The interpretation of the Supreme People’s Court on the application of law in the trial of construction contract disputes (1) (hereinafter referred to as the “new judicial interpretation”) was adopted by the 1825th meeting of the judicial committee of the Supreme People’s Court on December 25, 2020, and will be implemented simultaneously with the civil code from January 1, 2021
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The original “Reply of the Supreme People’s Court on the priority of compensation for construction project price” (FA Shi [2002] No
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16, hereinafter referred to as “the original reply”), and “interpretation of the Supreme People’s Court on the application of law in the trial of construction contract disputes” (FA Shi [2004] No
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14, Hereinafter referred to as “original judicial interpretation I”) and “interpretation of the Supreme People’s Court on the application of law in the trial of construction contract disputes (2)” (FS [2018] No
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20, hereinafter referred to as “original judicial interpretation II”) shall be repealed at the same time
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The new judicial interpretation mainly has the following changes: 1
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The situation of invalid construction contract is added
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According to the original judicial interpretation, the situation of invalid construction contract includes unqualified, borrowing qualification, exceeding qualification, bidding without bidding, bidding winning invalid, subcontracting, illegal subcontracting and signing contract with qualification invalid
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The new judicial interpretation has deleted the contents of “subcontracting, illegal subcontracting, invalid contract signing with qualification and illegal income of the parties”, and identified the subcontracting and illegal subcontracting as invalid
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2
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Adjust the treatment method when the construction contract is valid but the completion acceptance is not qualified
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According to the provisions of paragraph 3 of Article 16 of the original judicial interpretation 1, when the construction contract is valid but the completion acceptance is not qualified, the Contractor shall repair it and decide whether to pay for the project according to the repair situation
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In the new judicial interpretation, the settlement problem when the construction contract is valid but the completion acceptance is unqualified is adjusted to the liability for breach of contract, that is, “if one party fails to perform its contractual obligations or fails to perform its contractual obligations in accordance with the agreement, it shall bear the liability for breach of contract such as continuing to perform, taking remedial measures or compensating for losses.” 3
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To amend the settlement basis when multiple contracts are invalid, Article 24 of the new judicial interpretation stipulates that “if it is difficult to determine the contract actually performed, and the parties request to compensate the Contractor by referring to the agreement on project price in the final contract, the people’s court shall support it.” The settlement basis of the project in Article 11 of the original judicial interpretation II is revised from “settlement of the construction project price by reference to the actual performance contract” to “compensation to the Contractor by reference to the agreed discount of the project price in the actual performance contract”, And the “settlement of construction project price with reference to the last signed contract” is revised to “compensation to the contractor with reference to the agreement on project price in the last signed contract”
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4
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In the judicial practice, there are many disputes about the subject of the right, the conditions of exercise, the scope of compensation and the starting time of the exercise period of the priority right of compensation for the construction project price
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For the first time, the original reply made it clear that the Contractor’s priority of compensation is superior to mortgage and other creditor’s rights, and the original judicial interpretation II also made clear the content of the priority of compensation
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The new judicial interpretation clearly stipulates that “the priority of the Contractor’s construction project price is superior to the mortgage and other creditor’s rights”
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5
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Modify the conditions for the exercise of the Contractor’s priority of project price in decoration project
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The new judicial interpretation adds the premise of “decoration project has discount or auction conditions” when realizing the priority of compensation in decoration project, and removes the provision that “the employer is the owner of the building” in the original judicial interpretation II
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In practice, although the owner of the decoration project is not the owner of the building, but the owner has the right to dispose according to law and can be discounted or auctioned according to the nature of the building, the contractor of the decoration project should also have the priority of compensation for this part of the project price
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6
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Extend the period of priority of compensation for construction project to 18 months
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The original judicial interpretation 2 stipulates that the period of priority of compensation for construction project price is 6 months
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However, in the practice of construction projects, due to the delay of project settlement, the settlement period is extended, and the contractor often can not claim the priority of compensation within six months, resulting in the construction workers’ wages can not be paid in time
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The new judicial interpretation extends the period of the priority right to compensation to 18 months, which is in line with the characteristics of the performance of the construction project contract, and is conducive to ensuring the successful exercise of the Contractor’s priority right to compensation
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7
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The conditions for the actual contractor to exercise the right of subrogation are reduced
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Article 44 of the new judicial interpretation stipulates that “the actual contractor, in accordance with Article 535 of the civil code, brings a suit of subrogation because the subcontractor or illegal subcontractor is lazy to exercise the due creditor’s rights or the subordinate rights related to the creditor’s rights to the employer, which affects the realization of the due creditor’s rights, The people’s court shall support it
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” The scope of subrogation related to the due creditor’s rights is added, the proof standard of “cause damage to it” in the original judicial interpretation 2 is deleted, and it is reduced to “affect the realization of the due creditor’s rights”, which reflects the protection of the rights of the actual constructor
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Source: Guangzhou Arbitration Commission for more legal consultation in Jiangsu Province, please call lawyer Zhou Hui at 15262661895 [copyright notice]: text and text
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