That is, when the construction contract of the construction project is invalid, the “settlement clause” in the construction contract of the construction project is also invalid.
369), “construction project price settlement” (hereinafter referred to as “project price settlement”) refers to the agreement between the Employer and the Contractor or the actual constructor on the construction project contract price and the advance payment, progress payment The activities of project completion price settlement include dividing the construction process into construction periods according to time or progress nodes, and calculating, confirming and paying the price of the completed and undisputed quantities (including changes, visas, claims, etc.) within the period.
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The contents of the Settlement Agreement may involve the determination of the project price, the treatment of the remaining project price (including but not limited to the amount, time and method of project price payment), the liability for breach of contract of late payment of the project price, and some or all of the contents related to the settlement of project advance payment, project progress payment, and project completion price, It may be manifested as Settlement Agreement, Payment Agreement, Supplementary Agreement, Settlement List, Settlement Commitment, Confirmation Sheet, Statement of Account, Termination Agreement, Demobilization Agreement, Project Settlement, etc.
which are independent of the construction project contract.
1、 Article 567 of the Civil Code does not apply to invalid contracts; The construction contract of the construction project is invalid, and the “settlement clause” in the construction contract of the construction project is also invalid.
183) and the Interim Measures for the Settlement of Construction Project Price (CJ [2004] No.
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The latter is also the focus of this analysis.
According to the judgment of the Supreme Court, the “termination of rights and obligations of contract” in Article 567 of the Civil Code (Article 98 of the original Contract Law) includes many termination situations stipulated in Articles 160, 557, 528, 562 and 563 of the Civil Code, but does not include the situation of invalid contract.
according to the Ministry of Finance and the Ministry of housing and urban rural development In the Notice on Improving the Measures for the Settlement of Construction Project Price (CJ [2022] No.
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For the convenience of differentiation and reading, the settlement agreement embodied in the construction contract of the construction project is called “settlement clause”; The settlement agreement signed between the Employer and the Contractor or the actual constructor, which is independent of the construction contract of the construction project, is called the Settlement Agreement.
The meaning of “project price settlement” herein is consistent with the above provisions.
The “construction project price settlement agreement” (hereinafter referred to as the “settlement agreement”) herein refers to the agreement reached on the contract price of the construction project and the settlement of project advance payment, project progress payment and project completion price according to the contract.
Opinion of the First Civil Division of the Supreme Court: The invalidity of the construction contract of the construction project does not affect the validity of the Settlement Agreement.
2、 The Settlement Agreement is independent, and the construction contract of the construction project is invalid, which does not affect the effectiveness of the Settlement Agreement.
Based on the Civil Code, the Interpretation of the Supreme People’s Court on the Applicable Law in the Trial of Construction Contract Disputes and the cases of the Supreme Court, this paper analyzes how to determine the validity of the “settlement clause”, the “settlement agreement” and the “settlement commitment letter” issued unilaterally by the employer to the contractor or the actual constructor when the construction contract of the construction project is invalid.
The parties’ claim that the construction contract is invalid but the liquidation clauses therein are effective has no legal basis.
Reference case – (2020) Supreme Law Minshen No.
Therefore, the invalidity of the construction contract of the construction project does not affect the effectiveness of the settlement agreement..
The invalidity of the construction contract of the construction project does not necessarily lead to the termination of the contract relationship of the construction project The contract signed on the time of payment and liability for breach of contract not paid as agreed is invalid; Paragraph 1 of Article 793 of the Civil Code of the People’s Republic of China stipulates: “The construction contract of the construction project is invalid, but if the construction project passes the acceptance, the contractor may be compensated at a discount according to the agreement on the project price in the contract.” According to this paragraph, the construction contract of the construction project is invalid, but if the construction project passes the acceptance, the employer and the contractor shall determine the amount of the project price (the discount compensation) The agreement on the payment method and time is the right of the parties, the embodiment of the principle of voluntariness, and does not violate the mandatory provisions of the law.
Therefore, the agreement of the construction contract on the calculation method of the liquidated damages liability for late payment of project funds is not binding because the contract is invalid.
331 According to the opinion of the Supreme Court in the case, Article 567 of the Civil Code (Article 98 of the original Contract Law) stipulates that “the termination of the rights and obligations of the contract shall not affect the effectiveness of the settlement and liquidation clauses in the contract”, which does not cover the invalidity of the contract.
References – Minutes of the Third Judges’ Meeting of the First Civil Trial Chamber of the Supreme Court in 2022 (the 89th part of the Civil Trial Guidance and Reference) Opinions of the judges’ meeting of the First Civil Trial Chamber of the Supreme Court: The parties have the right to determine the rights and obligations after the contract is invalid by agreement.
