Perspective | If the legal representatives of the bidder and the tenderer are the same person, does it fall under "having a vested interest with the tenderer that may affect the fairness of the bidding"?
Published:
2025-02-26
If the legal representatives of the bidder and the tenderer are the same person, does it fall under the clause of "having a vested interest with the tenderer that may affect the fairness of the bidding"? Is the bid valid? This article analyzes the case as follows.
If the legal representatives of the bidder and the tenderer are the same person, does it fall under the clause of "having a vested interest with the tenderer that may affect the fairness of the bidding"? Is the bid valid? This article analyzes the case as follows.
Case: Fan**, Anhui Water* Construction Group Co., Ltd. Construction Engineering Contract Dispute
First Instance Stage:Anhui Province Hefei Intermediate People's Court (2017) Wan 01 Min Chu 36
Second Instance Stage:Anhui Province High People's Court (2020) Wan Min Zhong 507
The first instance court found the facts of the case:
On September 29, 2009, Jin* Company (Party A) signed a "Supplementary Agreement for the Construction and Installation Project of Jin* Fairy Tale Garden Buildings 17#-21#, 23#-25#" with Shui* Company (Party B). The main content of the contract stipulates that Party A, through bidding, determines to entrust Party B to undertake the construction of the construction and installation project of Jin* Fairy Tale Garden Phase III Buildings 17#-21#, 23#-25# (including basement), with a total construction area of 52,973 square meters. The contracting method is a package of labor and materials, and the scope of the project includes all contents in the complete set of construction drawings and the scope of the project determined in the bidding documents, as well as bidding inquiries, supplementary explanations, etc. The subcontracting service fee reported by Party B is 2%. The materials supplied by Party A include exterior wall tiles, roof tiles, etc.; the contract price determined after bidding is 73,644,000 yuan, and the contract price is fixed in one lump sum except for the following factors: design modifications and changes during construction, projects and costs outside the scope of the contract, and on-site verification approved by Party A; the adjustment of the contract price unit price, material prices, and rates is based on the original bidding quotation and adjusted according to the discount ratio; all contents within the scope of the bidding are deemed to be included in the contract price, regardless of whether there are omissions or missing items, no adjustments will be made; no advance payment will be made for this project, and the payment method for the project progress payment is 80% of the completed project cost paid monthly according to progress after the structure reaches the fourth floor (100% deducting the materials supplied by Party A), and 90% of the progress payment will be paid after the project completion acceptance is qualified and the completion filing procedures are completed (including the materials supplied by Party A), and the remaining payment will be settled after the completion acceptance is qualified, deducting the quality assurance fund, which is 5% of the total settlement amount, and will be paid after the quality assurance period expires. The contract also stipulates other rights and obligations. On October 18, 2009, Jin* Company and Shui* Company signed another "Construction Engineering Contract" for the above project and filed it with the construction administrative department, with the contract price stated in that contract being 53.9 million yuan. Subsequently, Jin* Company and Shui* Company signed another "Supplementary Agreement for the Construction and Installation Project of Jin* Fairy Tale Garden Buildings 23#-25#", and both parties made corresponding changes to the construction project of Buildings 23#-25#...
The second instance court found the facts of the case:On September 28, 2009, Shui* Company submitted a bidding document to Jin* Company, which included: engineering bidding quotation, quoted at 75.24 million yuan; bidding document, stating that based on the bidding documents for the Jin* Fairy Tale Garden Phase III project that had been received, our unit was willing to undertake all the projects within the scope of this bidding at a total price of 75.24 million yuan, according to the requirements of the bidding documents, the contractor is Fan**; letter of commitment, Fan** made commitments regarding the construction period, etc. On September 29, 2009, a winning notice was issued, with a winning price of 73.644 million yuan...
The focus of the second instance dispute: 1. Whether the bidding behavior involved in the case is illegal, whether the contract signed between Shui* Company and Jin* Company is valid...
The second instance court's ruling opinion:
1. During the bidding period, the legal representatives of Shui* Company and Jin* Company are the same person, and the bidder and the tenderer have a vested interest that may affect the fairness of the bidding, as well as the winning price of 73.644 million yuan changing from the bidding quotation of 75.24 million yuan, which violates the relevant provisions of the bidding law. Therefore, Fan**'s claim that the contract involved in the case is invalid has factual and legal basis, and this court supports it...
Lawyer's analysis:
Article 34, Paragraph 1 of the Implementation Regulations of the Bidding Law of the People's Republic of China states: "Legal persons, other organizations, or individuals who have a vested interest with the tenderer that may affect the fairness of the bidding shall not participate in the bidding. If the unit leader is the same person or there is a controlling or management relationship between different units, they shall not participate in the bidding for the same section or the same bidding project that has not been divided into sections. Bids that violate the previous two paragraphs are invalid."
From the existing judicial practice and official interpretation, the legal representatives of the tenderer and the bidder being the same person falls under the vested interest as stipulated in the Implementation Regulations of the Bidding Law of the People's Republic of China; it also falls under the situation of "possibly affecting the fairness of the bidding" during the bidding process. Therefore, the civil judgment of Anhui Province High People's Court (2020) Wan Min Zhong 507 ruled that "during the bidding period, the legal representatives of Shui* Company and Jin* Company are the same person, and the bidder and the tenderer have a vested interest that may affect the fairness of the bidding," resulting in the bid being invalid.
In summary, the legal representatives of the tenderer and the bidder being the same person falls under the situation of "having a vested interest with the tenderer that may affect the fairness of the bidding," which will lead to the bid being invalid, and consequently, the contract signed between the two parties will be invalid.
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