What are principles of signing and performing construction contracts in Vietnam? Shall a fine up to VND 40 million be imposed on failing to use Vietnamese language in construction contract?
Principles of signing and performing construction contracts in Vietnam
Based on Article 138 of the Law on Construction 2014, the regulations are as follows:
"Article 138. General Regulations on Construction Contracts
1. A construction contract is a civil agreement made in writing between the contracting party and the contractor to carry out part or all of the work within construction investment activities.
2. Principles of concluding a construction contract include:
a) Voluntariness, equality, cooperation, compliance with the law, and social ethics;
b) Ensuring sufficient funds for payment as agreed in the contract;
c) Completing the selection of the contractor and concluding the contract negotiation process;
d) In the case where the contractor is a consortium, a consortium agreement is required. Members of the consortium must sign and stamp (if any) the construction contract, unless otherwise agreed by the parties.
3. Principles of executing a construction contract include:
a) Contractual parties must adhere to the commitments regarding the scope of work, quality requirements, quantity, type, time, method, and other agreements;
b) Honesty, cooperation, and compliance with the law;
c) Not infringing on the interests of the state, the community, and the lawful interests of organizations and individuals.
4. The language used in the construction contract is Vietnamese. For a construction contract involving a foreign party, the language used is Vietnamese and another language agreed upon by the contracting parties.
5. Construction contracts must be concluded and executed in accordance with this Law and related legal regulations.”
The conclusion and execution of construction contracts must comply with the principles mentioned above.
What are principles of signing and performing construction contracts in Vietnam? Shall a fine up to VND 40 million be imposed on failing to use Vietnamese language in construction contract?
When will a construction contract take effect?
Based on Article 139 of the Law on Construction 2014:
"Article 139. Effectiveness of Construction Contracts
1. A construction contract takes effect when it satisfies the following conditions:
a) The person signing the contract must have full civil act capacity and proper authority as prescribed by law;
b) Ensure the principles of concluding construction contracts as stipulated in point a, clause 2, Article 138 of this Law;
c) The contractor must have sufficient operational capacity and construction practice capacity as prescribed by this Law.
2. The effective date of a construction contract is the date of contract signing or another specific date agreed upon by the contracting parties.”
Therefore, a construction contract must meet all the mentioned conditions to be effective. The effective date of the construction contract is the date of signing the contract or another date as agreed by the parties.
What are penalties for failing to use Vietnamese language in construction contract for projects utilizing public investment, non-public investment state capital?
Based on Article 19 of Decree 16/2022/ND-CP, the regulations are as follows:
"Article 19. Violations of regulations on construction contracts applied to projects using public investment capital, non-public investment state capital, PPP projects, and finalizing construction investment capital.
1. A fine ranging from 30,000,000 VND to 40,000,000 VND for failure to use Vietnamese in a construction contract as prescribed.
2. A fine ranging from 80,000,000 VND to 100,000,000 VND for one of the following acts:
a) The contract price exceeds the winning bid price or the result of contract negotiation and agreement (except for additional volumes outside the package allowed by the investment decision maker);
b) Adjusting the contract without conforming to procedures, authority, or conditions for adjusting the construction contract;
c) The advance payment exceeds the stipulated percentage or advances without the required advance guarantee;
d) Paying the construction contract not in accordance with the number of payments, payment periods, payment times, or payment durations stipulated in the contract unless otherwise agreed by the parties;
dd) Finalizing or liquidating the construction contract later than the stipulated time.
3. A fine ranging from 100,000,000 VND to 120,000,000 VND for late preparation of construction investment capital settlement documents for the approval of the investment decision-maker from the date the project is signed off for completion acceptance, handed over for operation, and use.
4. Remedial measures:
a) Mandatory use of Vietnamese when signing construction contracts as prescribed for violations stipulated in clause 1 of this Article for ongoing contracts;
b) Mandatory compliance with the winning bid price when the contract price exceeds the winning bid price or the result of contract negotiation and agreement for ongoing contracts as stipulated in point a, clause 2 of this Article;
c) Mandatory adjustment of the contract for conformity for ongoing contracts as stipulated in point b, clause 2 of this Article;
d) Mandatory recovery of extraordinary advance payments or full recovery of advance payments to the investor's account for ongoing contracts as stipulated in point c, clause 2 of this Article;
đ) Mandatory execution of payment, settlement, or liquidation of the contract as stipulated in point d and point đ, clause 2 of this Article;
e) Mandatory completion of construction investment capital settlement documents within 01 month and submission for approval by the investment decision-maker for violations stipulated in clause 3 of this Article.”
Thus, based on the violation, the administrative penalty for each case is determined according to the regulations mentioned above. The act of not using Vietnamese in construction contracts for projects using public investment capital will be fined from 30,000,000 VND to 40,000,000 VND.
In addition to administrative penalties, the remedy measures will be decided based on the specific violation type as mentioned.
Note: The above administrative penalty regulations apply to organizations committing administrative violations. For individuals, the administrative penalty will be half of that imposed on organizations.
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