BELGIUM Law and Practice Contributed by: Pieter Puelinckx, Yves Moreau, Donald Krols and Astrid Laga, Linklaters
7.4 Management of Schedule-Related Risk Contractual agreements generally address the consequences of delays attributable to the architect/contractor, including late delivery pen - alties, time extensions, contractor/architect sub - stitution or termination. Contracts often exempt the architect/contractor from liability for third- party caused delays and address force majeure events by excluding or granting employer indem - nification only if the delay extends past a certain timeframe. For residential properties, the Breyne Act pro - vides that the compensation must be at least equivalent with the property’s standard rental value upon completion. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Construction agreements often stipulate that contractors must provide a bank-guaranteed performance bond to ensure work completion. The conditions for releasing or reducing the bond are negotiable, but typically involve reaching milestones (eg, a half release at provisional deliv - ery, and the other half at final delivery). Alterna - tive guarantees like parent company guarantees, letters of credit, performance guarantees, and insurance policies may also be negotiated. In cases where the Breyne Act apply (for residential properties), securities must be provided by the contractor, the scope of which varies between accredited and non-accredited contractors. 7.6 Liens or Encumbrances in the Event of Non-Payment Construction and architect agreements usu - ally include a default interest clause for late payments. Architects and contractors can also withhold performance of their services in case of default of payment. They have also privileged
stability engineer (and potentially other techni - cal study contractors) are liable for hidden or apparent defects affecting the structural sound - ness of the building. This liability starts from the construction’s delivery, typically final delivery, but agreements often stipulate that it will start from provisional delivery. This safeguard also applies to future owners since the ten-year liability is linked to the prop - erty itself, rather than to the individual buyer or employer. The aforementioned division between provision - al and final delivery is mandatory if the Breyne Act applies, ie, for agreements concerning resi - dential buildings to be built or under construc - tion. In that case, the warranty period should entail at least one year. Constructions involving technical installations, such as solar panels or a cogeneration installa - tion, will usually also benefit from contractually stipulated performance guarantees ensuring, for example, a minimum output or functionality dur - ing an agreed period of time. The draft Book 7 of the Civil Code maintains that in a construction contract, the client’s accept - ance of the completed work results in the trans - fer of ownership of the good. The ownership of materials supplied by the contractor transfers to the client as they are incorporated into the good over which the client holds ownership or usage rights. A key new feature introduced by the draft bill is the provision that risk does not transfer with ownership but upon delivery. This change aligns with common practice in contrac - tor agreements.
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