the urgency will have to be shown.

Termination is at the creditor's own risk: if the court finds after the event that the non-performance was not sufficiently serious, the termination becomes a wrongful breach, entitling the contractor to compensation for its loss of profit. Hence the value of preceding termination with a technical record that can be relied on against the other side, ideally a court-ordered expert investigation already under way.

Where the contract contains a termination clause, in particular by reference to standard NF P 03-001, the contractual route is preferable: it frames the grounds, the time limits and the way the position is recorded, and reduces judicial uncertainty. It must be applied scrupulously, including its formal requirements.

The insurance consequence not to be missed

Article L. 242-1 of the Construction and Housing Code provides that structural damage insurance covers payment of the necessary repairs where, before acceptance, after an unsuccessful formal notice, the works contract concluded with the contractor is terminated for the contractor's failure to perform its obligations.

This provision is the main argument in favour of a termination that is formally beyond reproach. It makes it possible, for defects of a ten-year nature affecting the structural soundness of the work or making it unfit for its purpose, to call on the structural damage policy without waiting for acceptance and without depending on the contractor's solvency. The conditions are cumulative and are a matter of pure form as much as of substance: prior formal notice, its being unsuccessful, termination for non-performance. A termination pronounced on another ground, for example the contractor's insolvency alone, or a termination by agreement, closes this route.

The loss should at the same time be declared to the insurer in the form and within the time limits set by the policy, and the insurer should be joined to the court-ordered expert investigation. The declaration of loss and the response times imposed on the insurer are dealt with separately in our article on calling on the structural damage insurance cover.

Sequencing: the project owner's decision timetable

The strength of a file on defects before acceptance depends less on the seriousness of the defects than on the rigour of the chronology. The following order is the one that preserves the maximum number of options:

• document continuously: signed site meeting minutes, time-stamped photographs, letters from the project manager, records of findings by a commissaire de justice on the sensitive points before the work is covered over;
• check one's own contractual compliance, in particular the payment guarantee under Article 1799-1 and the regularity of the payments due;
• serve formal notice, citing Article 1222 of the Civil Code and the right to terminate;
• bring the matter before the judge in summary proceedings under Article 145 of the Code of Civil Procedure, joining all the parties involved and their insurers, and where appropriate seek a measure to restore the position under Article 835 of the Code of Civil Procedure;
• suspend, in a targeted and reasoned way, the payments corresponding to the non-conforming work;
• have the work carried out by a third party after a documented competitive process, seeking if necessary a judicial advance of the sums;
• terminate the contract in the contractual form or under Article 1226 of the Civil Code, and immediately draw the insurance consequences;
• take the protective measures that are useful over the contractor's assets before any collective insolvency proceedings are opened.

Conclusion

The period before acceptance is the window in which the project owner holds maximum leverage: it keeps the funds, it can replace a contractor without prior authorisation, it can terminate and open the structural damage insurance. This balance of power evaporates at acceptance, when only claims for compensation remain, against a debtor that is often insolvent. The classic mistake is to temporise in order to protect the programme, and then to accept the work with reservations out of weariness, in the hope that the completion warranty will solve the problem.

The position taken here is the opposite: treat defects before acceptance as immediate litigation, not as an incident on site. In concrete terms, before committing to any remedial expenditure, have a record that can be relied on against all the parties involved and their insurers established through summary proceedings for an expert appointment, and have the expert confirm that the replacement quotation is reasonable. It is that document, and not the formal notice, that will determine your ability to recover the sums committed.

Frequently asked questions

Can ten-year liability be relied on for defects noted before acceptance? No. Ten-year liability under Article 1792 of the Civil Code presupposes acceptance of the work, which is its starting point. Before acceptance, the project owner acts on the basis of the ordinary contractual liability of the contractor under a works contract (Articles 1231-1 et seq. of the Civil Code), coupled with an obligation to achieve a result as to conformity with the contract documents and good building practice. The limitation period is five years from knowledge of the facts (Article 2224 of the Civil Code).

Is the judge's authorisation needed to have the works carried out by another contractor? No, since Ordinance No. 2016-131 of 10 February 2016. Article 1222 of the Civil Code allows the creditor, after formal notice, to have the obligation performed itself within a reasonable time and at a reasonable cost, and then to claim reimbursement. Prior authorisation from the judge is required only to destroy what has been done in breach of the contract. Whether the cost is reasonable is reviewed after the event, hence the value of a documented competitive process.

Can the 5% retention of guarantee finance the remedying of defects before acceptance? In principle, no. Law No. 71-584 of 16 July 1971 earmarks the retention, capped at 5% of interim payments, for the performance of works intended to meet the reservations made at acceptance. Before acceptance, the relevant financial lever is the defence of non-performance under Article 1219 of the Civil Code, applied in a targeted and reasoned way to the interim statements. The fate of the escrowed retention must, however, be settled expressly in the account if the contract is terminated.

Can structural damage insurance be called on before acceptance? Yes, in one specific case. Article L. 242-1 of the Construction and Housing Code provides that the cover applies where, before acceptance, after an unsuccessful formal notice, the works contract is terminated for the contractor's failure to perform its obligations. The defects must be of a ten-year nature. The three conditions are cumulative: a termination by agreement or on another ground closes this route.

Which parties must be summoned in summary proceedings for an expert appointment under Article 145 of the Code of Civil Procedure? All those against whom the report will need to be relied on: the contractor holding the work package, the design and site project managers, the design office concerned, the technical inspector, the identified subcontractors, the supplier of the disputed product, and the liability insurers of each. An expert report cannot be relied on against a party that was not called to the proceedings, which means the measure has to be started again if the party actually responsible was not joined.

Does refusing acceptance expose the project owner to risk? Yes. The contractor may seek judicial acceptance where the work is in a condition to be accepted and the refusal is unjustified. Moreover, taking possession combined with payment of almost the whole of the price may amount to tacit acceptance, clearing the apparent defects. A refusal of acceptance must therefore rest on technically documented non-conformities, ideally recorded by a court-appointed expert.

Can suspending payments backfire on the project owner? Yes, on two grounds. On the one hand, a suspension that is disproportionate to the seriousness of the non-performance engages the project owner's liability under Article 1219 of the Civil Code. On the other hand, Article 1799-1 of the Civil Code requires the project owner to provide the contractor with a payment guarantee above the regulatory threshold; failing this, the contractor may, after an unsuccessful formal notice, lawfully suspend performance. Compliance with Article 1799-1 must be checked before any strategy of financial pressure.