Late Payment Penalties in a Construction Contract: The CCAG Requires Their Inclusion in the Final Account

You have just built a house in Plougastel-Daoulas, and the project was six months late. Your contractor owes you late payment penalties, you know that. But how do you claim them? Must they be included in a specific document, or is a simple letter sufficient?

This was the question raised in a case decided by the Court of Cassation on 18 November 2009. An employer (the owner having the building built) had succeeded on appeal, but the High Court quashed the judgment: late payment penalties must appear in the final account, otherwise they are lost.

This decision is essential for all those who sign a construction contract, whether for an individual house, a rental building or a housing development. It reminds us of a simple but often overlooked rule: the final account is the key document that definitively determines the rights and obligations of the parties.

The facts: a story that happens every day

Mr X, a property owner in Plougastel-Daoulas, entrusted the construction of his house to a contractor. The contract provided for the application of the general administrative clauses (CCAG) applicable to public contracts, but the parties agreed to refer to it for this private contract. The project was delayed: delivery was scheduled for 18 months, but took 24 months.

The project manager (the architect or design office) drew up a final account, signed by the employer and notified to the contractor. This document summarised all amounts due: work carried out, variations, price revisions... But it mentioned no late payment penalties. The contractor accepted the account, partially, and paid the balance.

A few months later, Mr X turned against the contractor to claim late payment penalties, arguing that the CCAG did not require them to appear in the account. The Court of Appeal agreed with him: according to it, Article 13.41 of the CCAG does not require, on pain of forfeiture (loss of right), that penalties be mentioned in the account. The contractor appealed to the Court of Cassation.

The reasoning of the court — dissected

The Court of Cassation quashed the appeal judgment. Its reasoning is relentless: the CCAG provides that all operations arising from the performance of the contract are included in a final account. This account, drawn up by the project manager, signed by the person responsible for the contract (the employer) and notified to the contractor, is an indivisible whole: "no element can be isolated," the Court specifies.

In other words, late payment penalties are an integral part of the account. If they are not included, they are deemed to have been waived. And if the contractor accepts the account, even partially, he is bound by the accepted part. Here, the contractor had accepted the balance of the account, which amounted to acceptance of the absence of penalties.

The Court relies on Article 13.41 of the CCAG, which provides that the final account "is the subject of a single document" and that "its balance determined when the final account is drawn up determines the rights and obligations of the parties." This is a rule of crystallisation (definitive fixation): once the account is accepted, it cannot be revisited.

This decision is not a reversal, but a confirmation. The case law was already well established: the final account is a fundamental document in the life of the contract. The 2009 judgment reminds us of its scope with particular clarity.

What this changes for you — concretely

If you are an employer (owner having the building built), this decision requires absolute vigilance. When the project manager submits the final account to you, check that all late payment penalties are indeed included. If not, insist on their addition before signing. A concrete example: for a contract of €200,000 with a delay of 6 months and a penalty of 1/1000th per day (i.e. €200/day), this represents €36,000. Losing them would be dramatic.

For contractors, it is on the contrary a safety. If the final account does not mention penalties, you can consider that the employer has waived them. But be careful: if you accept the account, you are bound by its content. If penalties appear, you will not be able to contest them later.

For co-owners or syndics, the rule also applies to renovation contracts. Imagine a facade renovation in Guipavas: if the final account does not mention penalties for delay due to the company, the syndicate cannot claim them afterwards. The syndic council must therefore be particularly attentive when the works are taken over.

In any case, the time limit for challenging the account is generally 6 months from its notification. After this period, the account becomes final and the parties are irrevocably bound.

Four tips to avoid this type of dispute

• Require a detailed final account: when the works are taken over, ask the project manager for an account listing all items: works, variations, revisions, and especially late payment penalties. Check each line before signing.
• Never sign an account without having it checked: have the document reviewed by a professional (lawyer, chartered accountant) if the amount is significant. A hasty signature can cost you substantial sums.
• If penalties are absent, notify your reservations in writing: if the account does not mention penalties when the project was delayed, send a registered letter to the project manager and the contractor to point out the omission, and request a corrected account.
• Contractually provide for the method of calculating penalties: in your construction contract, include the penalty rate (e.g. 1/1000th of the total amount per day of delay) and the terms for their inclusion in the account. This will avoid any ambiguity.

Further analysis: related case law and developments

This decision is part of a series of Court of Cassation judgments that reinforce the essential nature of the final account. We can mention a judgment of 12 July 2007 (No. 06-11.288) which had already held that the final account definitively binds the parties for the elements it contains, unless contested within the time limits.

Conversely, a decision of 3 June 2009 (No. 08-10.526) had admitted that late payment penalties could be claimed outside the account if the contract expressly provided for it. But the 2009 judgment closes this loophole: as soon as the parties refer to the CCAG, the account is exclusive.

The trend of the courts is therefore clear: the final account is a closing document that definitively fixes the rights and obligations. The judges are very strict on compliance with the time limits for contestation and on the requirement to mention all elements of the contract.

For the future, this case law should be maintained, because it meets a need for legal certainty: to allow contractors to know their exact debt and to avoid late claims.

What you absolutely must remember

FAQ:

• Q: Can I claim late payment penalties if they do not appear in the final account?
  A: No, according to this Court of Cassation decision. If the account does not mention them, you are deemed to have waived them.
• Q: What should I do if the final account is incomplete?
  A: Refuse to sign it and notify your reservations in writing. Request a corrected account before the expiry of the contestation period (generally 6 months).
• Q: Does this principle apply to private contracts without CCAG?
  A: Yes, if the contract provides for the application of the CCAG. Otherwise, everything depends on the contractual clauses. It is advisable to explicitly provide for the obligation to mention penalties in the account.
• Q: Can the contractor contest penalties appearing in the account?
  A: Yes, but within the time limits provided in the contract (often 6 months). After this period, the account becomes final.
• Q: What is the risk if I sign an account without checking?
  A: You lose all right to claim sums not mentioned, even if they are due. Example: €36,000 in late payment penalties for a house in Plougastel-Daoulas.

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