Hanoi-Vietnam: What is the lawfull construction contract?

Construction contracts must be concluded based on the following principles:

- 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;

- At the time of concluding, the contractor must meet the professional and operational capacity conditions as prescribed by the construction law:

+ For joint venture contractors, the division of work volume in the joint venture agreement must match the operational capacity of each member in the joint venture;

+ For foreign main contractors, there must be a commitment to hire domestic subcontractors to perform the project work when domestically available contractors meet the package requirements.

- The investor or the investor's representative may conclude contracts with one or more main contractors to execute the work.

In cases where the investor concludes contracts with multiple main contractors, the content of these contracts must ensure consistency and synchronization to guarantee the project's progress, quality, and investment efficiency;

- General contractors and main contractors can conclude contracts with one or several subcontractors, but these subcontractors must be approved by the investor. These subcontractor contracts must be consistent and synchronized with the main contract concluded with the investor. General contractors and main contractors are responsible to the investor for the progress and quality of the contracted work, including the work undertaken by subcontractors.

- The contract price shall not exceed the winning bid price or the result of negotiations and discussions, except for additional volumes beyond the scope of the package as permitted by the Authorized Person.

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Parties must adhere to the contract based on the following principles:

- Comply with the commitments in the contract regarding the scope of work, quality requirements, quantity, type, duration, method, and other agreements;

- Be honest, cooperative, and lawful;- Not infringe upon the interests of the State, community, and the legitimate interests of other organizations and individuals.

The language used in the construction contract must be Vietnamese. In cases where foreign parties are involved in the construction contract, the languages used shall be Vietnamese and another language agreed upon by the contracting parties.

Legal basis: Construction Law 2014, Decree 59/2015/ND-CP.

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