At present, the price of building materials mainly made of steel has risen sharply
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Many construction enterprises and construction units are faced with the problem of how to deal with the impact of performing the contract, especially the construction enterprises
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For the construction contract, EPC contract, PPP contract and related construction engineering franchise contract signed by the construction enterprise, the construction enterprise can deal with the sharp rise in the price of steel and other building materials according to the relevant contract, and refer to the following main laws and regulations, Consider whether it is possible to negotiate or claim with the construction unit and other contract counterparts
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If necessary, either party may apply for mediation, arbitration or litigation to settle the relevant disputes
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Article 6 of the civil code, when civil subjects engage in civil activities, they should follow the principle of fairness and reasonably determine the rights and obligations of all parties
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Article 533 if, after a contract is formed, the fundamental conditions of the contract have undergone major changes which the parties could not foresee at the time of conclusion of the contract and which are not commercial risks, and continued performance of the contract is obviously unfair to one party, the adversely affected party may renegotiate with the other party; If the negotiation fails within a reasonable period of time, the parties may request the people’s court or arbitration institution to modify or terminate the contract
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The people’s court or arbitration institution shall modify or terminate the contract in accordance with the principle of fairness in light of the actual situation of the case
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2
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For relevant regulations of some local government departments, please refer to the link reading
.
3
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For relevant opinions of some local courts, please refer to the link reading
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4
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Ministry of housing and urban rural development Article 15 of the measures for the administration of general contracting of housing construction and municipal infrastructure projects (JSG [2019] No
.
12) issued by the national development and Reform Commission, the construction units and general contracting units shall strengthen risk management and reasonably share risks
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The risks undertaken by the construction unit mainly include: (1) the price of main engineering materials, equipment and labor fluctuates more than that agreed in the contract when compared with the base price at the time of bidding; (2) changes in the contract price due to changes in national laws, regulations and policies; (3) changes in project cost and construction period caused by unforeseen geological conditions; (4) changes in project cost and construction period due to the reasons of the construction unit; (5) changes in project cost and construction period caused by force majeure
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The specific content of risk sharing shall be agreed by both parties in the contract
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Construction units and general contractors are encouraged to use insurance means to enhance their risk prevention ability
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5
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Article 3 of the administrative measures for contract awarding and contract pricing of construction projects (Order No
.
16 of the Ministry of housing and urban rural development) the contract awarding and contract pricing of construction projects are formed by market competition under the macro-control of the government
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The valuation of project contract shall follow the principles of fairness, legality and good faith
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Article 14 both parties shall stipulate in the contract the method for adjusting the contract price in case of the following circumstances: (1) changes in laws, regulations, rules or relevant policies of the state affect the contract price; (2) the project cost management organization issues price adjustment information; (3) change of design upon approval; (4) the employer changes the approved construction organization design, resulting in an increase in costs; (5) other factors agreed by both parties
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6
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Appendix “A.2 price difference of cost information adjustment” in code for valuation with bill of quantities of Construction Engineering (GB 5005-2013) 7
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“The second method: price adjustment by cost information” in “11.1 adjustment caused by market price fluctuation” in general contract terms of construction contract (model text) (gf-2017-0201)..
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