Vietnam: When must the guarantee for construction contract performance be submitted? Where is the value of the guarantee for construction contract performance specified?
When must the guarantee for construction contract performance in Vietnam be submitted?
The construction contract performance guarantee is specified in Article 16 of Decree 37/2015/ND-CP as follows:
Guarantee for construction contract performance
1. Measures to guarantee construction contract performance such as payment of deposit, security or performance bond for fulfillment of obligations shall be undertaken by the contractor during the construction contract period.
2. Contract performance guarantee must be submitted to the employer before the contract takes effect as agreed by the parties on value, currency and guarantee method according to the forms accepted by the employer and valid until the contractor has fulfilled its obligations under the contract or after the employer has received maintenance bond with respect to a contract for construction and procurement of equipment. Particularly for a contract for consultancy, fixed rate contract, construction contract for target programs performed by households and construction contracts in the form of self-performing, a performance guarantee is not required.
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According to the above provisions, the contract performance guarantee must be submitted to the employer before the contract takes effect as agreed by the parties on value, currency and guarantee method according to the forms accepted by the employer and valid until the contractor has fulfilled its obligations under the contract or after the employer has received maintenance bond to a contract for construction and procurement of equipment.
Particularly for a contract for consultancy, fixed-rate contract, construction contract for target programs performed by households and construction contracts in the form of self-performing, a performance guarantee is not required.
Where is the value of the guarantee for construction contract performance in Vietnam specified?
The value of the guarantee for construction contract performance in Vietnam is specified in Clause 4 Article 16 of Decree 37/2015/ND-CP as follows:
Guarantee for construction contract performance
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4. Value of contract performance guarantee and guarantee method are prescribed in the invitation to bid or request for proposals. Level of performance guarantee is determined within 2% - 10% or higher but not exceeding 30% of the contract value and approved by competent person.
5. The contractor shall not be permitted to get back the contract performance guarantee in case of refusal to perform the contract right after the contract takes effect and other violations as prescribed in the contract.
6. The employer must return the contract performance guarantee to the contractor after the contractor has fulfilled obligations under the contract or has transferred to maintenance work and the employer has received a maintenance bond with respect to a construction contract covering construction and procurement of equipment.
Thus, the value of the contract performance guarantee and guarantee method are prescribed in the invitation to bid or request for proposals.
The level of performance guarantee is determined within 2% - 10% or higher but not exceeding 30% of the contract value and approved by a competent person.
What date is the time of the construction contract performance counted from?
The time of construction contract performance is specified in Article 14 of Decree 37/2015/ND-CP as follows:
Time and progress of construction contract performance
1. The time of construction contract performance is from the effective date of the contract till the parties have fulfilled their obligations under the signed contract.
2. The contractor shall establish a detailed implementation progress and make submission to the employer for approval.
3. The implementation progress must represent milestones of completion and handover of key works and products.
4. As for a construction contract for a large-scale bid package with a long implementation period, the implementation progress may be divided into individual stages.
5. As for a procurement contract, progress of equipment supply must represent milestones of handover of equipment of which quantity and types of equipment in each stage of handover must be specified.
6. As for an EPC contract or turnkey contract, in addition to each stage’s implementation progress, progress for each type of work (project establishment, engineering, procurement and construction) must be also established.
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Thus, the time of construction contract performance is from the effective date of the contract till the parties have fulfilled their obligations under the signed contract.
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