Latest regulations on payment documents for construction contracts in Vietnam

Latest regulations on payment documents for construction contracts in Vietnam (Internet image) 

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

1. Latest regulations on payment documents for construction contracts in Vietnam

Payment documents for construction contract in Vietnam according to Article 20 of Decree 37/2015/ND-CP are as follows:

- Payment documents shall be established by the contractor in accordance with contract type, contractual price and other agreement in the contract. Payment documents (including forms) must be specified in the contract and confirmed by the employer. Payment documents include:

+ As for a lump sum contract:

++ Inspection and acceptance report on completed quantity with confirmations by the employer’s representative or consultant’s representative (if any) and by the contractor’s representative; such reports are the confirmation on fulfillment of the works, work items, quantity of work in accordance with scope of work to be performed under the contract without requirement for detailed confirmation of completed quantity.

++ Table of additional quantity value (if any) apart from the contract’s scope of work with confirmations by the employer's representative or consultant's representative (if any) and the contractor's representative;

++ Payment request from the contractor should represent the following matters: value of completed quantity under the contract, value of additional quantity (if any), subtraction of advanced amount, value stated in payment request after subtraction of these amounts with confirmations by the employer’s and contractor’s representatives.

+ As for contracts of fixed unit price:

++ Report on inspection and acceptance of actual completed quantity (increasing or decreasing versus the quantity set out in the contract) with confirmations by the employer’s representative or consultant’s representative (if any) and by the contractor’s representative;

++ Tabular calculation of value of works without unit price in the contract (if any) of which quantity and unit price for these works must be represented with confirmations from the employer’s representative or consultant’s representative (if any) and the contractor’s representative;

++ Payment request from the contractor should represent the following matters: value of completed quantity under the contract, value of additional quantity (if any), subtraction of advanced amount, value stated in payment request after subtraction of these amounts with confirmations by the employer’s and contractor’s representatives.

+ As for contracts of adjustable unit price:

++ Report on inspection and acceptance of actual completed quantity (increasing or decreasing versus the quantity set out in the contract) with confirmations by the employer’s representative or consultant’s representative (if any) and by the contractor’s representative;

++ Tabular calculation of unit price adjusted due to slippage in prices (or payment unit price) as agreed in the contract with confirmations by the employer’s representative or consultant’s representative (if any) and by the contractor’s representative;

++ Tabular calculation of value of works without unit price in the contract (if any) of which quantity and unit price for these works must be represented with confirmations from the employer’s representative or consultant’s representative (if any) and the contractor’s representative;

++ Payment request from the contractor should represent the following matters: value of completed quantity under the contract, value of additional quantity (if any), subtraction of advanced amount, value stated in payment request after subtraction of these amounts with confirmations by the employer’s and contractor’s representatives.

+ Time-based contract:

++ Report on inspection and acceptance of actual work time or timekeeping table (on a monthly, weekly, daily and hourly basis) in proportion to result of performance with confirmations by the employer’s representative or consultant’s representative (if any) and by the contractor’s representative;  In case addition of experts to perform the tasks arising during the implementation is required, the two parties must sit down, negotiate and agree on the pay for such experts’ work before implementation.

Then, the payment documents must include a tabular calculation of value of additional works (if any) beyond the contract’s scope of work with confirmations by the employer’s representative or consultant’s representative (if any) and the contractor’s representative;

++ Payment request from the contractor should represent the following matters: value of completed quantity under the contract, value of additional quantity (if any), subtraction of advanced amount, value stated in payment request after subtraction of these amounts with confirmations by the employer’s and contractor’s representatives.

+ As for a construction contract covering procurement of equipment, the completed quantity of work may be based on invoices, vouchers, bill of lading, reports on inspection and acceptance, handover of equipment and other relevant documents.

+ As for a construction contract covering consulting work that determination of completed quantity of work is difficult, the completed quantity of work shall be determined on the basis of documents, reports or any product confirmed by the employer as conformable with the payment period agreed in the contract.

- As for a contract of combined price, payment documents for each type of work under the contract shall be prescribed in Clause 1 of Article 20 of Decree 37/2015/ND-CP.

- When negotiating about payment document, the parties must rely on scale, nature and used capital source to negotiate required documents among key documents as prescribed in Clause 1 of Article 20 of Decree 37/2015/ND-CP.

- In addition to the key documents as prescribed in Clause 1 of Article 20 of Decree 37/2015/ND-CP, for a contract using ODA, loans of foreign credit institutions, payment documents must be done according to International Agreement.

- The employer, organizations, individuals relating to contract payment are not permitted to provide requirements for payment documents against agreement in the contract and provisions set out hereof.

2. Regulations on currency and payment term for construction contracts in Vietnam

Regulations on currency and payment term for construction contracts according to Article 21 of Decree 37/2015/ND-CP are as follows:

- Currency used for contract payment is Vietnam dong; use of foreign currency can be negotiated by the two parties but should not be contrary to the regulations on foreign exchange.

- For a construction contract involving some works that require payment to be made in multiple currencies, the parties must carry out negotiations under the contract but ensure the currency for payment is in conformity with the ITB or request for proposals.

- Payment may be made in cash, account transfer and other manners as agreed by the two parties in accordance with the law and specified in the contract.

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