Construction law in France.
A consortium is a temporary association of (construction) companies for the submission of a joint bid and/or the joint execution of a construction contract. A consortium exists only throughout the duration of the construction contract and does not have its own legal personality. It therefore does not exist as such vis-à-vis third parties. Each company enters into contracts in its own name. A consortium has no assets and, unlike a company, no so-called affectio societatis since its purpose is not to share profits and losses.
A consortium agreement must be entered into between its members before a joint bid is submitted or at least before the construction contract is signed. A default clause for one member – who may also be the leader of the consortium – should be included, containing conditions on how a new company will be jointly appointed to replace the original member.
Whatever form the consortium takes, it is advisable that a written agreement be concluded between the various consortium members. The French construction federation provides sample ARGE contracts online and free of charge: fntp.fr/outils/contratheque/groupement-momentane-dentreprises-gme
There are two forms of consortia in France: joint and severally liable consortia and non-jointly liable consortia.
In the non-jointly liable consortium, the work is divided into separate lots and each company is solely responsible for its own lot (or service). The consortium contract may, however, provide that the consortium leader is also jointly and severally liable or not jointly and severally liable vis-à-vis the client.
In case of a jointly and severally liable consortium, on the other hand, each company is jointly and severally liable to the client for the entire order and must therefore compensate for any default of a consortium partner. Joint and several liability also applies after acceptance of the work for any existing defects. In the case of a jointly and severally liable consortium, it is necessary for the consortium members to observe their own insurance policies, especially regarding the extension of the 10 year liability for third-party works.
If the contract does not contain a special provision, the consortium is generally not jointly liable, as joint and several liability is not presumed under French law (Art. 1310 Code Civil).
In case of public contracts, the contracting authority may prescribe a specific form of consortium if this is necessary for the proper execution of the contract and has also been specified in the award documents (Article 51-VII of the CMP).
Each consortium must appoint a consortium leader. This is usually the contractor with the largest lot. As a rule, the leader is entitled to payment for coordinating tasks of the consortium.
The leader of the consortium represents the other consortium members vis-à-vis the client. He is the client’s exclusive contact during the execution and performance of the contract.
In the event of bonuses or penalties, it is the role of the leader of the consortium to distribute them among the individual consortium members. His other rights and duties are provided for in the consortium agreement or standard NF P 03-001, insofar as the contract refers to it.
As a rule, the leader of the consortium also takes over the management of the construction sub-account (so-called compte prorata).
The leader of the consortium is advised to check internally whether the tasks are also covered by his insurance.
This article has been prepared for informational purposes only. It is not a substitute for legal advice addressed to particular circumstances. You should not take or refrain from taking any legal action based upon the information contained herein without first seeking professional, individualized counsel based upon your own circumstances. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
Information by ALARIS AVOCATS, English speaking lawyers in France (Paris) specialized in French labor law, especially any kinds of Social Plans, dismissal procedures and labor contract clauses.
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