When the construction contract is invalid, how to determine the scope of the management fee claimed by the actual constructor?

In the construction contract disputes of construction projects, there are a large number of cases in which the actual constructors ask for project funds

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In these cases, there are often problems of whether and how much the enterprise management fee should be given

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In view of the above problems, the people’s court has formed relevant guiding opinions in the trial process

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Now our lawyers will analyze the above-mentioned problems in combination with relevant cases in various places for readers’ reference

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1、 What is enterprise management fee? Enterprise management fee is composed of all kinds of management and operating expenses within the scope of the enterprise, including the salary, office expenses, travel and transportation expenses, inspection and test expenses, depreciation, maintenance and occupation expenses of fixed assets, interest expenses of working capital, taxes, labor protection expenses, staff education expenses, trade union expenses, etc

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2、 When the actual contractor is an individual contractor, can he claim the enterprise management fee? In reality, many actual constructors are not enterprises, and because they do not have the corresponding enterprise qualification, their claims on enterprise management fees are not recognized by the employer, the subcontractor or the subcontractor in the process of recovering the project funds

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So in this case, should the enterprise management fee be given or not? We will explain it through the following cases【 Case 1] (2018) Supreme People’s Procuratorate No

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183, civil judgment of retrial of construction contract dispute of Ningxia Xinyue Construction Co., Ltd

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and the Supreme People’s Procuratorate of the people’s Republic of China【 Case information] on June 1, 2008, Ningxia Hengxing Real Estate Development Co., Ltd., the predecessor of Ningxia Yucheng Real Estate Co., Ltd

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(hereinafter referred to as Yucheng company), signed the “construction project construction contract” with Xinyue company, and contracted the project of 3, 5, 7, 8, 10 and 11 buildings of Ningjing garden to Xinyue company for construction

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On behalf of Xinyue company, song Changping of houxinyue company contracted the 7th and 10th buildings to Huamou and laimou, but both parties did not sign a written contract

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Huamou and laimou started construction in June 2008 and were completed and accepted in mid October 2009

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In the case of construction contract dispute between Xinyue company and Yucheng company, the project cost of “Ningjing garden 3, 5, 7, 8, 10 and 11 buildings” was appraised, and the judicial appraisal certificate of project cost was issued

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Among them: the enterprise charges for 7 and 10 buildings are calculated according to three types of enterprises and three types of projects; The project tax is calculated as 3.4126%; Among the project costs that can be determined, the project cost of 7 building is 4831674.23 yuan, the project cost of 10 building is 5224140.65 yuan, a total of 10055814.88 yuan, of which 1587094 yuan is charged by the enterprise (745094.43 yuan of 7 building includes 169303.16 yuan of direct project cost, 842000.03 yuan of 10 building includes 179923.61 yuan of direct project cost)

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Among the cost of the disputed part of the project, the over haul distance of 7-storey masonry reinforcement, structural column ring beam planting reinforcement and commercial concrete is 213159.20 yuan, and the over haul distance of 10-storey masonry reinforcement planting reinforcement and commercial concrete is 268061.41 yuan

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After that, the case was settled by mediation, and crescent company voluntarily gave up part of the project funds in dispute

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On July 13, 2011, Xinyue company sued Xingqing District People’s Court of Yinchuan City (hereinafter referred to as Xingqing District Court) for refund of 256293.06 yuan of overpaid project funds on the ground of Huamou and laimou overpaying project funds

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Xingqing District Court made (2011) xingminchu Zi No

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3618 civil judgment (hereinafter referred to as No

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3618 judgment), confirming that Huamou, laimou and Xinyue company unanimously recognized that the total cost of 7 and 10 buildings was 10055814.88 yuan, and the project payment was settled within the above price, The project payment owed by Xinyue company is 820887.72 yuan (the total project cost is 10055814.88 yuan – enterprise indirect cost is 1237867.23 yuan – Commercial Concrete payment is 902595 yuan – paid project payment is 6461236.72 yuan – tax is 428426.38 yuan – management fee is 204801.83 yuan)

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Accordingly, the court of Xingqing District rejected Xinyue company’s claim for refund of overpaid project payment

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Huamou and laimou now file a lawsuit to Yinchuan intermediate people’s court, demanding Xinyue company to pay 481220.61 yuan of disputed masonry reinforcement, planting reinforcement of structural column ring beam and commercial concrete over haul distance and 1237867.23 yuan of enterprise indirect cost in addition to 820887.72 yuan of project payment confirmed in No

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3618 judgment (which is not claimed in this lawsuit)【 Court reasoning] Yinchuan intermediate people’s Court: regarding the indirect fee collection by enterprises, crescent company knows that Huamou and laimou do not have the construction qualification, but illegally subcontract the project to Huamou and laimou for the actual construction, which is responsible for the invalidity of the contract

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Although Xinyue company is a contractor, it has not participated in the actual construction of the project

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It should not calculate the enterprise indirect cost that should be obtained by the actual construction party when it has collected the corresponding management fee

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Therefore, the Institute supports Huamou and laimou in demanding the enterprise indirect cost of 1237867.23 yuan

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Ningxia Higher People’s Court: the court of second instance held that Xinyue company, knowing that Huamou and laimou did not have the qualification of construction project, illegally subcontracted the project to Huamou and laimou for the actual construction, and was responsible for the invalidity of the contract; Although Xinyue company is a contractor, it has not participated in the actual construction of the project

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The project involved has been completed by Huamou and laimou, and has been delivered for use after completion acceptance; And Huamou and laimou have paid the enterprise management fee to Xinyue company as agreed

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Therefore, in this case, the indirect cost of 1237867.23 yuan requested by Huamou and laimou should be supported

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Supreme People’s Court: the court held that it was not improper for the original judgment to support the acquisition of enterprise’s indirect expenses by Huamou and laimou

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First of all, according to the relevant laws and regulations, the project price includes direct cost, indirect cost, profit, tax, etc

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Although the construction project subcontract in this case is invalid, the project involved is delivered for use after the completion acceptance

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Huamou and laimou, as the actual constructors, have the right to request the payment of the project price according to the law

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Secondly, the enterprise indirect fee includes the enterprise management fee

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Huamou and laimou have paid the enterprise management fee to Xinyue company according to the agreement

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It is unfair for Xinyue company to claim the enterprise indirect fee again

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Third, crescent company knows that Huamou and laimou do not have the construction qualification, but still illegally subcontract the project involved, which leads to the invalidity of the contract

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It also violates the principle of good faith that it refuses to pay the enterprise’s indirect fees on the ground that Huamou and laimou do not have the qualification

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In the original judgment, Xinyue company was required to pay 1237867.23 yuan of indirect expenses and interest to an enterprise【 [lawyer’s commentary] first of all, the project payment in the industry is actually the construction and installation cost in the project cost, and the composition of it is clearly stipulated in the relevant pricing norms or the construction project cost project composition and calculation norms issued by various regions

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The project cost is composed of labor cost, machinery cost, material cost, enterprise management cost, profit, fees and VAT

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Among them, the enterprise management fees and fees are the enterprise indirect fees described by the people’s court in the above case

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Secondly, according to the interpretation of the Supreme People’s Court on the application of law in the trial of construction contract disputes (1) and the provisions of the civil code of the people’s Republic of China, the construction contract of construction project is invalid, and the actual constructor has the right to claim the project funds according to the contract when the construction project quality is qualified.

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