Construction Engineering Environmental Capital Law Review (Phase I) ① Opening remarks ② Analysis of changes in the main body of the contractor in the construction project general contract and related responsibilities

Review of Construction Environmental Capital Law

Opening Words

During the period of prevention and control of the new coronary pneumonia epidemic, the daily information of the epidemic is extremely distressing and distressing to us! Every day's medical rescue makes us extremely admire and moved! We believe that Wuhan and Hubei will be able to overcome the epidemic! We believe that our great motherland and people will surely overcome the epidemic and create another glory!

In this special period, we can't join the front line of epidemic prevention and control. We can only stay at home. We can't help but express some donation and consciously abide by the prevention and control regulations. As professional lawyers, what else can we do? Even if we say more touching, encouraging and confident words, do we all look so pale and weak? Yes! There is still something we can do. We can play our role as professional lawyers! We can make full use of this time to summarize, refine and convey our professional experience and skills, so that people can get a professional legal information and tips in this special dormant period, so as to promote its better development after the end of the dormant period. This may be one of our original intentions in opening up the column "Review of Construction Environmental Capital Law. At the same time, our column will continue to be opened, and professional legal information and articles on construction projects, ecological environment, natural resources and related aspects will be published from time to time. We hope that through this column, we can have serious exchanges and learning with colleagues and friends, sincere criticism and mutual learning, and grow together.

After the beginning of spring, the rain came. May you all be well, spring and autumn!

Li Heng

February 14, 2020

 

Wen Yi Li Heng
 

[Abstract] The determination of the main responsibility of the contractor after the change of the general contracting contract involves basic legal issues such as the transfer of contractual rights and obligations, the establishment and entry into force of the factual contract without a written contract, the accession of debts, and the assumption of civil legal liability. This paper accurately defines the general project contract, the contractor of the general project contract and its rights and obligations from the legal point of view, analyzes the difference between joint and several liability and common liability, and focuses on how to determine the subject and corresponding responsibility of the employer after the change of the employer's subject, such as the transfer of the rights and obligations of the employer, the separation of the employer, the addition of the debt of the employer, etc, and to deal with the responsibility of the contractor in the transfer of the general contracting project in accordance with the law, the determination of the factual contract relationship of the general contracting project and the meaning of the general contracting consortium in the change of the contractor's main body, some opinions are put forward, with a view to the theoretical improvement and practical operation of the general contracting of construction projects.

 

Key words: general contracting, contractor change, civil liability

 

Since the early 1980 s, the general contracting of construction projects has been developed in China for nearly 40 years, and the general contracting of projects has promoted the development of China's construction industry. However, the legal system of general contracting of construction projects in China is still imperfect, there are still many gaps in the legal provisions, and there are still a lot of disputes in judicial practice, such as the relevant liability issues of the change of the main body of the contractor of the general contract of the project. To this end, this paper analyzes and studies the series of problems related to the change of the main body of the contractor of the general contract of the project, and puts forward the corresponding treatment opinions and suggestions.

 

Basic Problems of General Contracting of 1. Projects

The Development of (I) Engineering General Contracting in China

 

After the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China, my country has introduced a large number of foreign advanced technologies and complete sets of equipment. At the same time, foreign funds and engineering contractors have also entered the Chinese market, bringing China internationally accepted project management and engineering contracting methods. First of all, there are no design institutes in western developed countries. They undertake engineering design by engineering companies, engineering consulting companies and design firms, and geotechnical engineering companies undertake survey work. Secondly, the project general contracting model is conducive to controlling investment and construction period, and is conducive to playing the leading role of design to achieve better economic and social benefits. Third, the implementation of general contracting can reduce the infrastructure organization of construction units, and at the same time help cultivate the transformation of Chinese design enterprises to international engineering companies.

 

In order to overcome many disadvantages such as over-budget and delayed construction period in the traditional mode of engineering construction, the design-led engineering general contracting started in the early 1980 s and has generally gone through four stages, namely, the pilot stage (1982-1992), the promotion stage (1992-2003), the standardization stage (2003-2016) and the all-round development stage (2016-present). After continuous development, the domestic general contracting model in the industrial field is becoming more and more mature, and the general contracting turnover of survey and design enterprises is increasing year by year. However, in urban construction, including construction, municipal administration, transportation and other professional fields, the development of general contracting is relatively lagging behind. Since 2016, the CPC Central Committee, the State Council and the Ministry of Housing and Construction have continuously issued documents to actively promote the general contracting of housing construction and municipal projects.

 

On February 6, 2016, the Central Committee of the Communist Party of China and the State Council issued the "Several Opinions on Further Strengthening the Management of Urban Planning and Construction", proposing to "deepen the reform of the organization and implementation of construction projects and promote the general project contract system". On May 20, 2016, the Ministry of Housing and Urban-Rural Development issued the ''Several Opinions on Further Promoting the Development of EPC Contract'', which discussed the contracting stage of EPC projects, the selection of EPC enterprises, the subcontracting of EPC projects, and the project. The supervision procedures for general contracting projects have been stipulated accordingly. After the Ministry of Housing and Urban-Rural Development approved Zhejiang Province as the first pilot province for project general contracting in August 2014, the pilot project general contracting work in 9 provinces and cities including Shanghai, Fujian, Guangdong, Guangxi, Hunan, Hubei, Sichuan, Chongqing, and Jilin has gradually started. Pilot programs and related supporting policies for the implementation of project general contracting have been formulated. On February 21, 2017, the General Office of the State Council issued the "Opinions on Promoting the Sustainable and Healthy Development of the Construction Industry", proposing to "accelerate the implementation of general contracting of projects" and "cultivate full-process engineering consulting". On December 26, 2017, the Ministry of Housing and Construction issued the measures for the Management of General Contracting of Housing Construction and Municipal Infrastructure projects (draft for soliciting opinions). On December 23, 2019, the Ministry of Housing and Construction officially announced the "Administrative Measures for General Contracting of Housing Construction and Municipal Infrastructure Projects" "Construction City Regulations [2019] No. 12" (hereinafter referred to as the "General Contracting Administrative Measures"), which will come into effect on March 1, 2020.

 

Legal Definition of General Contracting of (II) Projects

 

Article 24 of the "Construction Law" stipulates: "The general contracting of construction projects is advocated, and the dismemberment of construction projects is prohibited. The contracting unit of a construction project may contract out the survey, design, construction and equipment procurement of the construction project to a general contractor, or contract out one or more of the survey, design, construction and equipment procurement of the construction project to a general contractor; however, the construction project that should be completed by one contractor shall not be dismembered into several parts and contracted to several contractors." Article 272 of the Contract Law stipulates: "The contractor may enter into a construction project contract with the general contractor, or enter into a survey, design, and construction contract with the surveyor, designer, and builder. The contractor may not dismember certain parts of the construction project that should be completed by one contractor and contract out to several contractors." This is the current China's construction project general contracting to be defined at the highest level of two legal provisions.

 

Article 3 of the "General Contracting Management Measures" stipulates: "The general contracting of projects referred to in these Measures refers to the general contracting of engineering design, procurement, construction, or design, construction and other stages in accordance with the contract signed with the construction unit. The organization and implementation method of project construction that is fully responsible for the quality, safety, construction period and cost of the project." The definition of EPC in this management method is different from the provisions of Construction Law and Contract Law, mainly because EPC defined in this management method does not include engineering survey, and only defines design, procurement and construction (EPC)/turnkey EPC and design-construction EPC (D--B) as the specific way of EPC, excludes design-procurement general contracting (E--P), procurement-construction general contracting (P--C), etc.

 

Project general contracting and construction general contracting belong to two different legal systems and two different legal concepts in project construction, which are both related and different. The connection between the two is mainly that both belong to a way of project contracting. Under the two general contracting methods, the general contractor is responsible to the contractor (or bears joint and several liability with the contractor and subcontractor). The legal nature of the two general contracting belongs to construction project contracting. The main differences between the two are: 1. The scope of contracting is different. The scope of the general project contract can include all or part of the scope of survey, design, procurement, construction, trial operation (completion acceptance), etc. The scope of the general construction contract is the construction of professional projects and labor services within the scope agreed in the contract. The scope of the general project contract is greater than the scope of the general construction contract. The object of the general project contract is the project, and the object of the general construction contract is the construction operation of the project. 2. The qualification requirements are different. According to the "Letter of the Ministry of Construction on the Issue of General Contracting Market Access" (Jianshi Han [2003] No. 161) and the "Reply of the General Office of the Ministry of Construction on the Issue of General Contracting Market Access" (Jianban City Han [2003] No. 573) (hereinafter referred to as the "two replies"): "Enterprises engaged in general contracting business do not specifically establish general contracting qualifications. An enterprise with the qualification of engineering survey, design or construction general contracting may carry out the general contracting business within the scope of the project permitted by its qualification level, but the construction of the project shall be undertaken by the enterprise with the corresponding construction contracting qualification." That is to say, one of the qualifications for engineering survey, design or construction must be engaged in general contracting, but engineering survey and design enterprises shall not carry out engineering construction by themselves when implementing general contracting. According to the requirements of the Regulations on the Administration of the Qualification of Construction Enterprises and the Qualification Standards for Construction Enterprises, construction general contracting enterprises are divided into four levels: special, first, second and third, and the qualification conditions for each level are clearly defined. According to the spirit of the above two replies, the construction general contracting enterprise can implement the general contracting of the project and can carry out the construction of the project. That is, the construction general contracting enterprise with corresponding qualification can contract all or part of the project's survey, design, procurement, construction, trial operation (completion acceptance) and so on. 3, the contract classification is different, the legal application standard is different. Although both the general project contract and the general construction contract belong to the construction project contract, the construction project contract signed under the general project contract belongs to the general project contract. According to China's Contract Law, the Provisions of the Supreme People's Court on Civil Cases and other legal documents, construction contracts include survey contracts, design contracts, construction contracts, subcontracting contracts, supervision contracts, decoration contracts, etc., and the legal provisions applicable to various construction contracts are different. Therefore, there will be some differences in the applicable law between the EPC contract and the EPC contract according to the content of the contract.

 

The legal definition of the contractor of the (III) project general contract.

 

1, the project general contract contractor's main qualification and contracting conditions.

 

According to the relevant provisions of the Construction Law, the Contract Law and the Measures for the Administration of General Contracting, the contractor of the general contract of the project shall generally be the construction unit of the construction project with the qualification of the subject of civil law. Of course, in practice, there are also general contractors who are not "construction units" of the project.

 

At the same time, Article 7 of the "General Contracting Management Measures" also stipulates: "The construction unit shall complete the project approval, approval or filing procedures before contracting. An enterprise investment project that adopts the general project contracting method shall be contracted out after approval or filing. For government investment projects that adopt the general project contracting method, in principle, the general project contracting project shall be carried out after the preliminary design approval is completed; among them, the government investment projects that simplify the approval documents and approval procedures in accordance with relevant national regulations shall be completed after the completion of the corresponding investment decision. After the approval of the project general contracting project." In other words, the completion of the corresponding project approval, approval or filing procedures by the construction unit is the premise and basis for the general contracting of the project in accordance with the law.

 

2, the main rights and obligations of the contractor of the general contract of the project.

 

Article 2.1 "Main Rights and Obligations of the Employer" of the GF-2011-0216 General Conditions of the Model Text of the General Contract for Construction Projects (for Trial Implementation) ":

 

(1) Be responsible for the approval, approval or filing procedures of the project, obtain the right to use the project land, complete the demolition compensation work, make the project have the conditions for starting the project stipulated by law and the contract, and provide the project approval documents.

(2) To fulfill the obligations of contract price adjustment, payment and completion settlement agreed in the contract.

(3) It has the right to implement work proposals, modifications and changes to the design, procurement, construction and completion test of the Contractor in accordance with the provisions of the contract and the provisions of the applicable laws on mandatory standards and norms such as safety, quality, environmental protection and occupational health, but shall not violate the provisions of the national mandatory standards and norms.

(4) The right to make compensation for any loss and damage caused to the contractor due to the contractor in accordance with the contract.

(5) The Employer shall have the right to issue a notice of suspension in writing if it deems it necessary. Among them, due to the suspension caused by the contractor, the cost increase caused to the contractor shall be borne by the contractor, resulting in the delay of the critical path, the completion date shall be postponed accordingly.

 

The legal definition of (IV) joint liability and joint liability.

 

1. Shared responsibility

 

Joint liability is a kind of classification of civil liability according to the number of civil subjects who bear civil liability, that is, two or more civil subjects share a civil liability. The main types of joint responsibility are as follows:

 

(1) Joint debts of husband and wife: Article 41 of the Marriage Law: At the time of divorce, the debts originally incurred by the husband and wife living together shall be repaid together. If the common property is insufficient to pay off, or if the property belongs to each other, the two parties shall agree to pay off; if the agreement fails, the people's court shall make a judgment.

(2) Debt accession: Debt accession, also known as co-existing debt assumption, means that the original debtor does not leave the original debt relationship, and a third party joins the original debt relationship and shares the debt with the debtor. For the act of debt accession, although it is not clearly defined at the current legal level, it is mostly recognized in practice.

(3) The debts of the branch shall be jointly borne by the branch and the head office.

 

The branch does not have an independent legal personality and cannot be held responsible independently, and its assets belong to the head office. When it is liable to the outside world, it is generally compensated by the property of the branch first, and the head office will continue to compensate for the shortfall. The branch and the head office share the responsibility.

 

2. Joint and several liability

 

Joint and several liability, also known as "joint and several debts", is a kind of "civil liability", which refers to a form of liability in which each debtor is fully paid for the same debt, I .e. a form of debt in which the creditor may request full or partial payment to one, several or all of the debtors at the same time or successively. Joint and several liability is that any responsible person assumes full responsibility and recovers within the responsible person of joint and several liability, which is different from joint responsibility. If the partner's liability for external debt is typical of joint and several liability.

 

Joint and several liability belongs to strict liability in law. According to Article 87 of the general principles of the civil law and Article 178 of the general principles of the civil law, joint and several liability must be "prescribed by law" or "agreed by the parties". Otherwise, joint and several liability can not be established. For example, Article 29 of the Construction Law stipulates that the general contractor and the subcontractor shall be jointly and severally liable to the contractor.

 

3, the difference between joint liability and joint and several liability.

 

(1) In the case of debt relationships, the source of debt that forms joint responsibility is a single debt, and therefore a single debt, while the source of joint and several liability may be a single debt or a plural debt.

 

(2) In terms of the basis of responsibility, it is true that joint responsibility should be stipulated by law, but at its root, it stems from the special "flesh-and-blood relationship" between the joint responsible persons, that is, the so-called "you have me, I have you". Therefore, this kind of responsibility does not need to be prepared by law, let alone a kind of aggravated responsibility; and the basis for joint and several liability is either agreement or statutory, in tort liability is often a legal fiction of increased liability.

 

(3) In terms of the implication of liability, the joint responsible person is bound to be linked when taking responsibility for a certain property, and the inaction of a single responsible person is bound to fail to produce the result of the completion of the responsibility for payment; while the act of payment by one of the joint and several responsible persons is autonomous and can independently lead to the elimination of the joint and several debts.

 

(4) In the case of internal claims, since the assumption of joint responsibility is mainly achieved through the joint payment of a property, the internal claim relationship no longer occurs in general.

 

(5) In terms of the form of litigation, an action for joint liability should be a necessary joint action; an action for joint and several liability should be the norm, with the exception of a necessary joint action, such as an action involving an individual partnership.

 

The main responsibility of the contractor after the change of the 2. project general contract is determined.

The rights and obligations of the contractor in the (I) project general contract are transferred together.

 

Article 88 of the Contract Law stipulates that "one party may, with the consent of the other party, transfer its rights and obligations under the contract to a third party." Article 89 stipulates: "Where rights and obligations are transferred together, the provisions of Article 79, Articles 81 to 83, and Articles 85 to 87 of this Law shall apply".

 

According to the above provisions, the transfer of contractual rights and obligations, also known as contractual acceptance, means that one party, with the consent of the other party, may transfer its rights and obligations in the contract to a third party. In order for a contract to have legal effect, the following elements must be met: first, there must be a legal and valid contract. If the contract has not been concluded or the purpose of the contract has been reached and extinguished, the contract acceptance cannot be established due to the loss of the premise; If the contract is invalid, the rights and obligations arising from the contract shall be deemed to have not occurred from the beginning, and therefore the contract acceptance cannot be established. The contract can be revoked. Although the contract can be established before it is revoked, the cancellation right of the original contract parties shall be deemed to have been abandoned after the contract acceptance. Second, the contract of acceptance should be a double service contract. Contract acceptance is the general transfer of rights and obligations, therefore, the contract of acceptance should be a double-service contract, otherwise only the establishment of claims and debt to assume. Third, one of the parties to the original contract and the third party must reach an agreement on the acceptance of the contract, and the agreement should meet the valid elements of civil legal acts. Fourth, the consent of the other party to the original contract must be obtained. In addition, contracts that must be approved by the relevant authorities in accordance with the law can only be established, and the acceptance of the contract must be approved by the original approving authority.

 

If there is no legal and effective construction project general contract, if there is no situation that prohibits transfer as stipulated in Article 79 of the Contract Law, that is, there is no situation that cannot be transferred according to the nature of the contract, cannot be transferred according to the agreement of the parties, and cannot be transferred according to the law, the project general contract The contractor of the contract may transfer its rights and obligations to a third party. The contractor should pay attention to: 1, the construction project general contract contractor will transfer the rights and obligations to a third party, in order to avoid disputes, the contractor, the general contractor and the third party should sign a tripartite agreement, the contractor withdraws from the project general contract relationship, no longer assume the rights and obligations of the project general contract. 2, China's current law does not have a construction project contract must be approved by the relevant authorities before the establishment or entry into force of the clear provisions, but there are construction project contracts signed in accordance with the law after the filing provisions. With the continuous advancement of reforms in the construction field, the Ministry of Housing and Urban-Rural Development issued and implemented the "Notice on Amending Relevant Documents" on March 18, 2019 to modify the "Opinions of the Ministry of Housing and Urban-Rural Development on Further Strengthening the Supervision of the Construction Market" (Jianshi [2011] No. 86), clearly deleted the "contract filing system" for construction projects, and all parts of the country have canceled the filing of construction project contracts. For example, on April 29, 2019, the Sichuan Provincial Department of Housing and Urban-Rural Development issued a notice on the revision of the "Notice on the Implementation of Online Filing of Construction Project Bidding Control Prices, Contracts and Completion Settlement Documents" (Sichuan Construction Cost Fa [2019] No. 241), it is clear that construction engineering survey and design contracts (survey and design contracts), general engineering contracting (EPC) contracts, construction contracts (construction general contracting contracts, professional contracting contracts, labor subcontracting contracts), service contracts (project management contracts, Bidding agency contracts, entrusted supervision contracts, cost consulting contracts) and other related construction project contract filing work will be canceled. Therefore, the contractor, the general contractor and the third party shall sign a tripartite agreement to transfer the rights and obligations of the contractor together, no longer for the record, and shall not affect the legal effect of the transfer of rights and obligations agreement. 3. Attention should be paid to the specific provisions on special projects, and when the contractor, the general contractor and a third party sign a tripartite agreement to transfer the rights and obligations of the contractor together, the necessary follow-up agreements and follow-up procedures should be signed. For example, the "Interim Measures for the Management of Photovoltaic Power Station Projects" (Guoleng Xinneng [2013] No. 329) stipulates that since August 29, 2013, photovoltaic projects have been changed from the approval system to the filing system, and the contractor will be the photovoltaic construction project general contract. The rights and obligations are transferred to a third party together, and attention should be paid to whether changes in the project filing subject are involved.

 

When the contractor of the construction project general contract transfers its rights and obligations to a third party, the general contractor shall pay attention to: 1. Whether the general contract signed between the contractor and the general contractor is legal and valid, and whether it is agreed that the contractor shall not transfer the rights and obligations. For example, if it is a legally required bidding project, whether the legal bidding procedures have been fulfilled; 2. General Clause 1.1.5 of the Model Text of the General Contract for Construction Projects (Trial) (GF-2011-0216) "Employer refers to the party or legal successor who has the qualification of the project contracting subject and the ability to pay the project price as agreed in the contract agreement." Article 1.1 of the Conditions of Contract for the Construction of Railway Construction Projects "The contracting party (hereinafter referred to as Party A): the party who is qualified for the project and has the ability to pay the price of the project as stipulated in the terms of the agreement, and these conditions refer to the construction unit or project legal person of the railway project." Therefore, the contractor of the general contract of the project transfers its rights and obligations to a third party, and the general contractor shall examine whether the third party is capable or qualified to bear the rights and obligations of the contractor. 3. When the contractor transfers its rights and obligations to a third party, it should pay attention to the project site and project management handover, as well as the specific provisions on special projects. When the contractor, the general contractor and the third party sign the tripartite agreement to transfer the rights and obligations of the contractor, the necessary follow-up agreement shall be signed and the corresponding procedures shall be handled.

 

To sum up, the author believes that according to the provisions of Article 88 of the Contract Law and most judicial precedents, with the written consent of the general contractor, the contractor transfers the rights and obligations in the general contract to a third party, or without the written consent of the general contractor, the general contractor and the third party continue to perform the original general contract or the general contractor and the third party re-sign the general contract, the third party shall bear the legal responsibility of the contractor to the general contractor, and if the general contractor does not form a general contract relationship with the third party without the written consent of the general contractor, the contractor shall be liable to the general contractor.

 

The contractor of the general contracting project of the (II) project is divided.

 

In practice, most of the contractors of general contracting projects are often various legal entities, such as project companies, institutions, and legal persons. If the contractor merges with a third party in accordance with the law, the legal entity after the merger shall, of course, bear the legal liability of the contractor, and no special provision shall be made for this. If the contractor is separated according to law, the subject who bears the legal responsibility of the contractor shall be clearly defined. Article 67 of the General Principles of the Civil Law stipulates: "Where a legal person is merged, its rights and obligations shall be enjoyed and borne by the merged legal person. Where a legal person is separated, its rights and obligations shall be enjoyed and borne by the separated legal person, unless otherwise agreed upon by the creditor and the debtor."

 

Article 177 of the Company Law stipulates: "The company after the division shall bear joint and several liability for the debts of the company before the division. However, unless otherwise agreed in a written agreement between the company and the creditors on the settlement of the debts before the division."

 

Therefore, the author believes that: according to the above-mentioned legal provisions, in the performance of the general contract of the project, if the contractor is divided in accordance with the law, in addition to the general contractor and the subject after the separation of the project general contract, all the subjects after the separation shall bear joint and several liability to the general contractor.

 

The contractor's debt of the general contract of the (III) project is added.

 

Strictly speaking, debt accession is not a concept in the current law, because laws and regulations do not provide for debt accession, and the Supreme people's Court has not issued a judicial interpretation on debt accession, but individual higher people's courts have used the concept of debt accession in their notices and meeting minutes, such as the Beijing Municipal higher people's Court on the issuance<北京市高级人民法院关于审理房屋租赁合同纠纷案件若干疑难问题的解答>(Jing Gao Fa Fa [2013] No. 462), Jiangsu Higher People's Court on the application<中华人民共和国合同法>(I) of the Minutes of Discussion on Certain Issues (Su Gao Law Trial Committee No. 16 [2005]), and the Shenzhen Intermediate People's Court's Judgment Guidelines on Private Lending Disputes (Trial) (the Guidelines were approved by the Shenzhen Intermediate Court on July 3, 2014 The 18th meeting of the Civil Administrative Execution Professional Committee of the Trial Committee of the People's Court was discussed and approved), etc. At the same time, the Zhejiang Provincial Higher People's Court issued the "Zhejiang Provincial Higher People's Court Civil Second Division" on the issuance<商事审判若干疑难问题理解>A synonym for the addition of a concurrent debt assumption is used in the Notice.

 

Among the above-mentioned normative documents, only the Jiangsu Provincial Higher People's Court on the application of<中华人民共和国合同法>The (I) on the Discussion Minutes of Certain Issues (No. 16 [2005] of Su Gao Law Review Committee) defines debt accession. Article 17 of the minutes stipulates: "Debt accession refers to the third party reaching a tripartite agreement with the creditor or the debtor, or the third party reaching a mutual agreement with the creditor, or the third party unilaterally promises to the creditor that the third party will perform the debt of the debtor, but at the same time does not relieve the debtor of the manner in which the obligation is assumed."

 

In trial practice, courts often use the concept of debt accession in adjudicative instruments and affirm or deny whether the parties' actions constitute debt accession. For example, the Supreme People's Court in (2013) Min Yi Zhong Zi No. 26 "Wengfu International Trade Co., Ltd., Guangxi Gulf Resources Development Co., Ltd., Wantong Industry (Group) Co., Ltd., Wantong Metallurgical Chemistry Co., Ltd., Kunming Huahe Trading Co., Ltd., Zhang Heling, Zhang Wenjuan Contract Dispute Second Instance", the Supreme People's Court in (2008) Min Er Zhong Zi No. 81 "Industrial and Industrial and Commercial Bank of China Limited Sanmenxia Station Branch sanmenxia Tianyuan Aluminum Co., Ltd., Sanmenxia Tianyuan Aluminum Group Co., Ltd. loan guarantee contract dispute second instance" (Supreme People's Court Bulletin case). However, there are few typical cases involving debt accession in the dispute of the general contract of construction project.

 

Whether in practice or in theory, there is a basic consensus on debt accession, that is, the so-called debt accession refers to the identity of the debt, the debtor is not separated from the original debt, the debtor and a third party are jointly responsible for the original debt. However, according to the existing normative documents and jurisprudence, the following constituent elements of debt accession can be separated: 1, the original debt is legal and valid.

 

According to Mr. Shi Shangkuan, debt accession needs to have the following elements:

 

1, should have the general elements of the contractual thinking expressed; 2, to the effective existence of the original debt as a prerequisite; 3, in principle, the debtor's debt, its purpose, posture shall not be heavier than the original debt; 4, the original debtor and the debtor need not be one person. Liu Li, the People's Court of Zhenhai District, Ningbo City, Zhejiang Province, in the core journal of law, "The Judicial Distinction between Coexisting Debt Undertaking and Guarantees", holds that the constituent elements of debt accession are: 1, the establishment and entry into force of the debt-bearing contract; 2, the original debt should exist effectively; 3, the original debt is transferable.

 

All of the above points note that in order to establish an effective debt accession, the original debt must exist effectively and there must be a contract for the assumption of the debt, but the unilateral intention can also establish an effective debt accession. In practice, it is necessary to distinguish between debt joining and guarantee, and both the practical and theoretical circles in our country believe that the third party has a performance interest in the performance of the debt is an important criterion for determining the debt joining. The difference between debt joining and performance and debt transfer is that in the debt joining relationship, if the third party fails to perform the debt or the performance of the debt does not conform to the agreement, the creditor can directly claim the liability for breach of contract to the third party, but in the performance relationship, if the third party fails to perform the debt or the performance of the debt does not conform to the agreement, the creditor can only claim to the original debtor. The difference between debt accession and debt transfer is that debt accession does not result in the withdrawal of the original debtor from the debt relationship. In a debt transfer relationship, the original debtor no longer assumes any obligation for some or all of the transferred debt, while in a debt-joining relationship, the original debtor does not withdraw from the original debt-debt relationship and must share responsibility with a third party.

 

Therefore, the author thinks: in the process of the performance of the EPC contract, if the employer, the general contractor and the third party sign an agreement, or the third party and the general contractor reach an agreement, or the third party unilaterally promises to the general contractor that the third party will perform the obligations of the employer in the EPC contract without exempting the employer from performing the obligations, except that the third party, the employer and the general contractor have special agreements on the division of responsibilities, constituting a legal debt addition, we understand that in essence the third party and the contractor become the co-contractor in the general contract of the project, and the contractor and the third party should be jointly liable to the general contractor. At the same time, the author believes that the third party should enjoy the contractor's right of defense against the general contractor, such as the right to defend the quality of the project against the payment of the project price.

 

Problems to be Noticed in 3. Trial Practice

The responsibility of the contractor in the transfer of the general contracting project of the (I) project.

 

After the contractor and the general contractor sign the project general contract, the contractor will transfer its project to a third party, in practice, there are two main forms: 1, the project company's equity transfer.

 

In the equity transfer of the project company, since the project company as the contractor only changes its shareholders in accordance with the law, and the legal subject of the project company itself as the contractor has not changed, the project company still assumes the rights and obligations in the EPC contract as the contractor, there is no doubt, no more details here, and no special provisions need to be made.

 

In the transfer of the project land use rights, mining rights, etc., as well as the construction in progress, there is a change of the project owner, I .e. the original project owner (the original contractor) transfers the ownership of the project assets to a third party. Under normal circumstances, the original project owner (the original contractor) should terminate the general project contract with the general contractor and settle the settlement, and bear the legal responsibility and contract responsibility after the settlement, or after the original project owner (original contractor), the new project owner and the original general contractor sign a tripartite agreement on the transfer of the rights and obligations of the contractor, the new project owner shall bear the responsibility of the contractor to the general contractor. In this case, the principal responsibility of the contractor is clear and generally unquestionable.

 

However, if the original project owner (the original contractor) transfers the ownership of the project assets to a third party, and the third party (I. e. the new project owner) does not form a general project contract relationship with the original general contractor, the original project The project general contract between the owner (the original contractor) and the original general contractor still exists, but the project general contract may not continue to be performed. Therefore, based on the basic legal principle of contract relativity, if the contractor transfers the project to a third party in accordance with the law, and the general contractor and the third party do not form a general contract relationship, the contractor shall still be liable to the general contractor.

 

The identification of the factual contract relationship of the general contracting of (II) projects.

 

The factual contract, also known as other forms of contract, implied form or factual contract, is a constructive form of contract from the point of view of the judge's trial. There are also offers and promises in factual contracts, where the parties do not express their intentions in words or words, but rather make an offer to the other party with an act, and the other party accepts the offer, makes a certain or specified act as a promise, and the contract is established. Article 2 of the (II) for Judicial Interpretation of Contract Law provides that: "If the parties have not concluded a contract in writing or orally, but it can be inferred from the civil acts performed by the other party that the parties have the will to conclude a contract, the people's court may determine that it is a contract concluded in 'other forms' in Article 10, paragraph 1, of the Contract Law. Except as otherwise provided by law."

 

Whether the general contractor has formed a factual contractual relationship between the general contractor and the third party without the written consent of the general contractor to the contractor to transfer its rights and obligations to a third party, or whether the general contractor and the contractor and the third party continue to form a de facto tripartite factual contractual relationship with the general contractor without the written consent of the general contractor, A careful and comprehensive judgment should be made in the light of the parties' expression of intent at the time of the act and the parties' perception of the relevant facts after the occurrence of the dispute, and should not be based solely on the unilateral statement of one party.

 

Article 135 of the "General Principles of Civil Law" stipulates: "Civil legal acts may be in written, oral or other forms; if laws, administrative regulations or the parties agree to adopt a specific form, it shall adopt a specific form." Article 36 of the Contract Law stipulates: "If the law, administrative regulations or the parties agree to conclude a contract in writing, the parties have not adopted a written form but one party has performed its main obligations, and the other party accepts it, the contract is established." Article 37 stipulates: "If a contract is concluded in the form of a contract, before signing or sealing, one of the parties has performed its main obligations and the other party accepts it, the contract is established." Therefore, a comprehensive review should be conducted on the actual payment application and payment process, project meeting minutes, project contact list, records of supervision or project consulting unit, project visa, change approval, settlement and settlement review, project completion and delivery and other factual behaviors of the employer, the third party and the general contractor in the process of project implementation, instead of only one party's statement.

 

The relevant problems of the general contracting consortium of (III) projects in the change of the main body of the contractor.

 

1, should pay attention to the screening of "true and false" project general contracting consortium.

 

In practice, there are more activities related to general contracting in the name of a consortium. The constituent elements of the consortium are not clearly defined in the Construction Act. Article 27 of the Construction Law only provides for the circumstances in which the consortium is allowed to contract in a relatively principled manner. The relevant specific provisions are mainly scattered in Article 31 of the Tendering and Bidding Law, Articles 37 and 51 of the Implementation Regulations of the Tendering and Bidding Law, Article 24 of the Government Procurement Law, and the Government Procurement Law Article 22 of the Implementation Regulations, etc. Combined with the relevant provisions of the above laws and regulations, it can be seen that the so-called consortium shall have the following conditions:(1) there is a consortium agreement between the consortium;(2) the contractor is aware of the consortium agreement between the consortium;(3) the units forming the consortium jointly sign a contract with the contractor.

 

In practice, the main manifestations of the "false" consortium are:

 

(1) The form of organization of the consortium is false and does not meet the legal elements of the consortium in accordance with the law. For example, the so-called union is only an internal union between two units, which is not known to the employer; or the units forming the consortium have not jointly signed a contract with the employer, etc.

 

(2) The substance of the consortium is false, and the so-called consortium is only for the purpose of achieving the illegal purpose of one of the parties. For example, even if the process is followed, it is actually only one party allowing the other party to be affiliated, or one party subcontracting or illegally subcontracting the project.

 

2, the rights and obligations of the parties to the general contracting consortium and legal status.

 

(1) Legal status of the lead party

 

When two or more legal persons or other organizations that implement independent accounting, can independently bear civil liability, and have the corresponding ability and qualifications to undertake bidding projects voluntarily form a temporary, loose general contracting consortium, the internal members of the consortium It is a cooperative relationship between equal subjects. According to Article 44 of the Measures for Tendering and Bidding for Construction Projects, the parties to the consortium must designate a leader who is authorized to be responsible for the hosting and coordination of the bidding and contract implementation phases on behalf of all consortium members. This dictates that the lead party must be selected by the parties to the consortium and that the parties to the consortium are required to grant them the authority to perform their obligations such as bidding, signing contracts, and performing contracts.

 

As the leader, its legal status in the operation of the consortium is twofold: first, as one of the members of the consortium, it enjoys the legal status as an independent subject and assumes independent legal responsibilities; second, as a representative of the consortium, Engaging in external activities under the authorization of other parties of the consortium, its actions within the scope of authorization are binding on the members of the consortium, and the parties of the consortium are jointly and severally liable for this.

 

(2) Rights and obligations of the lead party

 

The lead party shall fully coordinate and manage the bidding and operation process of the whole project within the scope of the authorization of the other parties of the consortium, control the duration, quality and financial suitability of the whole project, participate in the preparation of budget documents, and be able to play the role of an independent contractor in external affairs. As the sponsor, coordinator and representative of external affairs of the consortium, the lead party generally enjoys the following rights: ① organization and management; ② communication and coordination; ③ organization and liquidation; ④ external representative and other rights.

 

The reason why the lead party can play a representative role externally and play an organizational and command role internally as an independent general contractor lies in the fact that the parties specifically agree within the consortium agreement or separately authorize the entrustment outside the agreement. Therefore, the main obligation of the lead party is to conduct representative affairs prudently within the scope of the authorization of other members. The consortium agreement should be enumerated to determine the manner of authorization, the scope of authority, the time of agency, and the issue of liability for ultra vires acts.

 

(3) Rights and obligations of other members

 

Primary Rights:

 

The right to know. Each member has the right to know all aspects of the consortium through the board of directors or other decision-making and management agencies of the consortium regularly or irregularly: the performance of the general contract, the performance of other partners, the progress of the project, the availability and operation of funds, the income and expenditure of the project, the financial report or the internal economic operation, etc.

 

② The right to participate in project management decision-making. The consortium is not only the union between members, but also the union of funds, technical capabilities and professional qualifications. Each member generally has professional advantages in a certain engineering project field and undertakes a specific project task in the general contracting project. Each member should participate in the permanent management organization of the consortium to manage each link in the operation process of the whole general contracting project, this includes management decisions on major issues such as duration, quality and safety control, fund raising and circulation plans, cost settlement and financial final accounts.

 

The right of supervision. Based on the fact that the consortium is generally represented by the lead party, other members have the right to supervise and urge them to implement the authorized matters, and the lead party shall also introduce and inform other members of the performance of various contracts in various ways on a regular or irregular basis, and take the initiative to accept the supervision of other members.

 

④ Right of income. Each member shall distribute the profits in accordance with the proportion agreed upon in the agreement, which is also one of the cooperative purposes of the consortium. The direct basis of profit distribution is the settlement and liquidation results, after the completion and acceptance of the project, the lead party should do a good job of project cost settlement and the internal financial accounts of the consortium, cost reconciliation, surplus or loss settlement.

 

⑤ Right to recover losses. When the rights and interests of the consortium are damaged or damaged or the rights and interests of other members of the consortium are infringed, the consortium has the benefit of recovering from the responsible party after assuming joint and several liability.

 

Main obligations:

 

① The obligation to regularly report on the progress of the project, the procurement of important materials, subcontracting, the completion of project tasks and the delivery of results.

② Obligation to pay the investment amount in accordance with the agreed proportion and manner.

③ Obey the lead party's obligation to coordinate and rationally allocate, support and cooperate with other parties in the consortium.

④ Comply with the management system and procedures of the consortium, and fulfill the obligations of confidentiality and loyalty.

⑤ The obligation to allocate or replace personnel as required by the various systems of the consortium.

⑥ Joint and several liability to the outside world and internal liability and risk as agreed.

⑦ Other obligations stipulated in the consortium agreement.

 

3, by the consortium leader alone and the contractor signed the effectiveness of the project general contract.

 

According to Article 31 of the Tendering and Bidding Law, "If the consortium wins the bid, the parties to the consortium shall jointly sign a contract with the tenderer and bear joint and several liability to the tenderer for the winning project." Therefore, the EPC contract should be signed by the contractor and the parties to the consortium. If the employer only signs the project general contract with the consortium leader, because the consortium leader signs the project general contract with the employer according to the authorization of the consortium authorization, it represents the common meaning of "consortium". As the main units participating in the "consortium", the other contractors, after submitting the bidding documents and the consortium authorization to the employer, that is to say, it accepts the legal responsibility for the behavior of the leader to perform the bidding content such as signing the contract with the project involved in the case. Therefore, the general contract of the project is legal and valid.

 

At the same time, based on the fact that the other contractors of the consortium have authorized the lead person to sign the general contract with the contractor, exercise the contractual rights and perform the contractual obligations, so in the process of contract performance, the lead person should perform the contract affairs, and it is not appropriate for the other contractors of the consortium to exercise the contractual rights directly to the contractor. Only when the leader is lazy in exercising the contract right, thus damaging the contract right of the consortium, can other members of the consortium claim the contract right against the employer in their own name. in (2016) judgment no 706 of the people's Republic of 1284, the court held that the contract price belongs to the rights and interests of the consortium. when the leader is not lazy in claiming the project price, other members of the consortium cannot claim the project price according to the contract.

 

After the consortium wins the bid, the parties shall undertake the work within the scope of their qualifications in accordance with the division of labor in accordance with their respective qualifications as agreed in the consortium bidding agreement. At this time, the lead person and the other contractors of the consortium signed a subcontracting agreement, clear the remaining consortium members of the scope of work, rights and obligations of the agreement does not violate the provisions of the law, the contract counterparties are legally binding, both parties shall perform their respective contractual obligations in accordance with the contract. However, in terms of external liability, the internal agreement between the consortium leader and other contractors does not exempt them from joint and several liability to the contractor.

 

4. In the change of the main body of the contractor, the validity of the meaning of the members of the general contracting consortium.

 

If the employer transfers its rights and obligations in the EPC contract to a third party, the leader of the EPC consortium shall agree in writing. Unless otherwise specifically agreed in the consortium agreement, the written consent of the leader shall be deemed as the common intention of the consortium and shall be binding on all members of the consortium. However, the intention of consent made by non-leading members of the consortium shall not have this effect.

 

It should be noted that if the members of the consortium express their intentions by factual behavior, it is necessary to conduct a comprehensive review on whether the members of the consortium are the leaders, the actual payment application and payment process during the implementation of the project, the minutes of the regular project meeting, the project contact list, the records of the supervisor or project consulting unit, the project visa, the change approval, the settlement and settlement review, the completion and delivery of the project and other factual behaviors, it cannot be judged on the basis of one party's statement alone.

 

If the leader of the consortium has expressed his intention to transfer the rights and obligations of the contractor in the general contract of the project, but the members of the consortium have objections to the leader's intention (or even against the leader's opinions)? The author believes that, as mentioned above, the written consent of the leader should be recognized as the common intention of the consortium, which is binding on all members of the consortium. However, if the leader's external intention causes loss or damage to the members of the consortium, the members of the consortium have the right to claim compensation from the leader according to the consortium agreement.

 

Reference Articles

Rong Shili, "Review and Reflection on the Development of China's EPC in the 40 Years of Reform and Opening-up", in China Survey and Design, December 2018.

Non-litigation Reading: "Six Key Points in the Practical Operation of Debt Joining", by He Jian Jindu Law Firm,

https://victory.itslaw.com/victory/api/v1/articles/article/3f2aa5a3-4dd4-446b-add8-75bdbb90b05b?downloadLink=2&source=article,2019年12月11日访问 。

Liu Li, "The judicial distinction between coexisting debt commitment and guarantee-Ying Zhiwei v. Yang Dingbing and Wang Chongxing's dispute over the contract of sale and purchase", "Application of Law", No. 7, 2012.

WeChat Public Number: Lawyer Jianwei, "The (III) of the General Contracting Consortium-The Problem of" True and False "Consortium, Xu Yinzhe, https://mp.weixin.qq.com/s/XIDnHSCQmrxGnhNNRxhzqg,2020年2月11日访问 。

Anonymous, Overview of the Rights, Obligations and Legal Status of the Parties to the General Contracting Consortium, China Real Estate Lawyers Network, http://www.iestatelaw.com/jssght/559.html,2020年2月11日访问 。