03 new construction contract templates applied from April 20, 2023 in Vietnam

03 new construction contract templates applied from April 20, 2023 in Vietnam (Internet image)

1. General provisions on construction contracts in Vietnam

In Article 138 of the Construction Law 2014, general provisions on construction contracts are as follows:

- Construction contracts are civil contracts established in writing between principals and contractors to perform in part or wholly the work in construction investment activities.

- The principles of signing construction contracts include:

+ Voluntariness, equality, cooperation, non-violation of law and social ethics;

+ Assurance of adequate funds for payment according to contractual agreement;

+ Having completed the selection of contractor and concluded the process of contract negotiation;

+ 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.

- The principles of performance of construction contracts include:

+ 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;

+ Honesty, cooperation and lawfulness;

+ No infringement upon the interests of the State and community and lawful interests of other organizations and individuals.

- 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.

- Construction contracts shall be signed and performed in accordance with the Construction Law 2014 and relevant laws.

2. 03 new construction contract templates applied from April 20, 2023 in Vietnam

Thus, 03 new construction contract models applied from April 20, 2023 include:

- The form of construction consultancy contract is in Appendix II attached to Circular 02/2023/TT-BXD used for the type of consulting contract to perform the work of making feasibility study reports, construction surveys, construction design work, and construction supervision.

- The form of construction contract is in Appendix III to Circular 02/2023/TT-BXD.

- The EPC contract form in Appendix IV of Circular 02/2023/TT-BXD is used for package contracts. In case of applying the forms of contract price according to fixed unit price, adjusted unit price, or contract price according to combined price, the parties shall base themselves on the provisions of law and Circular 02/2023/TT-BXD to amend and supplement the terms of the EPC contract form to establish the contract.

3. Instructions for using 03 new construction contract templates from April 20, 2023 in Vietnam

Article 7 of Circular 02/2023/TT-BXD guides the use and application of 03 new construction contract forms:

- Form of construction contract published together with Circular 02/2023/TT-BXD for organizations and individuals to consult and apply in the establishment and management of contract performance for construction bidding packages, ensuring the content of the construction contract as prescribed in Clause 1, Article 141 of the Construction Law 2014.

- The form of construction contract published together with Circular 02/2023/TT-BXD is the contract between the investor and the contractor. In cases where the principal is a general contractor or main contractor, the parties shall study and apply the necessary contents of this contract form to establish and manage contract performance.

- For simple small-scale contracts, other types of construction investment consulting contracts, and other mixed contracts, the parties refer to and apply the construction contract templates announced together with Circular 02/2023/TT-BXD to adjust, amend, and supplement the terms of the contract form to establish the contract.

- When using the construction contract form published together with Circular 02/2023/TT-BXD, in order to negotiate and sign a construction contract, the parties shall base themselves on the specific requirements and conditions of the bid package or project and provisions of Decree 37/2015/ND-CP as amended in Decree 50/2021/ND-CP, other provisions of the law and guidance in Circular 02/2023/TT-BXD for implementation. The content of the contract must specifically agree on the following contents:

+ Specifying the payment term, contract performance guarantee time, time limit for replying to documents, contract termination time, and similar cases.

+ In case the contractor is a joint venture contractor, the contract performance security and advance payment guarantee must be agreed upon in accordance with law.

+ Specifying the currency and form of payment in the contract is not contrary to the requirements in the bid documents or the provisions of the law on foreign exchange.

+ In case the contract is in the form of an adjusted unit price, it is necessary to agree on the method of adjusting the contract price, the source of price data, and the price basis for the adjustment of the contract, which is not inconsistent with the bidding documents and construction contract law.

+ Depending on the nature and conditions of the bid package, adjust and supplement the contract contents accordingly.

Circular 02/2023/TT-BXD takes effect on April 20, 2023.

Do Thanh Long

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