International Construction Law Review
ACCELERATION OF WORKS AND PENALTIES FOR DELAY IN FRANCE IN CONSTRUCTION PROJECTS
VIRGINIE A COLAIUTA *
Hughes Hubbard & Reed LLP, Paris
French law presents some peculiarities in relation to construction projects concerning the application of penalties for delay that may have a considerable impact on a subcontractor’s decision as to whether it would be more convenient to face the costs of accelerating the works in order to comply with the contract deadlines or to run the risk of paying liquidated damages and penalties.
After a short description of the French rules applicable to penalty and liquidated damages clauses in Section 1, we will analyse how these rules are applied by French courts (Section 2) in order to understand how the economics of acceleration of construction works are affected (Section 3).
1. The French rules applicable to penalty and liquidated damages clauses
Penalty clauses are defined by Articles 1226 and 1229 of the French Civil Code. While Article 1226 provides that “A penalty clause is a clause by which a person, in order to ensure performance of an agreement, binds himself to doing something in the event of non-performance”,1 Article 1229 stipulates that “A penalty clause consists of compensation for the damage which the creditor suffers as a result of the non-performance of the principal obligation. He may not claim the principal and the penalty at the same time, unless it was stipulated for a mere delay”.2
Penalty clauses must be respected by the parties because the agreed clauses in a contract have force of law between the parties, as is recalled in the first sentence of Article 1152 of the French Civil Code. Therefore, occurrence of the event provided for in a penalty clause renders the clause applicable and payment of the penalties cannot, in principle, be avoided.
In fact, Article 1152 of the French Civil Code specifies that:
* Virginie Colaiuta practises as counsel at the Paris office of Hughes Hubbard & Reed LLP. She is admitted to practise in Paris (France) and New York (USA).
1 The original French version of Article 1226 reads as follows: “La clause pénale est celle par laquelle une personne, pour assurer l’exécution d’une convention, s’engage à quelque chose en cas d’inexécution.”
2 According to the French original version of Article 1229:
“La clause pénale est la compensation des dommages et intérêts que le créancier souffre de l’inexécution de l’obligation principale.
Il ne peut demander en même temps le principal et la peine, à moins qu’elle n’ait été stipulée pour simple retard.”
Pt 3] Acceleration of Works and Penalties for Delay in France
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