Construction warranty requirements in Vietnam

Construction warranty requirements in Vietnam (Internet image)

1. Construction warranty requirements in Vietnam

Construction warranty requirements in Vietnam are specified in Article 28 of Decree 06/2021/ND-CP:

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

- 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 Article 28 of Decree 06/2021/ND-CP.

- 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 Article 28 of Decree 06/2021/ND-CP.

- 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.

- 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:

+ 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;

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

+ 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.

- 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.

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

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

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

+ 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 Clause 7 of Article 28 of Decree 06/2021/ND-CP.

2. Liabilities of entities involved in construction warranties in Vietnam

- During the validity period of warranty for a construction work, when detecting any damage or defect, the investor must, and the owner or the manager or the user of that construction work must report to the investor to, request the construction contractor or the equipment supply contractor to implement warranty procedures.

- The construction contractor and equipment supply contractor shall have the burden of discharging warranty obligations to the work they perform on their part after receiving the warranty claim from the investor, the owner or the manager or the user of the construction work with respect to any damage occurring during the warranty period, and bearing all costs associated with the warranty claim payments.

- The construction contractor or equipment supply contractor shall have the right to refuse to take warranty responsibilities in cases where damage or defect is caused through no fault of their own or due to force majeure events prescribed under the construction contract.

In case damage or defect is caused through the contractor's fault but the contractor does not carry out their warranty obligations, the investor shall have the right to use the warranty sum to hire another organization or individual to perform their warranty obligations.

The investor, the owner or the manager or the user of a construction work shall be responsible for complying with regulations on operation and maintenance of the construction work in the course of operation and use of such work.

- The investor shall be responsible for inspecting and testing the implementation of the warranty obligations by the construction contractor and the equipment supply contractor.

- Certifying the completed warranty for construction works:

+ Upon expiry of the warranty period, the construction contractor and the equipment supply contractor shall make a report on completion of implementation of warranty obligations and send it to the investor.

The investor shall be responsible for certifying the completion of implementation of the warranty obligations for the construction work to the contractor in writing and refunding the warranty sum (or releasing the letter of guarantee having equivalent value from the bank) to the contractors in case where results of inspection and testing of warranty performance of the construction contractor or the equipment supply contractor in Clause 4 of Article 29 of Decree 06/2021/ND-CP are satisfactory;

+ The owner or the manager or the user of that construction work must take part in granting the certificate of completion of warranty for the construction work to the construction contractor or the equipment supply contractor at the investor’s request.

- The construction survey contractor, the construction design contractor, the construction contractor, the construction equipment supply contractor and other relevant contractors shall be responsible for the quality of the work performed on their part even after expiry of the warranty period.

- For housing construction works, contents, requirements, responsibilities, forms, values and warranty periods must comply with the housing law.

(Article 29 of Decree 06/2021/ND-CP)

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