Analysis of the legal liability of the winning bidder for not signing the "winning contract".

[Abstract]]Affected by the rising prices of raw materials in the construction market and other factors, it is becoming more and more common for the winning bidder to refuse to sign a "winning contract" with the tenderer after the contractor organizes bidding and determines the winning bidder in accordance with the law. As the relevant laws, regulations and judicial interpretations have not made clear what kind of legal liability the winning bidder should bear, resulting in a greater controversy in practice, one view is that the liability for contracting negligence should be borne, the other view is that the liability for breach of contract should be borne. This paper first puts forward the existing problems and the point of view of the two kinds of games, and then focuses on the analysis of whether the contract is established after the winning bidder receives the notice of winning bid, and finally puts forward the view that the winning bidder should bear the liability for breach of contract if he does not sign the "winning contract", in order to benefit the judicial practice.

Key words]Bid winning contract negligence liability liability for breach of contract

Presentation of 1. issues

Recently, when handling a dispute over a construction contract, the author found that after the tenderee entrusted a tendering agency to organize the bidding, determined the winning bidder according to law and issued a bid-winning notice to the winning bidder, the winning bidder delayed signing the construction contract with the tenderee. under the condition that the winning bidder had already entered the construction site, the tenderee entrusted the supervision company to send letters to the winning bidder many times to request the signing of the construction contract as soon as possible, but failed. At present, the construction of the project has been completed by the winning bidder and has been accepted. Because the two parties did not sign a contract, the tenderer did not pay the winning bidder, so the winning bidder sued the tenderer to the people's court, demanding that it pay the arrears of the project and interest. The case itself does not directly involve the legal liability of the winning bidder for not signing the construction contract, but in the process of handling the case, the author has been thinking about this problem that has plagued judicial practice for a long time. Due to the relatively large controversy in practice, there have been two tit-for-tat views for a long time, which have seriously affected the judicial organs' thinking on handling such disputes, and even the phenomenon of "fighting" with different judgment results on the same issue. The author has noticed that although the recently promulgated and implemented Regulations on the Implementation of the Bidding Law stipulates the legal liability that the winning bidder should bear if it fails to enter into a contract with the tenderer without justifiable reasons, it is still not clear whether the legal liability belongs to the liability for contracting negligence or the liability for breach of contract. Therefore, this paper attempts to further explore the problem to seek the final solution.

 2. the view of two kinds of game

On the question of what kind of legal liability the winning bidder should bear if he does not sign the winning contract, there are two main views in practice, one is that he should bear the liability for contracting negligence, and the other is that he should bear the liability for breach of contract. The reason why the two views continue to play games is mainly due to their different legal consequences. If the winning bidder bears the liability for contracting negligence, the winning bidder should compensate the other party for the losses caused by the violation of the principle of good faith, which is usually limited to the relevant expenses incurred by the other party due to the trust to conclude the contract with it; if the winning bidder bears the liability for breach of contract, the compensation amount is equivalent to the losses caused to the other party due to the breach of the breach, including the benefits that the other party can obtain after the performance of the contract, I .e. including the loss of the other party's available benefits.[①]Therefore, it is very important in judicial practice to determine whether the winning bidder should bear the liability for contracting negligence or the liability for breach of contract.

The reasons why the (I) believes that the liability for contracting negligence should be borne.

According to Article 270 of the Contract Law and Article 46 of the Bidding Law, the conclusion of a construction project contract shall be made in writing. This provision stipulates the requirements for the entry into force of the contract, that is, although the notice of winning the bid has been issued, a written contract has not yet been concluded at this time, so although the contract has been established but has not entered into force, it is not legally binding.[②]Since there is no written contract between the tenderer and the winning bidder, the two parties do not have a construction contract relationship, so the winning bidder shall bear the liability for contracting negligence. This view once became the mainstream view and was supported by some local high court decisions in judicial practice.

Reasons why the (II) considers it liable for breach of contract

Even if no written contract has been concluded after winning the bid, the two parties have already established a contractual relationship, which is a contract based on the tender documents, tender documents and notice of winning the bid. Because article 11 of the Contract Law provides that "written form refers to contracts, letters and data messages (including telegrams, telexes, faxes, electronic data interchange and e-mails) and other forms that can tangibly express the contents contained." The tender documents, tender documents and notice of winning the bid clearly meet the above-mentioned form requirements. As far as the legal nature of the relevant documents is concerned, the tender documents belong to the invitation to offer, the tender documents belong to the offer, and the notice of winning the bid belongs to the commitment. Thus, even if the winning bidder and the tenderer have not entered into a written contract as stipulated in the Bidding Law after the issuance of the notice of winning bid, the written contractual relationship between the two parties already exists and the winning bidder shall be liable for breach of contract.[3]

Analysis of the legal liability of the 3. winning bidder for not signing the "winning contract".

(I) relevant legal provisions

1. Article 45 of the Bidding Law stipulates: "After the winning bidder is determined, the tenderer shall issue a bid-winning notice to the winning bidder and notify all unsuccessful bidders of the bid-winning result at the same time. The bid-winning notice shall have legal effect on the tenderer and the winning bidder. After the bid-winning notice is issued, the tenderer shall bear legal responsibility in accordance with the law if the bid-winning result is changed or the winning project is abandoned."

2. Article 46 of the Bidding Law stipulates: "The tenderer and the winning bidder shall, within 30 days from the date of issuance of the bid-winning notice, conclude a written contract in accordance with the bidding documents and the winning bidder's bidding documents. The tenderer and the winning bidder shall not conclude any other agreement that deviates from the substantive content of the contract."

3. Article 74 of the Regulations on the Implementation of the Tendering and Bidding Law stipulates: "If the winning bidder fails to enter into a contract with the tenderer without justifiable reasons, puts forward additional conditions to the tenderer at the time of signing the contract, or fails to submit a performance bond in accordance with the requirements of the tender documents, it shall be disqualified from winning the bid and the bid bond shall not be refunded. For the winning bidder of a project that must be tendered according to law, the relevant administrative supervision department shall order it to make corrections and may impose a fine of less than 10 ‰ of the winning project."

The above legal provisions only stipulate that the tenderer and the winning bidder shall sign a written contract in accordance with the tender documents and tender documents, and the winning bidder shall bear legal responsibility in accordance with the law if he abandons the winning project, and if the winning bidder fails to enter into a contract with the tenderer without justifiable reasons, he shall be disqualified from winning the bid and the bid bond shall not be refunded. However, the above-mentioned legal provisions do not clearly stipulate what legal responsibilities the winning bidder should bear if he does not sign a "winning contract" with the tenderer. This issue needs to be analyzed and demonstrated based on existing legal provisions and combined with judicial practice.

Analysis of whether the construction contract is established (II) the successful bidder has not signed a written contract after receiving the notice of winning the bid.

The winning bidder's failure to sign a written contract after receiving the bid-winning notice can be divided into two situations. One is that the winning bidder has not signed a written contract after winning the bid, and the project has been actually implemented by the winning bidder. The other is that the winning bidder has not signed a written contract after winning the bid, and the project has not been actually implemented by the winning bidder. The following is analyzed separately according to different situations.

1. If the winning bidder has not signed a written contract after receiving the bid-winning notice, but has actually implemented the construction project, the contract shall be established.

As described in the case at the beginning of this article, although the winning bidder did not enter into a written "winning contract" with the tenderer, the contract was established when the winning bidder had actually completed the work. Since Article 36 of the Contract Law has already made clear provisions, this issue is not controversial in practice. That is, in accordance with the provisions of Article 36 of the Contract Law, the contract is established if the law, administrative regulations or the parties agree to conclude a contract in writing, and the parties do not use writing but one party has performed its main obligations and the other party accepts it. Therefore, in the case that the winning bidder has actually carried out the construction of the project and the project has passed the acceptance, even if the winning bidder has not signed a written construction contract with the tenderer, the construction contract between the two parties shall be deemed to have been established.

2. If the winning bidder has not signed a written contract or actually implemented the construction project after receiving the bid-winning notice, the contract shall still be established.

Although in practice, most views prefer to think that the contract is not formed or the contract is not formed in this case, the author believes that the contract is still formed in this case. From the legal nature, the tender documents belong to the invitation to offer, the tender documents belong to the offer, the notice of winning the bid belongs to the commitment, according to Article 25 of the Contract Law, the contract is established when the commitment takes effect. Even if a written contract is not concluded after the notice of winning the bid is issued, the parties have established a contractual relationship, I .e. a contract formed by the tender documents, the tender documents and the notice of winning the bid, and it is a written contract. From the content point of view, the bidding documents generally fully respond to the bidding documents, even the bidding documents are attached, and the bid-winning notice is the tenderer's approval of the bidding documents. Moreover, the written contract stipulated in Article 46 of the Bidding Law is concluded according to the contents of the bidding documents, and no agreement deviating from the substantive contents of the contract can be concluded, that is to say, after the winning bidder receives the bid-winning notice, the main contents of the contract are clear, and no changes shall be made. In terms of form, the bidding documents and the notice of winning the bid comply with the requirements of Article 11 of the Contract Law that "written form refers to the form in which contracts, letters and data messages (including telegrams, telexes, faxes, electronic data interchange and e-mails) can be tangibly expressed. Article 46 of the Bidding Law stipulates that the tenderee and the winning bidder shall conclude a written contract, but it does not stipulate that a contract shall be concluded. Since a written contract includes not only a contract, but also letters and data messages that can tangibly express the contents contained therein, the bidding documents, bidding documents and bid-winning notice together belong to the form of tangibly expressing the contents, that is, a written contract. In addition, the signing of a written contract as stipulated in Article 46 of the Tendering and Bidding Law is only a requirement from the perspective of administrative management. It is a system for the construction administrative department to facilitate the effective management of bidding activities and construction activities. Arrangements, even if a written contract is not signed separately, it will not affect the establishment of the contract.

Based on the above point of view, the author believes that even if the winning bidder has not signed a separate written construction contract with the tenderer, a contractual relationship has been formed between the winning bidder and the tenderer, that is, the contract has been established.

(III) the winning bidder fails to sign a written contract after receiving the bid-winning notice, he shall be liable for breach of contract.

According to the foregoing analysis, the winning bidder has not signed a written contract after receiving the notice of winning the bid, and the contract is established regardless of whether the construction project has been actually implemented by the winning bidder. It is generally agreed in the tender documents that the winning bidder shall sign a written contract with the tenderer within 30 days from the date of receipt of the notice of winning the bid, that is to say, if the winning bidder does not sign the contract with the tenderer in accordance with the agreement, the winning bidder is in breach of contract. Therefore, in the first case, the contract has been established and the winning bidder has actually implemented the construction project. If the winning bidder does not sign a written contract with the tenderee, the winning bidder shall bear the liability for breach of contract without signing the "winning contract". In the second case, since the contract has been established and the winning bidder has not implemented the construction project according to the contract requirements, in addition to the liability for breach of contract for not signing the "winning contract", the winning bidder shall also bear the liability for breach of contract for not implementing the construction project in accordance with the agreement of the established contract.

4. how the winning bidder should bear the liability for breach of contract if he does not sign the contract.

As mentioned earlier, the legal consequences of the winning bidder's liability for contracting negligence or liability for breach of contract are different, and then we analyze the conclusion that the winning bidder should bear the liability for breach of contract if he does not sign the "winning contract", but how to bear the liability for breach of contract, but also need to be analyzed in detail.

(I) the successful bidder has not signed a written contract, but has actually implemented the liability for breach of contract of the construction project.

Article 74 of the Regulations on the Implementation of the Bidding and Bidding Law stipulates: "If the winning bidder fails to enter into a contract with the tenderer without justifiable reasons, puts forward additional conditions to the tenderer at the time of signing the contract, or fails to submit a performance bond in accordance with the requirements of the bidding documents, the bid winning qualification shall be canceled, and the bid bond shall not be refunded. For the winning bidder of a project that must be tendered according to law, the relevant administrative supervision department shall order it to make corrections and may impose a fine of less than 10 ‰ of the winning project." In the event that the winning bidder has not signed a written contract but has actually performed it, the winning bidder shall not be liable for breach of contract for failure to perform the construction contract, but the winning bidder shall have the obligation to continue to sign the construction contract with the tenderer. If the winning bidder does not agree to sign, resulting in the tenderer being punished by the relevant competent departments of the government or causing other economic losses to the tenderer, the tenderer shall have the right not to return the bid bond of the winning bidder, require the winning bidder to pay the corresponding fine and compensate the tenderer for all economic losses caused thereby.

(II) the successful bidder has not signed a written contract, nor has he actually implemented the liability for breach of contract of the construction project.

Article 60 of the Bidding Law stipulates: "If the winning bidder fails to perform the contract concluded with the tenderer, the performance bond shall not be refunded, and if the loss caused to the tenderer exceeds the amount of the performance bond, the excess shall also be compensated; If the performance bond is not submitted, the tenderer shall be liable for the losses of the tenderer." Article 113 of the contract Law stipulates: "if one of the parties fails to perform its contractual obligations or fails to perform its contractual obligations in accordance with the agreement, causing losses to the other party, the amount of compensation for the losses shall be equivalent to the losses caused by the breach of contract, including the benefits that can be obtained after the performance of the contract, but shall not exceed the losses that may be caused by the breach of contract foreseen or should have been foreseen by the party at the time of the conclusion of the contract."

According to the above provisions, if the winning bidder has not signed a written contract and has not actually implemented the construction project, he may be liable for the following breach of contract.

1. Non-refundable performance bond

In order to urge the winning bidder to perform the contract, Article 46, paragraph 2, of the Bidding Law stipulates that if the bidding documents require the winning bidder to submit a performance bond, the winning bidder shall submit it. If the winning bidder who has paid the performance bond fails to perform the contract, the performance bond paid shall not be refunded, regardless of whether the winning bidder's breach of contract has caused losses to the tenderer. If the amount of loss caused by the winning bidder to the tenderer exceeds the amount of the performance bond, the winning bidder shall also compensate for the excess; if the winning bidder fails to submit the performance bond as required, it shall also be liable for the loss of the tenderer.

2. Compensation for loss

If the breach of contract by the winning bidder causes losses to the tenderer, the winning bidder shall be liable for damages. According to the provisions of the Bidding Law and the Contract Law, the scope of compensation by the winning bidder includes the direct and indirect losses suffered by the tenderer, I .e. the benefits that can be obtained after the performance of the contract, but shall not exceed the losses that the parties foresee or should foresee at the time of the conclusion of the contract. In the bidding practice, because the winning bidder does not sign a written contract, the scope of loss caused to the tenderer by not implementing the construction project includes bidding, bid evaluation costs, construction delay costs, increased construction costs, the difference between the two winning bids and other costs incurred by the tenderer as a result of organizing the bidding.

5. epilogue

The purpose of this paper is to try to solve the problem of what kind of legal liability the winning bidder should bear if he does not sign the "winning contract" after receiving the notice of winning the bid. The author combined with the actual situation of their own cases, through analysis and argumentation, that the winning bidder received the letter of acceptance, regardless of whether it has actually implemented the project, the contract is established. In the case of the contract has been established, the winning bidder does not sign the construction contract with the tenderer itself is a breach of contract, if the winning bidder does not actively perform the obligations of the contract has been established, the winning bidder's liability for breach of contract is more clear, and the liability for breach of contract is heavier.

Therefore, once the winning bidder receives the bid-winning notice, he should actively sign a written contract with the tenderer. Even if he encounters difficulties in performing the contract, he should actively negotiate with the tenderer and keep the evidence materials that are beneficial to him. As for the tenderer, in the face of the winning bidder not signing the contract and not implementing the construction project, he should make full use of the existing bidding documents, bidding documents, bid-winning notice and other evidence materials to investigate the winning bidder's liability for breach of contract and safeguard his legitimate rights and interests.

[①]See Wang Jun, "Liability for breach of contract or liability for contracting negligence-the legal liability of a party to refuse to sign a contract after the notice of winning the bid is issued", Construction Economy, No. 5, 2011.

[②]See Yang Yulin, Editor-in-Chief, "The Gist of Real Estate Cases and Comments on Judgment", People's Court Press, 2004 edition, p. 28.

[3]See Wang Jun, "Liability for breach of contract or liability for contracting negligence-the legal liability of a party to refuse to sign a contract after the notice of winning the bid is issued", Construction Economy, No. 5, 2011.