Is a construction contract considered a civil contract or a commercial contract? When is the effective date of a construction contract in Vietnam?
Vietnam: Is a construction contract considered a civil contract or a commercial contract?
Pursuant to Clause 1, Article 138 of the Law on the Construction 2014, there are provisions as follows:
General provisions on construction contracts
1. Construction contracts are civil contracts established in writing between principals and contractors to perform in part or wholly the work in construction investment activities.
2. The principles of signing construction contracts include:
a/ Voluntariness, equality, cooperation, non-violation of law and social ethics;
b/ Assurance of adequate funds for payment according to contractual agreement;
c/ Having completed the selection of contractor and concluded the process of contract negotiation;
d/ If the contractor is a partnership of contractors, there must be a partnership agreement. The partners shall sign and append their seals (if any) to the construction contract, unless otherwise agreed by the parties.
3. The principles of performance of construction contracts include:
a/ The contractual parties shall properly implement their commitments in the contract regarding the scope of work, quality requirements, quantity, category, schedule, methods and other agreements;
b/ Honesty, cooperation and lawfulness;
c/ No infringement upon the interests of the State and community and lawful interests of other organizations and individuals.
4. Language used in construction contracts is Vietnamese. For construction contracts with the participation of foreign parties, the languages used therein are Vietnamese and another language as agreed upon by the parties.
5. Construction contracts shall be signed and performed in accordance with this Law and relevant laws.
Thus, construction contracts are civil contracts established in writing between principals and contractors to perform in part or wholly the work in construction investment activities
Construction contracts in Vietnam (Image from the Internet)
When is the effective date of a construction contract in Vietnam?
Pursuant to Article 6 of Decree 37/2015/ND-CP, there are provisions as follows:
Validity and legality of construction contract
1. A construction contract shall become legally effective when it meets the following conditions:
a) Persons who participate in signing a contract must obtain adequate legal capacity;
b) Meet the principles for contract signing as prescribed in Article 4 hereof;
c) Form of a contract is in writing and signed by representative of the parties to a contract according to the law. In case either of the parties is an organization, such party shall sign its name and affix stamp according to the law.
2. The effective date of a contract is the date when it has been signed (affixed with stamp if any) or other specific times as agreed in the contract and the employer has received performance bond issued by the contractor (for a contract with provisions on performance bond being specified).
3. Legality of construction contract:
a) A construction contract that has become effective shall be the highest legal foundation that the employer, contractor and other related parties have the obligations to perform;
b) A construction contract that has become effective shall be the highest legal foundation for settling dispute between the parties. Any dispute that is not yet agreed by the parties to the contract shall be settled on the basis of relevant law provisions;
c) Regulatory agencies and agencies that perform controlling, allocation, provision of capital, investigation and auditing, and other relevant agencies shall perform their functions and duties as defined without encroachment on rights and interests of the parties in reliance on terms and conditions of the effective construction contract.
Thus, the effective date of a contract is the date when it has been signed (affixed with stamp if any) or other specific times as agreed in the contract and the employer has received performance bond issued by the contractor (for a contract with provisions on performance bond being specified).
Is the contractual price permitted to exceed the bid price in Vietnam?
Pursuant to Clause 4, Article 4 of Decree 37/2015/ND-CP, there are provisions as follows:
Principles for signing construction contract
Principles for signing construction contract must conform to Clause 2, Article 138 of the Law of Construction No. 50/2014/QH13 and ensure the followings:
1. At the time of signing, the contractor must meet conditions for practice qualification and performance qualification as prescribed in the Law on Construction. As for partnership contractor, division of work quantity in the partnership agreement must be based on performance qualification of each member of the partnership. As for foreign main contractor, an undertaking to hire domestic sub-contractor to perform the tasks under the contract must be included when such sub-contractor is capable of meeting requirements of the bid package.
2. The investor or its representative is permitted to sign a contract with one or more main contractors for the performance of tasks. In case the investor signs contracts with multiple main contractors, the content of these contracts must ensure uniformity and comprehensiveness during the performance of the tasks under the contract to meet schedule, quality and efficiency of the investment project
3. General contractor or main contractor is permitted to sign contracts with one or multiple sub-contractors but such sub-contractors must be accepted by the investor. All these sub-contractors must be in uniformity and agreement with the main contractor signed with the investor. General contractor or main contractor must be responsible to the investor for schedule, quality of the undertaken tasks including the tasks performed by sub-contractors.
4. Contractual price is not permitted to exceed the bid price or result of negotiation on construction contract except the quantity generated outside scope of the bid package permitted by competent persons.
Thus, contractual price is not permitted to exceed the bid price or result of negotiation on construction contract except the quantity generated outside scope of the bid package permitted by competent persons.
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