The first people’s Court of the Supreme People’s Court: does the invalidity of the construction contract affect the exercise of the priority

Although the contractor has paid corresponding labor, he should get corresponding remuneration, otherwise it will violate the fairness concept of civil law; However, after the invalidation of the construction contract, the nature of the Contractor’s right to receive remuneration has changed.

Article 38 of the interpretation of the Supreme People’s Court on the application of law in the trial of disputes over construction contracts of construction projects (I) stipulates: “If the quality of the construction project is qualified, and the contractor requests that the price of the construction project be compensated preferentially with respect to the price of the project converted or auctioned, the people’s court shall support it.” this article clearly stipulates that the Contractor’s priority of compensation for the project price is related to the quality of the construction project, not directly related to the effectiveness of the contract.

It is no longer the agreed debt enjoyed according to the contract, but the right to obtain loss compensation according to law.

Even if the contract is invalid, it is still beneficial to determine that the contractor has the priority to be compensated for such expenses Promoting the protection of workers’ interests is in line with the legislative purpose of the construction project priority system.

This article is only for exchange and learning, and the edition right belongs to the originator.

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Is the exercise of the priority of compensation for construction projects affected by the effectiveness of the contract? Q: is the exercise of the priority of compensation for construction projects affected by the effectiveness of the contract? A: whether the exercise of the priority right to compensation of construction projects is affected by the effectiveness of the contract is a very controversial issue in the theoretical circle.

We tend to believe that the construction contract of the construction project is invalid and should not affect the exercise of the priority of compensation.

The agreed creditor’s right of construction project funds does not occur from the beginning with the invalidation of the contract, and the right of priority to compensation should not continue to exist; On the other hand, from the perspective of the legislative purpose of the system of priority of compensation for construction project funds, it hopes to ensure the realization of the Contractor’s agreed creditor’s rights by setting up a security interest.

In the invalid construction project contract, the above-mentioned relevant expenses have also been actually paid and should be paid by the employer.

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Another view is that if the construction contract of a construction project is invalid, but the project quality is qualified, the contractor may act in accordance with Article 793 of the civil code “The construction contract of the construction project is invalid, but if the construction project passes the acceptance, the contractor can claim the project price by referring to the agreement on the project price in the contract, so it naturally enjoys the priority of the project price.

This right is a legal right.

This is because if the construction contract is invalid, the agreement that the employer should pay the project payment shall also be invalid.

Editor’s note: This article is excerpted from the questions and answers on civil trial practice compiled by the first civil trial division of the Supreme People’s Court (Law Press, the first edition in July 2021).

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On the one hand, from the perspective of the right characteristics of the real right for security, as a kind of real right for security, the right of priority to compensation of construction project funds has the dependence on the main creditor’s right – construction project funds.

The legislative purpose of the priority of compensation of the construction project is Protect the interests of workers, because a considerable part of the project payment owed by the employer to the contractor is the wages and other labor expenses that the contractor should pay to the workers.

After the construction contract is invalid, the Contractor’s agreed creditor’s rights do not exist, and the priority of compensation guaranteed by the agreed creditor’s rights should not continue to exist.

One view is that the exercise of the priority of compensation for construction projects is affected by the effectiveness of the contract.

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