Types of invalid construction contracts and the practical distinction between subcontracting and affiliation

In essence, the fundamental reason for the formation of affiliation is the separation of “name” and “reality” of the affiliated person.

However, the affiliated construction will usually directly lead to the invalidity of the construction contract of the construction project.

Subcontracting still has the distinction between legal and illegal, while the contractor’s subcontracting behavior is completely not protected by law, and subcontracting itself is completely illegal.

(1) Violation of the mandatory provisions of the relevant construction market access system 1.

The scope of work involved is different.

Subcontracting usually takes place after the subcontractor obtains the right to contract, while affiliation generally means the intention to borrow qualifications before or at the same time as the contract is concluded by the affiliated person.

An unqualified actual constructor contracts projects in the name of a qualified construction enterprise.

Affiliation means that the affiliated person contracts the whole project in the name of the affiliated person.

During the affiliated construction, due to the existence of name borrowing behavior, the external performance is the contractual relationship between the Employer and the affiliated person; In the subcontracting behavior, the subcontractor generally implements the behavior in its own name, and the external performance is the relationship between itself and the counterpart.

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If the subcontracting is invalid, it will not affect the effectiveness of the contract between the Employer and the Contractor.

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(4) The practical distinction between subcontracting and affiliate behavior 1.

(2) Violation of the mandatory provisions of the bidding system for construction projects, Projects that are wholly or partly funded by state-owned funds or financed by the State, as well as projects that use loans or aid funds from state organizations or foreign governments, fall within the scope of projects that must be subject to tender.

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At the same time, if the survey, design, construction, supervision and procurement of important equipment and materials related to engineering construction within the scope of the above specified projects meet certain standards, the bidding procedures must also be performed.

The Provisions on Projects Subject to Bidding issued by the National Development and Reform Commission has made clear the above-mentioned projects subject to bidding, which are “projects wholly or partly invested by state-owned funds or financed by the state” and “projects using loans and aid funds from state organizations or foreign governments”.

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Regarding subcontracting, from the perspective of behavior mode, subcontracting is to assign all the construction tasks undertaken to a third person for construction, or to divide the project into several units for construction.

According to the provisions of Article 11 and Article 12 of the Administrative Measures for the Determination, Investigation and Punishment of Illegal Acts of Construction Contracting and Contracting, illegal subcontracting specifically includes the following situations: (1) The contractor subcontracts its contracted projects to individuals; (2) The general construction contractor or specialized contractor subcontracts the project to a unit without corresponding qualifications; (3) The general construction contractor subcontracts the construction of the main structure of the project within the scope of the general construction contract to other units (except for the steel structure project); (4) The professional subcontractor subcontracts the non labor operation part of the professional project it has contracted; (5) The specialized operation contractor subcontracts the contracted labor services; (6) In addition to the labor operation cost, the professional operation contractor also calculates the cost of major construction materials, large and medium-sized construction machinery and equipment, and major revolving materials.

The problem of illegal subcontracting means that the contractor transfers part of its rights and obligations to a third party, but different from the general transfer of contractual rights and obligations, the contractor does not therefore exempt its contractual obligations to the subcontracting part.

The time of occurrence of the two is different.

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On the invalidity of bidding (III) The construction contract signed by the contractor with others due to subcontracting or illegal subcontracting of construction projects shall be deemed invalid based on the provisions of Article 791 of the Civil Code, which violates the mandatory provisions of the project subcontracting management system, and for the purpose of prohibiting subcontracting and illegal subcontracting.

The contractor who has not obtained the construction enterprise qualification or contracted projects beyond the qualification level, according to the relevant provisions of the Provisions on the Administration of Construction Enterprise Qualification, the construction enterprise qualification is divided into three series: general construction contracting qualification, professional contracting qualification, and construction labor service qualification.

After the affiliated person undertakes the project by borrowing the qualification, subcontracting and other situations may occur, while the contractor does not have the basis for re attachment after subcontracting the project.

Subcontracting may be either to subcontract the whole project or to subcontract the whole project separately after dismemberment.