What is construction warranty according to the law in Vietnam?

What is construction warranty according to the law in Vietnam?

Pursuant to Clause 17 Article 2 of the Decree 06/2021/ND-CP stipulating following regulations:

Construction warranty means the contractor's commitment to become liabilities to mitigate and correct, within a certain period of time, damages and defects that may occur during the period of operation and use of a construction project.

What is construction warranty according to the law in Vietnam? - image from internet

What are construction warranty requirements in Vietnam?

Pursuant to Article 28 of the Decree 06/2021/ND-CP stipulating construction warranty requirements in Vietnam:

1. Construction contractors and equipment supply contractors shall be responsible to investors for the warranty for the works they perform on their part.

2. In the construction contract, the investor must agree with the contractors involved in the construction work on the rights and responsibilities of the parties regarding the construction warranty; period of warranty for the construction work, equipment, technological equipment; warranty method and form; warranty coverage; custody, use, and refund of warranty expenses, collateral, pledged property or other forms of guarantee having equivalent value. The above contractors shall only be entitled to refund of the warranty expenses, collateral, collateral, pledged property or other forms of guarantee after the expiration of the warranty period, and obtaining the investor’s confirmation of discharge of warranty liabilities. For construction works using public investment capital or state capital other than public investment capital, monetary warranty or letter of guarantee for warranty issued by banks may be accepted. The warranty period and coverage shall be specified in Clauses 5, 6 and 7 of this Article.

3. Depending on the specific conditions of each construction work, the investor may agree with the contractor on a separate warranty period for one or several construction items, construction or equipment installation bids in addition to the overall warranty period for the entire construction project as prescribed in Clause 5 of this Article.

4. The period of warranty for construction works in progress that have quality-related defects or incidents that have been repaired and remedied by the contractor may be extended on the basis of agreements between the investor and the construction contractor before the pre-commissioning test thereof.

5. The warranty period for new or renovated or upgraded construction works or projects shall start from the date of the investor’s pre-commissioning test in accordance with regulations and shall be regulated as follows:

a) Not less than 24 months for special-grade and grade-I construction works using public investment capital or state capital other than public investment capital;

b) Not less than 12 months for construction works at other grades using public investment capital or state capital other than public investment capital;

c) The warranty period for construction works using other capital which can be determined with reference to the provisions of Points a and b of this Clause.

6. The warranty period for construction equipment, technological equipment shall be determined under the construction contract but not shorter than the warranty period as prescribed by the manufacturer and shall be calculated from the date of the test of completion of equipment installation and operation activities.

7. For construction works using public investment capital or state capital other than public investment capital, the minimum warranty coverage shall be regulated as follows:

a) 3% of contract value with respect to special-grade and grade-I construction works;

b) 5% of contract value with respect to construction works at the remaining grade;

c) The warranty coverage for construction works using other capital which can be determined with reference to the minimum warranty coverage prescribed in Points a and b of this Clause.

Best regards!