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This Interpretation is formulated in accordance with the "General Principles of the Civil Law of the People's Republic of China", the "Contract Law of the People's Republic of China", the ¡¡ãBidding Law of the People's Republic of China¡¡À, the ¡¡ãCivil Litigation Law of the People's Republic of China" and other laws as well as in combination with the civil trial practices, on the application of law for the trial of cases of dispute over contracts on undertaking construction projects. Article 1. Where a contract on undertaking a construction project is under any of the following circumstances, it shall be invalidated in accordance with Item (5) of Article 52 of the Contract Law: (1) The contractor has not been eligible as a construction undertaking enterprise or is in excess of the eligibility grade; (2) An ineligible actual construction undertaker works in the name of an eligible construction undertaking enterprise; or (3) The construction project must be under bid invitation but no bid is invited or the bid is invalid. Article 2. Where a contract on undertaking a construction project is invalid, but the construction project is inspected at the time of completion to be qualified, the contractor's request for payment of the construction cost by considering the contractual stipulations for reference shall be sustained. Article 3. Where a contract on undertaking a construction project is invalid, and the construction project is inspected at the time of completion to be unqualified, the matter shall be handled separately according to the following circumstances: (1) If the restored construction project is inspected at the time of completion to be qualified, and the contract letting party requests the contractor to bear the restoration expenses, such request shall be sustained; (2) If the restored construction project is inspected at the time of completion to be unqualified, and the contractor requests payment of construction costs, such request shall not be sustained. With respect to the losses arising from the fact that the construction project is unqualified, the contract letting party shall, if it has any fault, also bear its civil liabilities, accordingly. Article 4. Where a contractor illegally assigns the contract for a construction project or illegal sublets such contract, or an ineligible actual construction undertaker concludes a contract on undertaking a construction project with others in the name of an eligible construction undertaking enterprise, such an act shall be invalidated. The people's court may, in accordance with Article 134 of the General Principles of Civil Law, confiscate the illegal proceeds which have been obtained by the parties. Article 5. Where a contractor concludes a contract on undertaking a construction project in excess of the scope permitted by its eligibility grade, but obtains the suitable eligibility grade prior to the completion of the construction project, the request of the party concerned for treating the contract as invalid shall not be sustained. Article 6. Where the parties have contractual stipulations on the imprest or imprest interest, and the contractor requests refund of the imprest and the interest thereof pursuant to the contractual stipulations, such request shall be sustained, except that the stipulated rate for calculating the interest exceeds the coterminous interest rate for the same kind of loans, which is promulgated by the people's bank of China. Where the parties have no contractual stipulations on the imprest, the imprest shall be treated as construction cost in arrears. Where the parties have no contractual stipulations on the imprest interest, the contractor's request for the interest shall not be sustained. Article 7. Where a party concerned requests confirming that a contract on subletting the contract for labor services, which was concluded between a contractor legally eligible for labor services and a general contractor or subcontractor, is ineffective, with the reason that the assigned contract for the construction project violates legal provisions, such request shall not be sustained. Article 8. Where a contractor is under any of the following circumstances, the contract letting party's request for rescission of the contract on undertaking the construction project shall be sustained: (1) It explicitly expresses or implies by behavior not to perform the principal obligations in the contract; (2) The construction has not been completed within the period stipulated in the contract, and remains uncompleted within a reasonable period after notified by the contract letting party; (3) The quality of a completed construction project is unqualified, and the party concerned refuses to restore it; or (4) The contractor illegally assigns or sublets the contract for the construction project. Article 9. Where a contract letting party is under any of the following circumstances, thus causing the contractor to be unable to carry out the construction work, and the contract letting party does still not perform its obligations within a reasonable period after being notified, the contractor's request for rescinding the contract on undertaking the construction project shall be sustained: (1) It fails to pay the construction cost as stipulated in the contract; (2) The main building materials, construction components and parts, equipment it has supplied cannot meet the compulsory standards; or (3) It does not perform the assistance obligations as stipulated in the contract. Article 10. If, after the contract on undertaking a construction project is rescinded, the quality of the completed part of the construction project is qualified, the contract letting party shall pay the corresponding construction costs pursuant to the contractual stipulations; if the quality of the completed construction project is unqualified, the matter shall be handled by referring to Article 3 of this Interpretation. Where the contract is rescinded due to breach by one party, the party in breach shall indemnify the losses caused to the other party. Article 11. Where the quality of a construction project does not conform to the contractual stipulations due to the contractor¡¡¥s fault, and the contractor refuses to repair, reconstruct or rebuild the project, the contract letting party's request for reducing the construction cost shall be sustained. Article 12. Where a contract letting party is under any of the following circumstances, thus causing any defect to the quality of the construction project, it shall bear the liability for fault: (1) The design it provides contains any defect; (2) The main building materials, construction components and parts, equipment it has supplied or designated for purchase cannot meet the compulsory standards; or (3) It directly designates a subcontractor to undertake professional tasks of the project. Where the contractor has any fault, it shall also bear the liability for fault accordingly. Article 13. Where a construction project has not been inspected at the time of completion, but the contract letting party alleges its claim after its discretionary use on the ground that the quality of part of the project does not conform to the contractual stipulations, such claim shall not be sustained; however, the contractor shall bear civil liabilities for the quality of the ground engineering and the principal structure within the reasonable service life of the construction project. Article 14. Where the parties have any dispute over the actual completion date of a construction project, the completion date shall be determined separately in the following methods: (1) If the construction project has been inspected at the time of completion to be qualified, the date of inspection shall be the completion date; (2) If the contractor has submitted a report for inspection at the time of completion, but the contract letting party delays the inspection, the date when the contractor submits the report for inspection shall be the completion date; (3) If the construction project was not inspected at the time of completion, but the contract letting party uses the project without authorization, the date when the construction project is transferred to the contract letting party's occupation shall be the completion date. Article 15. Where, prior to the completion of a construction project, the parties have any dispute over the project quality, but the project quality is authenticated to be qualified, the authentication period shall be the extended period for undertaking the construction work. Article 16. Where the parties have contractual stipulations on the standard or method of pricing a construction project, the construction cost shall be settled pursuant to the contractual stipulations. Where the modification in design causes any change with the amount of construction work or quality standards of the construction project, and the parties fail to reach an agreement through negotiation on the changed portion of construction cost, they may settle the construction cost by considering the pricing method or standard announced by the local administrative department for construction at the time of conclusion of the contract on undertaking the construction project for reference. Where the contract on undertaking a construction project is effective, but the construction project is inspected at the time of completion to be unqualified, the construction cost shall be settled with Article 3 of this Interpretation considered for reference. Article 17. Where the parties have contractual stipulations on the rate of interest of the construction cost in arrears, the interest shall be paid pursuant to the contractual stipulations; if they have no such contractual stipulations, the interest shall be calculated on the basis of the coterminous interest rate for the same kind of loans, which is promulgated by the People's Bank of China. Article 18. The interest shall be calculated on the date when the construction cost is due. If the parties have no contractual stipulations on the time of payment or the contractual stipulations are not clear, the following dates shall be deemed as the time of payment: (1) the delivery date in case the construction project has been actually delivered; (2) the date of submission of the documents on settlement at completion in case the construction project has not been delivered; (3) the date when a party concerned brings a lawsuit in case neither the construction project has been delivered nor the construction cost has been settled. Article 19. Where the parties have any dispute over the amount of construction work, such amount shall be confirmed according to the written documents including the certification formed in the process of construction. If the contractor is able to prove that the contract letting party has consented to the carryout of construction, but is unable to provide the certification document to prove the occurrence of the amount of construction work, the actually occurred amount of construction work may be determined on the basis of other evidence provided by the parties. Article 20. Where the parties stipulate that the contract letting party shall be deemed to have ratified the documents on settlement at completion if making no reply within the stipulated period after receipt of the documents on settlement at completion, the matter shall be handled pursuant to the contractual stipulations. The contractor's request for settling the construction cost according to the documents on settlement at completion shall be sustained. Article 21. Where the contract on undertaking construction of a project, which was separately concluded between the parties regarding the same construction project, is inconsistent with the substantive contents in an archived bid-winning contract, the archived bid-winning contract shall be deemed as the basis for settling the construction cost. Article 22. Where the parties have stipulated to settle the construction cost at a fixed price, but one party requests authentication of the construction cost of the project, such request shall not be sustained. Article 23. Where the parties have any dispute over some of the facts in the case, only the disputed facts need to be authenticated, except that the scope of the disputed facts cannot be determined, or both parties request authentication of all the facts. Article 24. In case of any dispute over the contract on undertaking a construction project, the place where the construction is carried out shall be deemed as the place of contract implementation. Article 25. In case of any dispute over the quality of a construction project, the contract letting party may bring a lawsuit by considering the general contractor, the subcontractor and the actual construction undertaker as joint defendants. Article 26. Where the actual construction undertaker brings a lawsuit against the contract assignor or the illegal subcontractor, the people's court shall accept the lawsuit in accordance with the law. Where an actual construction undertaker makes its claims by considering the contract letting party as the defendant, the people's court may add the contract assignor or the illegal subcontractor as the party in the case. The contract letting party may only need to bear liabilities to the actual construction undertaker within the scope of the construction cost in arrears. Article 27. Where the maintainer fails to timely perform its maintenance obligations, thus damaging the building or causing any personal or property damage, the maintainer shall bear indemnity liabilities. Where both the maintainer and the building owner or the contract letting party have their faults for the damage to the building, they shall bear their respective liabilities accordingly. Article 28. This Interpretation shall come into force on January 1, 2005. This Interpretation shall apply to the cases of the first instance accepted after it has come into force. In the event that any judicial interpretation promulgated by the Supreme People's Court before this Interpretation comes into force is in conflict with this Interpretation, the latter shall prevail. |
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