Foundations for signing construction contract in Vietnam

Foundations for signing construction contract in Vietnam (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. Foundations for signing construction contract

Foundations for signing construction contract according to Article 9 of Decree 37/2015/ND-CP is as follows:

- Foundations for signing a construction contract include requirements for performance of the tasks as agreed by the parties, result of selection of contractor, negotiation and completion of the contract and other relevant foundations.

- As for EPC, EC and EP contracts, in addition to the foundations as specified in Clause 1 of Article 9 of Decree 37/2015/ND-CP, a feasibility study report or approved FEED is also required.

- As for Turnkey contracts, in addition to the foundations as specified in Clause 1 of Article 9 of Decree 37/2015/ND-CP, other foundations such as project performance duties, investment policies, approved feasibility study report are also required.

2. Content and quantity of work in construction contract in Vietnam

Content and quantity of work in construction contract in Vietnam according to Article 12 of Decree 37/2015/ND-CP are as follows:

- Content and quantity of work in a construction contract are subject matters and quantity of work that the employer signs with the contractor in accordance with scope of work and specified in the contract.  Scope of work is determined on the basis of an invitation to bid (ITB) or request for proposals, bid documents, negotiation minutes and other relevant legal documents. Depending on specific construction contract type, scope of work shall be determined as follows:

+ Contract for consultancy: Establishment of planning, investment project; designing and survey; project management; management of construction contract performance; construction supervision; examination and verification of design, cost estimates and other consulting works in activities of investment and construction;

+ Construction contract: Supply of building materials, human force, working machinery and equipment, and construction in accordance with approved design document;

+ Procurement contract: Supply of equipment; instructions on installation, use, trial operation, official operation, training and technology transfer (if any) in accordance with approved design document;

+ EPC contract: Engineering, procurement of materials and equipment, construction; training and instructions on operation, maintenance, repair work; technology transfer; on-load/off-load trial operation; other works in accordance with approved design document;

+ Turnkey contract: Establishment of investment project; engineering, procurement of materials and construction; training and instructions on operation, maintenance, repair work; technology transfer; on-load/off-load trial operation; handover of the works to the employer for operation; other works in accordance with approved project;

- Revision of quantity of work in the contract is prescribed in Article 37  of Decree 37/2015/ND-CP;

3. Requirements for product quality, acceptance and handover of work in construction contract in Vietnam

Requirements for product quality, acceptance and handover of work in construction contract in Vietnam according to Article 13 of Decree 37/2015/ND-CP are as follows:

- Requirements for construction product quality:

+ Construction product quality must meet requirements under the contract and conform to the quality requirements as prescribed by the law. The parties to the contract must reach a common agreement on national regulations and standards, technical instructions applied to the product.

+ As for imported equipment and goods, in addition to the provisions set out in Point a of Clause 1 of Article 13 of Decree 37/2015/ND-CP, provisions on origin must be applied.

- Acceptance and handover of finished works:

+ Agreements on procedures for acceptance and handover of the works by the parties to the contract must conform to the provisions set out in the Law on Construction Quality Control.

+ Works to be accepted and handed over; foundations for acceptance and handover; procedures, date of acceptance and handover of finished works; personnel involved in acceptance and handover; forms; signers, written records, reports must conform to the law provisions and be agreed by the parties to the contract.

+ Only products that meet quality requirements as prescribed in Clause 1 of Article 13 of Decree 37/2015/ND-CP are accepted and handed over.

+ As for the works to be inspected and accepted before moving on to other works, the contractor must make prior notice to the employer for inspection as prescribed by the Law on Construction Quality Control.

+ As for defective products (failing to meet requirements as prescribed in the contract), they must be remedied or eliminated otherwise.  Any party that commits the fault shall incur the entire cost for remedial work, re-appraisal and implementation progress.

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