Construction Contracts: Acceptance, Payment and Warranties

Overview

A completed building can raise several disputes at once: whether the client accepted it, whether the final invoice is payable, who bears an accidental loss, and which participants must repair defective work. Each question has its own triggering event and burden of proof. Occupation, delivery, acceptance and completion of the work can occur on different dates.

The contract of enterprise (contrat d'entreprise) supplies the contractual framework. For its formation and ordinary performance, see enterprise and service contracts. This lesson concentrates on acceptance and the special construction warranties. The payment discussion concerns the ordinary civil framework; public construction contracts may carry special payment and dispute rules.

Learning Objectives

• Distinguish completion, delivery and acceptance, and connect each event to payment, risk and time limits.
• Apply the separate conditions, defendants and effects of the five-year and one-year construction warranties.
• Build an evidence and remedies analysis that preserves reservations, correction opportunities and prescription.

Completion, delivery and acceptance

Acceptance of the work (réception de l'ouvrage) occurs when the client declares acceptance with or without reservation. Under art. 2110 CCQ, the client must accept at completion, when the work has been performed and is ready for its intended use. Acceptance involves the client's intention; delivery of the work (délivrance de l'ouvrage) concerns making it available or transferring possession. Completion of the work (fin des travaux) is an objective factual assessment of the agreed project.

Identify the entire contractual scope through the agreement, plans, specifications and authorized changes. Distinguish unfinished construction from defective construction already performed. A small omitted element of the agreed scope may prevent completion. Repairs required because completed work is deficient do not ordinarily postpone it. Neither the value of the remaining task nor the client's moving date supplies a universal test. The party relying on completion must prove it.

The principle of a single completion date concerns the overall project, including where the owner engages several contractors. The last day on which a particular trade attended the site does not automatically determine completion for every legal purpose. Temporary suspension must also be distinguished from abandonment: an anticipated resumption differs from an abandonment of the whole project attributable to the owner. These distinctions affect both construction warranties and preservation of construction security.

Acceptance can be express or tacit unless the contract requires a particular form. Payment and conduct may evidence acceptance, but their meaning depends on the surrounding circumstances. A certificate issued by a professional must be read with the professional's authority, attached deficiency list and any continuing dispute. Its title does not conclusively settle every question of acceptance and completion.

For work performed in successive phases, art. 2114 CCQ permits partial acceptance. The price of a phase is payable on delivery and acceptance of that part; payment creates a rebuttable presumption of acceptance unless it is merely a payment on account. A monthly progress invoice alone does not establish that the parties agreed to separately acceptable phases.

Worked example: possession before completion

Factual Scenario

Hypothetical. A private workshop project includes ventilation grilles and exterior paving. The client begins operating while both remain uninstalled and complains about crooked cabinetry.

Reservations and the final price

A reservation (réserve) identifies an apparent defect or poor workmanship that the client does not accept. A clear written deficiency list, photographs and prompt transmission reduce disputes over what was reserved. A general expression of dissatisfaction may have evidentiary value, but a precise description makes the correction obligation easier to prove.

An apparent defect is assessed against the examination a prudent and diligent client of comparable competence would make, without necessarily engaging an expert. Concealed construction and misleading assurances can change the analysis. A visible stain is not automatically knowledge of every concealed defect behind the wall; its significance depends on what a reasonable examination would reveal.

Acceptance without reservation ordinarily extinguishes recourse for apparent defects. Article 2113 CCQ expressly preserves recourse for non-apparent defects and poor workmanship. Acceptance must nevertheless be distinguished from a valid release of every possible claim: the five-year regime serves a public-order function and cannot simply be excluded in advance by a standard acceptance clause.

Under art. 2111 CCQ, acceptance normally makes the price payable. The client may retain a sufficient sum to satisfy reservations concerning apparent defects existing at acceptance until corrections are made. This holdback (retenue) must correspond to the reserved work. It is not a licence to freeze the entire unpaid contract balance or to include every hidden defect later discovered. Other defences to payment may exist, but they require their own legal foundation.

The contractor can defeat the holdback by providing sufficient security (sûreté suffisante) guaranteeing performance. Examine the amount, available beneficiary, enforceability and duration of the proposed security. An ordinary promise to return is not equivalent to effective security. Conversely, refusing adequate security merely to retain bargaining pressure risks an abusive exercise of rights.

If the parties disagree about the holdback and work to complete, art. 2112 CCQ provides for assessment by an expert designated by agreement or, failing agreement, by the court. The mechanism concerns assessment of the reserved work; it does not convert the expert's report into an enforceable judgment for the balance. A party seeking a monetary condemnation must obtain the appropriate judicial determination.

Worked example: a proportionate holdback

Factual Scenario

Hypothetical. At acceptance, a client owes $48,000 and reserves defective stair finishing and missing hardware. A supported correction estimate is $6,500.

Progress payments and construction security

For immovable work, art. 2122 CCQ permits agreed payments on account corresponding to work performed and materials needed. The contractor must provide the client with a statement of sums paid and still payable to participants and suppliers. The entitlement depends on the agreement and a substantiated account; the contractor cannot invent a progress-payment schedule after agreeing that the price is payable at acceptance.

The client's inspection right under art. 2117 CCQ covers progress, materials, work quality and expenses, exercised without obstructing performance. Requests for evidence of actual progress serve that right. Constant interference in construction methods can instead create delay or liability. The extent of appropriate inspection depends on the project and warning signs.

A second holdback protects against a construction legal hypothec (hypothèque légale de la construction). Under art. 2123 CCQ, the client may retain enough to discharge workers' claims and qualifying claims of other participants who notified their contracts, until proof of discharge is supplied. Sufficient security again defeats the statutory holdback. A release should identify the claim, amount and whether it is partial or final.

The hypothec and the personal debt remain distinct. Articles 2726 and 2728 CCQ identify eligible participants and restrict security for persons who did not contract directly with the owner to work, materials or services following written notice of their contract; workers receive a statutory exception to that notice requirement. An account supplied by the general contractor does not substitute for the subcontractor's own required notice. The owner should verify the actual creditor and the scope of each discharge before releasing the corresponding retained sum.

These protections do not automatically make the owner personally liable for a subcontractor's invoice or authorize direct payment with full discharge of the general contractor's debt. Consent, a relevant contractual mechanism or judicial determination may be necessary to avoid paying twice. The separate subcontracting lesson explains this three-party structure.

Loss before delivery

Article 2115 CCQ places loss before delivery on the contractor, subject to the client's fault or default in accepting the work. The normal rule is particularly significant where the contractor provides the materials. The client proves the contract, loss and absence of delivery; the contractor must establish an applicable ground for relief. Ordinary careful workmanship alone does not answer that allocation of risk.

When the client provides the property, the contractor is not liable for the loss unless it results from the contractor's fault or another breach. Liability for the lost property and entitlement to remuneration must still be separated. The contractor can claim the price of its work only in the cases specified by the provision: an inherent defect in the supplied property, a defect it could not detect, or the client's fault. The duty to warn about unsuitable client-supplied property under art. 2104 CCQ also matters.

For example, a client provides a structural component with a concealed flaw that a competent contractor could not detect. If that flaw causes loss before delivery, the allocation can differ from a project where the contractor supplied the component. If the contractor noticed obvious weakness and nevertheless installed it without warning, reliance on the client's supply of the component is insufficient. Preserve procurement records and evidence of inspection, warnings, delivery and any default in acceptance.

The five-year warranty for loss

Article 2118 CCQ addresses loss of an immovable work occurring within five years after completion because of a defect in design, construction, production or the ground. Its protective purpose supports a broad conception of loss of the work (perte de l'ouvrage): total collapse is unnecessary. Partial destruction, serious impairment of usefulness or a serious risk of loss can qualify. An isolated cosmetic defect ordinarily belongs to a different analysis.

The claimant must establish the qualifying immovable work, relevant construction relationship, loss or sufficiently serious risk, a causative defect and the five-year connection. The claimant benefits from a presumption of liability (présomption de responsabilité), not an exemption from proving the defect and its consequences. Technical evidence should explain the deficient system, applicable workmanship requirements and causal connection. It need not invariably identify the precise individual act responsible for every concealed failure.

This regime concerns immovable works beyond buildings, such as substantial retaining structures and drainage installations. The classification of incorporated equipment depends on the actual work. A mere sale of materials is not automatically construction participation. The supplier's separate quality obligations can remain relevant; see special regimes in sale law.

The protected owner may claim against the contractor and the architect, engineer or professional technologist who directed or supervised the work, as applicable, and against a subcontractor for work it performed. The inclusion of professional technologists must be respected when identifying defendants. Under art. 2121 CCQ, a professional who did not direct or supervise is responsible only for loss resulting from an error or defect in the plans or expert opinions supplied.

Article 2124 CCQ assimilates a real estate developer to a contractor for these rules. Examine whether the actor undertook construction or renovation on its property as part of a resale activity. A mere seller and an occasional owner-builder should not be classified solely from the fact that a building was sold. Project managers also require functional analysis of the undertaking, rather than automatic inclusion because of their title.

The protection follows the property to subsequent owners under art. 1442 CCQ. A former owner facing a claim can also retain a relevant recourse against construction participants. The absence of a direct agreement between owner and subcontractor does not defeat this statutory protection.

Solidarity (solidarité) allows the owner to seek the covered debt from a liable solidary defendant. It does not automatically give one contractor the owner's evidentiary presumptions against every other participant. Contribution and indemnity between defendants require analysis of their own contractual relationships and causal faults. A settlement releasing one participant can affect the others' recourses and the amount recoverable; the release must be assessed before it is signed.

Defences depend on the participant's role

Article 2119 CCQ differentiates the available grounds of exoneration (exonération). A professional must demonstrate that the defect does not arise from errors in supplied plans or expert opinions, or from deficient direction or supervision. Scope of professional services, disciplines involved and actual site activity therefore matter. A design-only retainer cannot simply be treated as full construction supervision.

The contractor's specified design defence concerns errors in the plans or expert opinions of a professional selected by the client. Establishing that the contractor tried hard is insufficient. It cannot excuse its defective execution merely by showing that the supervising professional failed to detect it. Responsibility for one's own construction methods remains central.

The subcontractor may establish that the defect resulted from the contractor's decisions or the professionals' plans or expert opinions. That defence is read with the subcontractor's own competence: knowingly following a direction contrary to proper workmanship does not necessarily excuse performance. A defect confined to an unrelated trade is different from one to which the subcontractor contributed.

All participants may rely on qualifying decisions imposed by the client concerning the ground, materials, subcontractors, experts or methods. They must prove an imposed decision and causal connection, taking account of their warning obligations. A client's aesthetic preference or routine approval is not automatically technical interference. An external cause, exceptional event or abusive use likewise requires actual proof that it explains the loss; ordinary seasonal conditions do not become irresistible events merely because damage occurred.

Worked example: leaking walls in year four

Factual Scenario

Hypothetical. Four years after completion, recurring infiltration reveals defective flashing throughout a building envelope and a documented risk of extensive deterioration.

The one-year warranty for poor workmanship

Article 2120 CCQ covers poor workmanship (malfaçon) existing at acceptance or discovered within the following year. Apparent deficiencies must be reserved. The protected defect can be minor or aesthetic: proving threatened collapse or substantial loss of use is unnecessary. The client must nevertheless establish a departure from the promised work or proper workmanship, rather than a preference for a different result. Proving covered poor workmanship triggers a rebuttable presumption; the owner need not independently establish each constructor’s fault.

The contractor, relevant supervising or directing professionals, including the professional technologist, and subcontractor for its own work are bound jointly. Joint liability (responsabilité conjointe) limits each debtor to its share; art. 2120 does not itself confer the solidarity of art. 2118 CCQ. Identify the responsible participants and support the proposed allocation instead of assuming that one solvent defendant must answer for everyone's shares.

This warranty is supplementary rather than of public order in the same sense as the five-year regime. A relevant contractual limitation and proof of diligent, faultless supervision can therefore matter. That does not establish the validity of every exclusion imaginable or erase other obligations. Read the clause's scope and the rest of the contractual liability framework before concluding that a claim disappears.

The two warranties can be pleaded where classification is uncertain, without double recovery. A localized sealing defect discovered after eight months may support the annual warranty. Extensive defects threatening the integrity of the entire envelope may support the five-year regime if its conditions are proved. Repair cost alone does not decide the classification.

Correction opportunities and separate clocks

A demand putting the debtor in default (mise en demeure) and an opportunity to inspect and correct are particularly significant before replacing defective work at the debtor's expense. The annual-warranty authorities distinguish correction costs from consequential damage already caused. For the five-year regime, arguments about default by operation of law do not justify routinely depriving participants of a chance to observe or repair. Urgency or another exception must be established on its facts. See performance of obligations.

Maintain distinct calendars. Article 2116 CCQ generally connects contractual recourses between the parties with completion, including reserved work. Article 2118 uses five years after completion for covered loss; art. 2120 uses acceptance and the following year for poor workmanship. Neither warranty period is itself the general prescription (prescription) period for bringing proceedings.

Articles 2925 and 2926 CCQ ordinarily require a three-year prescription analysis, with gradual or late injury measured from its first legally relevant manifestation. A covered failure in year four does not automatically mean the action must be filed by the fifth anniversary, and a failure in year one does not permit waiting until year five. Nor is every hidden defect guaranteed for eight years: manifestation within the applicable warranty period and timely proceedings are separate requirements.

If poor workmanship first appears after the annual warranty, ordinary contractual recourse may remain available, with its own proof and prescription analysis. Correction attempts, acknowledgments or negotiations require careful assessment; informal discussions should never be assumed to suspend time. Separate default notices and timely proceedings against jointly liable parties may be necessary. Ending the contract raises further consequences addressed in termination of enterprise and service contracts.

Practice Checklist

• Identify the contractual scope, participants and distinct completion, delivery and acceptance dates.
• Record apparent deficiencies precisely, preserve reservations and substantiate the amount retained.
• Check progress-payment agreements, participant statements, notices, releases and offered security.
• Match each defect to the five-year warranty, annual warranty and any ordinary contractual remedy.
• Prove the defect, consequences, timing and defendant's role; anticipate role-specific defences.
• Allow inspection and correction where required, and calculate prescription separately for every claim and defendant.