Tuesday 8 February 2022

Key points of construction contracts for construction projects

1. pay attention to reviewing the requirements of contract bidding and bidding, and the qualifications of the main body of the contractor

(1) for large-scale national infrastructure construction, public utilities, state-owned capital investment, government investment projects, and international organizations such as world bank loan projects, bidding must be passed.

(2) interpretation on issues concerning the application of law in the trial of cases involving disputes over construction contracts: five types of contracts are found to be invalid according to law: (1) the contractor has not obtained the qualification of the construction enterprise or exceeded the qualification level; (2) the actual builder without qualification borrows the name of the qualified construction enterprise; 

(3) the construction project must be tendered but the bidding is not conducted or the winning bid is invalid; 

(4) the contractor illegally subcontracts the construction project; (5) the contractor illegally subcontracts the construction project.

therefore, the qualification review of the contracting entity can prevent the final validity of the contract. in practice, when the lawyer modifies the construction contract, the two parties to the contract mostly go through the stage of mutual exploration in the early stage, but it still needs to be analyzed from the perspective of the specific contract characteristics.

2. pay attention to the review of the scope of project contracting

the overall situation is relatively concise; the notes are consistent with the content of the bidding documents, the contract drawings, and the bill of quantities.

including: civil engineering, water supply and drainage engineering, electrical engineering, fire hydrant engineering, fire sprinkler engineering, hvac engineering, weak current engineering (including intelligent system embedded pipes, boxes, box shell parts), etc.

3. pay attention to the establishment sign indicating the date of commencement

the clarification of the start date of the project is of great significance to the determination of the construction period.

general indication: the date of commencement of construction shall be subject to the date of commencement of construction issued by the contract issuer, the supervising party, or the supervision.
the actual start date is inconsistent with the agreed date: the actual start date shall prevail (confirmed by the start order, etc.);

the date of the construction permit and the actual date of construction are inconsistent: the date of the construction permit shall prevail.

4. pay attention to the order in which the contract documents are composed

first of all, it should be marked: in the former priority; second, for supplementary agreements, it should be noted that it is consistent with the validity of the main body of the contract.

5. pay attention to reviewing the setting of the authority of the supervising engineer and the contractor to dispatch the engineer

for engineer instructions that may cause major changes such as extension of construction period, project quality, and contract validity, it may be agreed that it needs to be approved by the contractor or contractor to take effect.

(1) clarify the scope of the engineer's authorization;

(2) for those beyond the scope of the engineer's authorization, the contracting party shall confirm it.

6. pay attention to reviewing the agreement on safe and civilized construction

generally, it is agreed that the contracting party shall bear the burden, but in order to protect the interests of the contracting party, a bottom clause may be agreed, such as: the contracting party shall bear all losses due to the safe and civilized construction problems caused by the contracting party.

7. pay attention to the agreement on the extension of the construction period

(1) the reason for the extension of the construction period, in addition to the provisions of force majeure, for the extension of the construction period caused by the change of the project content, the increase in the construction period, the design change, the payment of the project payment, the government directive (water and power outages), the underground materials and other factors, the agreed standard is used as the basis for determining whether the extension of the construction period is constituted;

(2) procedural agreement on the extension of the construction period: the contracting party shall report in writing to the contracting party for approval and supervision approval within a certain period of time. an "as deemed" clause could be added. (deemed clause: if the contracting party does not reply within the agreed period of time, it shall be deemed to be recognized.) )

8. pay attention to the conditions and procedures for concealed projects and intermediate acceptance

(1) procedure: "in accordance with the relevant provisions of the state, province, city and county." the contractor notifies the supervising engineer and the contractor's representative in writing before self-inspection and acceptance in the concealment or intermediate. the construction of important parts such as waterproofing and outdoor decoration should be modeled first, and the construction can be carried out after acceptance by the contractor and on-site supervision. etc.

(2) there are specific agreements in the general clauses, and the acceptance requirements of major nodes such as "plus or minus zero and cap" can also be clarified in the contract.

9. pay attention to the way to determine the contract price

there are generally three ways.

(1) adopt a fixed-price contract. pay attention to the risk ranges included in the agreed contract price, such as: "market changes in steel prices (8%)". pay attention to the calculation method of risk costs, such as: the contract stipulates that the total price of the project includes all the contents of the project quantity, and the contractor does not include the project in the unit price or the total price for any reason, the contractor has no obligation to increase the payment, and believes that the project has been included in the general contract price. when the project is completed and settled, only the change part and the material price difference adjustment part are calculated, and the quotation, reserve price and winning price are no longer re-checked.

(2) adopt an adjustable price contract. contract price adjustment method: the amount of works within the scope of bidding is calculated according to the actual calculation, the fixed amount is calculated, and the total price before tax is lowered. design changes and on-site visas are jointly approved by the director and the on-site engineer of the contractor, and the project changes or visa adjustments are single items during construction

the change of a single item of the yuan or visa above the yuan is adjusted at the time of completion of the final account, and the amount of work for the visa or change is reduced according to the corresponding float rate stipulated in the special provisions.

(3) adopt cost plus remuneration contract. there are not many ways to use this approach.

10. pay attention to the payment method of the project progress

(1) method: node image progress, proportional; engineering quantity, proportional.

(2) according to the agreement of node payment, the contracting parties will agree according to the characteristics of the contract. the lawyer reviews the comprehensive progress of the project and the matching of the payment, the pressure of the advance ratio, and the continuity and science of the capital investment in the project process.

11. pay attention to reviewing the agreement on engineering changes

planning and design changes that have not been approved by the plan and approved by the design; the contractor principle does not make changes; but in practice, changes need to be made.

confirmation process: due to the project change, the amount of work or the content of the work is increased or decreased, after the change occurs, the contractor must submit a written report to the engineer, the engineer approves the written report and reports to the contractor for approval, and the written report is confirmed by the contractor and stamped with the official seal, which can be used as a valid visa to adjust the contract price and be paid at the time of project settlement. if the contractor fails to report within the time limit, it shall be deemed that it does not involve an increase in the cost of the project. the design change must provide a notice of engineering change issued by the contractor or entrusted by the contractor to the design unit after approval by the contractor, otherwise it is not regarded as a design change.

during the construction period, the change and adjustment of a single item shall not be calculated within the yuan, and the change of the single item of the yuan or above shall be adjusted at the time of completion of the final account.

12. pay attention to the review of the agreement on completion acceptance and settlement

program setup for this phase:

(1) acceptance process (four main bodies plus quality inspection station);
(2) project delivery;
(3) delivery of information (deemed to be clauses, details of handing over information);
(4) settlement of completion (time, deemed terms).

the focus is on the qualifications of the subject of acceptance, rectification measures and responsibility in the case of unqualified quality, the submission time and supplementary requirements of settlement information. note that as a contractor, do not forget to add: after the settlement documents are submitted, if the contract issuer does not audit them within the agreed time, it is deemed to recognize the settlement information.

13. points of attention in the review process of liability for breach of contract of construction contract

(1) clarify the specific connotation of the performance bond (or letter of guarantee): under what circumstances is the deduction, the effective expiration time of the letter of guarantee, the time of the refund of the deposit and the interest agreement.

(2) penalties for delay in construction period: deduction of security deposit, liquidated damages and liquidated damages for the project payment and total price.

(3) penalties for late payment of project payment: if the contractor fails to pay the project payment on time, it shall bear the interest during the delay in performance period in accordance with the loan interest rate stipulated by minmin bank from the date of overdue.
liquidated damages: the proportion of the extension pass can be agreed.

(4) agreement on the right of priority to be reimbursed.

(5) agreement on the delivery of the project and the data: any objection to the settlement of the project between the contractor and the contractor shall be resolved through arbitration or litigation, but regardless of whether it occurs or the liability of the dispute, it shall not be the defense of the contractor's exercise of the project transfer, project acceptance, cooperation with the project filing and the transfer of project information. if the above dispute is confirmed to be the fault of the contractor, the contractor shall bear the corresponding responsibility (right of retention).

(6) agreement on quality disputes: the establishment and identification of intermediate bodies for the identification of quality problems. assumption and procedure of the burden of proof. a third party can be agreed: the quality department of the district location.

(7) the agreement on the warranty deposit: the length of the warranty period, the way in which the warranty payment is returned and the issue of interest payment.

(8) agreement on the responsibility and punishment methods in the process of safe and civilized construction.

(9) agreement on illegal subcontracting and affiliation of the project: mainly penalties. subcontracting or illegal subcontracting of the project is not permitted, and if the contract issuer discovers that the contractor has subcontracted or illegally subcontracted in violation of the provisions of this article, it has the right to immediately terminate the contract. the contractor shall bear all the liability in accordance with the corresponding penalty clauses of this agreement for quality and duration, and shall bear a liquidated damages of 10% of the total list price of the project. if the loss of the contract issuer is caused, the contractor shall also bear the direct and indirect economic and reputation compensation liability for damage to the reputation of the house sales caused by the rescission of the contract and the forced re-bidding of the contractor. however, this agreement provides for subcontracting by the contractor.

(10) determination of project warranty liability: handling and cost borne by the contractor without warranty.

14. review of the agreed validity of the time and place of the contract

when signing and sealing, when the performance bond is paid (with effective conditions), etc.; the place where the contract is signed, the location of the project.

15. review of the agreement on the channels and locations of dispute resolution

choice of litigation and arbitration; location of the project, place of contract signing, location of plaintiff, location of contractor or contract issuer, third party.

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