There is no basis for terminating the contract on the grounds of the rise of material price, and asked the contractor to ensure the mobilization for construction on April 1, 2017.
On May 25, 2017, Zhuozhou blue * Grid Co., Ltd.
In the face of soaring material prices, should the construction party stick to the contract to continue construction or suggest a default stop loss? Conversely, if the price of materials falls sharply, should the employer stick to the contract or break the contract and make profits? The following real case may bring some thoughts.
On March 24, 2017, the law firm sent another letter to the contractor, saying that the Contractor’s forced unilateral termination of the contract has constituted a serious breach of contract, and the employer is unable to return the performance security, and reserves the right to investigate the losses caused to the employer by the breach of contract.
Therefore, the employer paid 1691319.63 yuan more for the project, which led to the delay of the construction period.
According to the guide price of Huai’an construction engineering materials recorded in Huai’an engineering cost management magazine published by Huai’an engineering cost management office, from August 2016 to April 2017, the overall price level of Huai’an steel was rising, but the average monthly increase was relatively stable, which was a gradual rising process.
On September 22, 2016, the employer and the contractor signed a construction contract for the construction project, with the contract price of 1414378.71 yuan.
On August 29, 2016, the contractor bid and won the bid, and the bid winning price was 1414378.71 yuan.
After that, both parties signed a construction contract for the project involved.
Employer: Xin * company contractor: Chen * company court of first instance: Huai’an qingjiangpu District People’s Court (2017) Su 0812 minchu No.
Therefore, the Contractor’s argument on the change of situation was not accepted.
8 in 2016, the employer discussed the “steel grating project of production workshop of reconstruction stem verification production line supporting project” External bidding.
After deducting 142000 yuan of performance bond paid by the contractor, the Contractor shall compensate the employer 858000 yuan.
Judgment of the court of second instance: maintain items 1 and 3 of the main text of civil judgment (2017) Su 0812 minchu No.
The contractor paid the performance security of 142000 yuan to the employer.) on March 19, 2017, the contractor sent a letter to the employer, saying that the market price of steel has increased by more than twice compared with that at the time of signing the contract, The employer is required to adjust the contract price to 2957394.99 yuan, and then the contractor starts to perform the contract, otherwise the contract is terminated, the employer is required to return the deposit of 142000 yuan, and is willing to accept a fine of 10000 yuan.
The pricing method of the project agreed in the contract is fixed unit price, and the rise of material price is the risk under the contract.
It is obviously unbearable to continue to perform at the original price of the contract, Therefore, his proposal to terminate the contract is a helpless move.
(article 3.7 of the contract stipulates that the Contractor shall provide performance security in the form, amount and period of 10% of the total contract price.
In the judgment of first instance, the employer appealed to the people’s Court of qingjiangpu District, Huai’an City on August 31, 2017.
The court of first instance only ordered the contractor to bear the default loss of 142000 yuan, which was obviously too low.
On March 27, 2017, the contractor sent a letter to the employer requesting to terminate the construction contract and return part of the performance security as appropriate.
Claim: rescind the construction contract of steel grating construction project of production workshop signed by both parties; The Contractor shall compensate the employer for the loss of 1850038.63 yuan (the price difference between the two tenders is 1691319.63 yuan, the construction delay is 70719 yuan, and the lawyer’s fee is 88000 yuan).
Since the project involved is the steel grating project of the production workshop, and the main material required for the project is steel, the price of steel has increased nearly twice from the date of signing the contract to the agreed commencement date, and the degree of change has far exceeded the reasonable expectation of normal people.
Due to the Contractor’s failure to perform the contract, the employer invited another bid for the project involved, and the bid winning price was 3105698.34 yuan.
The contractor unilaterally terminates the contract.
The court of first instance held that if a 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 continued performance, remedial measures or compensation for losses.
In accordance with the principles of fairness and good faith, the court of second instance made appropriate adjustments to the losses due to the breach of contract by comprehensively measuring the reasons for the non performance of the contract, the fault of the parties, the strength of the contracting status of the parties, the consequences of losses and other factors, and decided that the contractor should compensate the employer 1 million yuan.
won the bid with a bid price of 3105698.34 yuan.
Other losses claimed by the employer shall not be supported due to insufficient evidence.
7343 civil judgment court of second instance: Huai’an intermediate people’s Court (2018) Su 08 Minzhong No.
After the signing of the contract involved in this case, the steel price rose, but the rise was a gradual evolution process, not a sudden change process that caught the market subject off guard.
On March 22, 2017, the employer entrusted a law firm to send a letter to the contractor, saying that both parties must perform their contractual obligations according to the contract.
Source: China referee network and case study of engineering cases.
The court of first instance ruled that the construction contract for the steel grating project of the production workshop of the reconstituted stem verification production line construction project of Jiangsu Xin * tobacco flake Co., Ltd.
7343 of qingjiangpu District People’s Court of Huai’an City and the burden of litigation costs, and revoke item 2; The Contractor shall compensate the employer for the default loss of 858000 yuan.
Brief introduction: due to the sharp rise in the price of main material steel, the contractor proposed to terminate the construction contract and refund part of the performance security as appropriate.
If the Contractor fails to perform its obligations in accordance with the contract and is at fault, it shall bear corresponding liabilities for breach of contract.
Reject other litigation claims of the employer.
After the final judgment is pronounced in the second instance, the contractor refuses to accept the judgment and applies to the higher people’s Court of Jiangsu Province for retrial..
The employer refuses to accept the judgment of first instance and appeals to the intermediate people’s Court of Huai’an City, Jiangsu Province.
The employer shall file a lawsuit.
Considering that the project involved is the steel grating project of the production workshop, and the main material required for the project is steel, the objective fact that the steel price has increased nearly twice by the commencement date agreed by both parties in the contract, and there is no evidence that the contractor deliberately fails to perform its obligations under the contract, combined with the provisions of the performance bond in the contract between both parties, At the discretion of the court of first instance, the Contractor shall compensate the employer for the default loss of 142000 yuan (offset with the performance security paid by the Contractor).
signed by the employer and the contractor on September 22, 2016 was terminated; The Contractor shall compensate the employer for the default loss of 142000 yuan (offset by the performance bond).
The employer believes that there is no basis for terminating the contract on the grounds of rising material prices and requires continued construction.
Due to the Contractor’s failure to perform the above contract, the employer again invited bids for the project involved.
It is also difficult for the contractor to foresee this at the time of signing the contract.
On March 21, 2017, the contractor sent a letter to the employer, saying that the contract could not be performed due to major changes in the market price of steel, and notified the employer to terminate the contract and return the deposit.
103 retrial Court: Jiangsu High Court (2020) Su minzai No.
The court of second instance held that the Contractor’s failure to perform its construction obligations as agreed in the contract constitutes a breach of contract and shall bear corresponding liabilities for breach of contract.
