DECREE 37/2015/ND-CP
April 22, 2015
ON DETAILED REGULATIONS ON CONSTRUCTION CONTRACT
Pursuant to the Law on Government
organization dated December 25, 2001;
Pursuant to the Law on Construction
dated June 18, 2014;
At the request of the Minister of Construction,
The Government promulgates the Decree detailing
construction contract
Chapter I. GENERAL PROVISIONS
Article
1. Scope and regulated entities
1. This Decree provides detailed
regulations on construction contract
2. This Decree applies to organizations,
individuals concerning formulation and management of the performance of
construction contract for construction projects (including construction
contract between investors in BOT, BTO, BT and PPP projects and contractors for
project packages) as follows:
a) Construction projects by regulatory
agencies, political organizations, socio-political organizations,
political-social-occupational organizations, socio-occupational organizations,
social organizations and units affiliated to People’s armed forces and public
service providers;
b) Construction projects by state-owned
enterprises;
c) Construction projects that are not
defined in Points a, b of this Clause but use state capital, corporate capital
from 30% and over or from under 30% to over VND 500 billion of total project
investment capital;
Relevant organizations, individuals
using other capital sources are encouraged to apply provisions set out hereof.
3. As for construction contract for ODA
projects, provisions set out in the International Agreement to which Vietnam is
a signatory shall be exercised in case they are different from provisions set
out hereof.
Article
2. Interpretation of terms
In this Circular, some terms are
construed as follows:
1. Construction contract is a civil contract negotiated
in writing between the employer and contractor for execution of a part or whole
of the construction investment activity.
2. The employer means the investor or
its representative, general contractor or main contractor.
3. Contractor means general contractor
or main contractor if its employer is the investor; sub-contractor if its
employer is general contractor or main contractor. The contractor can be a
joint venture among contractors.
4. General provisions of the
construction contract are exhibits attached to the contract that define rights
and obligations and relationship of the parties involved in the contract.
5. General provisions of the
construction contract are the documents attached to the contract that define
rights and obligations and relationship of the parties involved in the
contract.
6. Appendices of the construction
contract are the documents attached to the contract that detail amendments and
supplements to a number of terms and conditions of the contract.
7. Working days in this Decree mean
solar days except Sundays, public holidays, Tet holidays as stipulated by the
law.
8. Technical instructions mean a
collection of technical requirements based on technical regulations and
standards applied to construction works, construction engineering to instruct
and define materials, products and equipment used for construction packages and
tasks of construction, supervision, inspection and acceptance of construction
works.
9. Front End Engineering Design means
general design developed in conformity with international practice as the basis
for development of detailed design.
10. Scope of work as prescribed in
Clause 1, Article 12 hereof;
11. Main contractor means an
organization that directly signs the construction contract with the investor.
12. Sub-contractor means an
organization that signs the contract with main contractor or general
contractor.
13. Foreign contractor means an
organization established under foreign law or individuals holding foreign
nationality that are involved in the signing and management of the performance
of construction contract in Vietnam. Foreign contractor can be main contractor,
general contractor or sub-contractor.
Article
3. Types of construction contract
1. Depending on nature, types of
construction contracts are as follows:
a) Construction consultant contract (or
contract for consultancy) is a type of contract for performance of part or
whole of the consulting task in activities of investment and construction;
b) Work construction contract (or
construction contract) is a type of contract for the performance of
construction of the works, work items or part of construction work by design;
General construction contract is a type of contract for the performance of all
of the works of an investment project;
c) Technological equipment procurement
contract (or procurement contract) is a type of contract for the procurement of
technological equipment to be installed to the construction works under
technological design; General procurement contract is a type of contract for
the procurement of equipment to all of the works of an investment project;
d) Engineering and Construction
contract (or EC contract) is a type of contract for the engineering and
construction of the works, work items; General EC contract is a type of contract
for the engineering and construction of all of the works of an investment
project;
dd) Engineering and Procurement
contract (or EP contract) is a type of contract for the engineering and
procurement of equipment for the installation of the construction works as
designed; General EP contract is a type of contract for the engineering and
procurement of equipment to all of the works of an investment project;
e) Procurement and Construction
contract (or PC contract) is a type of contract for the procurement and
construction of the works, work items; General PC contract is a type of
contract for the procurement and construction of all of the works of an
investment project;
g) Engineering, Procurement and Construction contract (or EPC contract) is a type of contract
for the engineering, procurement and construction of the works, work items;
General EPC contract is a type of contract for the engineering, procurement and
construction of all of the works of an investment project;
h) Turnkey contract is a type of
contract for the performance of all the tasks from project establishment,
engineering, procurement and construction of the works of an investment
project;
i) Contract for supply of human force,
working machinery and equipment is a type of contract for the supply of human
force, working machinery, equipment and other necessary vehicles for serving
the construction of the works, work items, packages or construction work as
designed;
k) Other types of construction contract
2. Depending on contractual price manner,
construction contracts include the following types:
a) Lump sum contract;
b) Fixed unit price contract;
c) Adjustable unit price contract;
d) Time-based contract;
dd) Combined price contract is a type
of contract using the combination of contractual price types as prescribed in
Points a – d of this Clause.
3. Depending on relationship of parties
involved, construction contracts include the following types:
a) Main contract is a type of contract
signed between the investor and main contractor or general contractor.
b) Sub-contract is a type of contract
signed between main contractor or general contractor and sub-contract.
c) Fixed rate contract is a type of contract signed
between the employer and contractor as an agency or organization.
d) Foreign construction contract is a
type of contract signed between a foreign contractor and a domestic contractor
or investor.
Article
4. Principles for signing construction contract
Principles for signing construction
contract must conform to Clause 2, Article 138 of the Law of Construction No.
50/2014/QH13 and ensure the followings:
1. At the time of signing, the
contractor must meet conditions for practice qualification and performance
qualification as prescribed in the Law on Construction. As for partnership contractor,
division of work quantity in the partnership agreement must be based on
performance qualification of each member of the partnership. As for foreign
main contractor, an undertaking to hire domestic sub-contractor to perform the
tasks under the contract must be included when such sub-contractor is capable
of meeting requirements of the bid package.
2. The investor or its representative
is permitted to sign a contract with one or more main contractors for the
performance of tasks. In case the investor signs contracts with multiple
main contractors, the content of these contracts must ensure uniformity and
comprehensiveness during the performance of the tasks under the contract to
meet schedule, quality and efficiency of the investment project
3. General contractor or main
contractor is permitted to sign contracts with one or multiple sub-contractors
but such sub-contractors must be accepted by the investor. All these
sub-contractors must be in uniformity and agreement with the main contractor
signed with the investor. General contractor or main contractor must be
responsible to the investor for schedule, quality of the undertaken tasks
including the tasks performed by sub-contractors.
4. Contractual price is not permitted
to exceed the bid price or result of negotiation on construction contract
except the quantity generated outside scope of the bid package permitted by
competent persons.
Article
5. Principles for execution of construction contract
When executing the construction
contract, the parties must meet the principles for execution of construction
contract as prescribed in Clause 3, Article 138 of the Law on Construction No.
50/2014/QH13:
Article
6. Validity and legality of construction contract
1. A construction contract shall become
legally effective when it meets the following conditions:
a) Persons who participate in signing a
contract must obtain adequate legal capacity;
b) Meet the principles for contract
signing as prescribed in Article 4 hereof;
c) Form of a contract is in writing and
signed by representative of the parties to a contract according to the law. In
case either of the parties is an organization, such party shall sign its name
and affix stamp according to the law.
2. The effective date of a contract is
the date when it has been signed (affixed with stamp if any) or other specific
times as agreed in the contract and the employer has received performance bond
issued by the contractor (for a contract with provisions on performance bond
being specified).
3. Legality of construction contract:
a) A construction contract that has
become effective shall be the highest legal foundation that the employer,
contractor and other related parties have the obligations to perform;
b) A construction contract that has
become effective shall be the highest legal foundation for settling dispute
between the parties. Any dispute that is not yet agreed by the parties to the
contract shall be settled on the basis of relevant law provisions;
c) Regulatory agencies and agencies
that perform controlling, allocation, provision of capital, investigation and
auditing, and other relevant agencies shall perform their functions and duties
as defined without encroachment on rights and interests of the parties in
reliance on terms and conditions of the effective construction contract.
Article
7. Management of construction contract performance
1. Within one's rights and obligations,
the parties need to establish a plan and take appropriate implementation
measures in accordance with the signed construction contract to achieve terms
and conditions set out in the contract.
2. Depending on construction contract
types, management of construction contract performance shall include:
a) Management of contract performance
schedule
b) Quality management;
c) Quantity and contractual price
management;
d) Management of labor safety,
environmental protection and fire & explosion prevention and fighting;
dd) Revision of contracts and other
contract-related issues;
3. Both the employer and contractor
must appoint and notify other party of its representative who shall manage
construction contract performance. Representative of the parties must be fully
entitled to decide and take responsibility for its own decision within
authority as set out in the contract.
4. All proposals, requests and
feedbacks from either party during the management of construction contract
performance must be made in writing. Such proposals and request should
represent foundations, efficiency (if any) and feedback deadline as agreed in
the contract. Upon receipt of a proposal or request from one party, the other
party must make a written reply about approval or disapproval of the deadline
as agreed in the contract within seven working days since receipt of such
proposal or request except otherwise as agreed. After this deadline, if the
party that receives proposal or request fails to respond without proper reason
and causes damage to the other party shall take full responsibility and pay
compensation (if any).
5. Any proposal or request from either
party during the management of construction contract performance must be
dispatched to the address as agreed by the parties under the contract.
6. For any matter that is not
prescribed hereof, the parties shall rely on relevant law provisions for
execution.
Chapter II. PARTICULAR PROVISIONS
Section 1. INFORMATION, FOUNDATIONS FOR SIGNING, CONTENT,
DOCUMENT, APPLICABLE LAW, AND LANGUAGE USED IN CONSTRUCTION CONTRACT
Article
8. Information about construction contract
Information about a construction
contract must be specified in the contract as follows:
1. Contract type and number, name of
bid package, project name, construction site and foundations for contract
signing;
2. Business name of the parties to the
contract, representatives of the parties, registered business address or
transaction address, tax codes, business registration certificate, account
number, phone number, fax number, email, time and venue for contract execution
and other relevant information;
3. In case of a partnership contractor,
all the information about the leading member and other individual members of
such partnership as prescribed in Clause 2 of this Article must be specified.
Article
9. Foundations for signing construction contract
1. Foundations for signing a
construction contract include requirements for performance of the tasks as
agreed by the parties, result of selection of contractor, negotiation and
completion of the contract and other relevant foundations.
2. As for EPC, EC and EP contracts, in
addition to the foundations as specified in Clause 1 of this Article, a
feasibility study report or approved FEED is also required.
3. As for Turnkey contracts, in
addition to the foundations as specified in Clause 1 of this Article, other
foundations such as project performance duties, investment policies, approved
feasibility study report are also required.
Article
10. Content, document and order of priority of documents enclosed in a
construction contract
Content, documents and order of
priority of documents enclosed in a construction contract are instructed in
Points 141, 142 of the Law on Construction No. 50/2014/QH13:
Article
11. Applicable law and language used in a construction contract
1. The construction contract must
conform to the law system of the Socialist Republic of Vietnam and provisions
set out hereof.
2. Language used in a construction
contract is Vietnamese.
3. As for a foreign construction
contract, the language used is Vietnamese and English as agreed by the parties;
in case no agreement on this is reached, English shall be used.
Section 2. CONTENT AND QUANTITY OF WORK, REQUIREMENTS FOR
QUALITY AND IMPLEMENTATION PROGRESS
Article
12. Content and quantity of work in construction contract
1. Content and quantity of work in a
construction contract are subject matters and quantity of work that the
employer signs with the contractor in accordance with scope of work and
specified in the contract. Scope of work is determined on the basis of an
invitation to bid (ITB) or request for proposals, bid documents, negotiation
minutes and other relevant legal documents. Depending on specific construction
contract type, scope of work shall be determined as follows:
a) Contract for consultancy:
Establishment of planning, investment project; designing and survey; project
management; management of construction contract performance; construction
supervision; examination and verification of design, cost estimates and other
consulting works in activities of investment and construction;
b) Construction contract: Supply of
building materials, human force, working machinery and equipment, and
construction in accordance with approved design document;
c) Procurement contract: Supply of
equipment; instructions on installation, use, trial operation, official
operation, training and technology transfer (if any) in accordance with
approved design document;
d) EPC contract: Engineering,
procurement of materials and equipment, construction; training and instructions
on operation, maintenance, repair work; technology transfer; on-load/off-load
trial operation; other works in accordance with approved design document;
dd) Turnkey contract: Establishment of
investment project; engineering, procurement of materials and construction;
training and instructions on operation, maintenance, repair work; technology
transfer; on-load/off-load trial operation; handover of the works to the
employer for operation; other works in accordance with approved project;
2. Revision of quantity of work in the
contract is prescribed in Article 37 hereof;
Article
13. Requirements for product quality, acceptance and handover of works
1. Requirements for construction
product quality:
a) Construction product quality must
meet requirements under the contract and conform to the quality requirements as
prescribed by the law. The parties to the contract must reach a common
agreement on national regulations and standards, technical instructions applied
to the product.
b) As for imported equipment and goods,
in addition to the provisions set out in Point a of this Clause, provisions on
origin must be applied.
2. Acceptance and handover of finished
works:
a) Agreements on procedures for
acceptance and handover of the works by the parties to the contract must
conform to the provisions set out in the Law on Construction Quality Control.
b) Works to be accepted and handed
over; foundations for acceptance and handover; procedures, date of acceptance
and handover of finished works; personnel involved in acceptance and handover;
forms; signers, written records, reports must conform to the law provisions and
be agreed by the parties to the contract.
c) Only products that meet quality
requirements as prescribed in Clause 1 of this Article are accepted and handed
over.
d) As for the works to be inspected and
accepted before moving on to other works, the contractor must make prior notice
to the employer for inspection as prescribed by the Law on Construction Quality
Control.
dd) As for defective products (failing
to meet requirements as prescribed in the contract), they must be remedied or
eliminated otherwise. Any party that commits the fault shall incur the
entire cost for remedial work, re-appraisal and implementation progress.
Article
14. Time and progress of construction contract performance
1. Time of construction contract
performance is from the effective date of the contract till the parties have
fulfilled their obligations under the signed contract.
2. The contractor shall establish a
detailed implementation progress and make submission to the employer for
approval.
3. The implementation progress must represent
milestones of completion and handover of key works and products.
4. As for a construction contract for a
large-scale bid package with a long implementation period, the implementation
progress may be divided into individual stages.
5. As for a procurement contract,
progress of equipment supply must represent milestones of handover of equipment
of which quantity and types of equipment in each stage of handover must be
specified.
6. As for an EPC contract or turnkey
contract, in addition to each stage’s implementation progress, progress for
each type of work (project establishment, engineering, procurement and
construction) must be also established.
7. Speeding up contract implementation
progress while product quality is ensured is encouraged. In case such speeding
up brings about more efficiency to the project, the contractor shall be
considered for rewards as agreed in the contract.
8. Revision of contract implementation
progress is prescribed in Article 39 hereof;
Section 3. CONTRACTUAL PRICE, ADVANCES, PAYMENT, FINAL
SETTLEMENT AND LIQUIDATION OF CONSTRUCTION CONTRACT
Article
15. Contractual price and conditions
1. Contractual price is an amount of
money that the employer undertakes to pay to the contractor for the
implementation of the works under the requirements for quantity, quality,
progress, payment terms, advances and others as agreed in the contract.
2. Expenses, taxes and other charges
(if any) included or not included in contractual price must be specified in the
construction contract; contractual price to be revised must conform to contract
type, contractual price manner and must be agreed by the parties in the
contract. As for a construction contract under which payment in multiple
currencies is agreed by the parties, contractual price in proportion to each
currency must be specified.
3. Construction contract price includes
the following types:
a) Lump sum contract price is the
contractual price that is unchanged throughout the implementation period for
the quantity of work within the scope of work under the signed contract except
force majeure events or compulsory changes to scope of work.
b) Contractual price of fixed unit
price is determined by multiplying fixed unit price of each work by respective
quantity of work. Fixed unit price is the unit price that is unchanged
throughout the implementation period except force majeure events.
c) Contractual price of adjustable unit
price is determined by multiplying the unit price subject to adjustment due to
slippage in prices as agreed in the contract by respective quantity of work
(with the price adjustable). Adjustment to unit price due to slippage in prices
are prescribed in Clauses 3, 4, Article 38 hereof;
d) Time-based contract price is
determined on the basis of expenses for experts’ work, other expenses and work
time (quantity) by month, week, day and hour.
- Expenses for experts’works are
determined by multiplying their pay rate and other related expenses by the
actual work time (on a monthly, weekly, daily and hourly basis).
- Other expenses apart from the
expenses for experts’ work include travel expenses, working offices and other
expenses.
dd) Contractual price of combined price
is the contractual price used in combination with other contractual prices as
prescribed in Points a – d of this Clause in accordance with each type of work
mentioned in the contract.
4. Construction contract price is
determined on the basis of bid price or result of negotiation on the
construction contract between the parties.
5. Conditions for applying construction
contract types are prescribed as follows:
a) Lump sum contract:
Lump sum contract price applied to bid
packages at the date of contractor selection and contract negotiation has met
conditions for determination of quantity and unit price for the implementation
of the works under the construction contract or in some cases, quantity and
unit price are not yet determined but the parties are qualified to calculate
and determine the lump sum contract price.
When the lump sum contract price is
applied, elements related to bid package price or contractual price such as
risks to quantity and slippage in prices must be taken into account during the
contract implementation period and each party must be responsible for its own
risks.
b) Contractual price of fixed unit
price:
Contractual price of fixed unit price
applied to bid packages at the date of contractor selection and contract
negotiation has met conditions for determination of unit price for the
implementation of the works under the construction contract but quantity of
work is not yet determined. Then, risky elements of unit price such as slippage
in prices must be taken into account during the contract implementation period
and each party must be responsible for its own risks as well as anticipating
provisional budget for risky elements of bid price and contractual price such
as slippage in prices and quantity.
c) Adjustable unit price contract
applied to bid packages at the date of contractor selection and contract
negotiation has not yet met conditions for determination of quantity, unit
price and elements of contractual price such as slippage in prices during the
contract implementation period and the parties must be responsible for
anticipating provisional budget for risky elements of bid price and contractual
price such as slippage in prices and quantity.d) Time-based contract price is
usually applied to a number of construction contracts covering consulting work
in activities of investment and construction. Contract for consultancy is
applied to all contractual prices as prescribed hereof.
Article
16. Guarantee for construction contract performance
1. Measures to guarantee construction
contract performance such as payment of deposit, security or performance bond
for fulfillment of obligations shall be undertaken by the contractor during the
construction contract period.
2. Contract performance guarantee must
be submitted to the employer before the contract takes effect as agreed by the
parties on value, currency and guarantee method according to the forms accepted
by the employer and valid until the contractor has fulfilled its obligations
under the contract or after the employer has received maintenance bond with
respect to a contract for construction and procurement of equipment.
Particularly for a contract for consultancy, fixed rate contract, construction
contract for target programs performed by households and construction contracts
in the form of self-performing, a performance guarantee is not required.
3. In case the contractor is a
partnership contractor, each member of such partnership must submit contract
performance guarantee to the employer and level of guarantee value must
correspond to part of the contract value undertaken by each member. If the
partnership has an agreement on submission of contract performance guarantee
made by a leading member, such leading member shall submit the performance
guarantee to the employer and each member of the partnership must submit its
own performance guarantee to the leading member in proportion to the contract
value undertaken by each member.
4. Value of contract performance
guarantee and guarantee method are prescribed in the invitation to bid or
request for proposals. Level of performance guarantee is determined within 2% -
10% or higher but not exceeding 30% of the contract value and approved by
competent person.
5. The contractor shall not be
permitted to get back the contract performance guarantee in case of refusal to
perform the contract right after the contract takes effect and other violations
as prescribed in the contract.
6. The employer must return the
contract performance guarantee to the contractor after the contractor has
fulfilled obligations under the contract or has transferred to maintenance work
and the employer has received maintenance bond with respect to a construction
contract covering construction and procurement of equipment.
Article
17. Payment guarantee
1. Construction contract payment
guarantees shall be responsibilities of the employer for proving capabilities
to perform payment obligations under the signed contract via such forms as
approved capital arrangement plan, bank or credit organization guarantee,
credit supply contract or loan agreement with financial institutions.
2. Before signing a construction
contract, the employer must issue a payment guarantee in accordance with the
payment schedule as agreed in the contract. The employer is not permitted to
execute a construction contract without approved capital arrangement plan as
agreed in the contract except urgent construction works.
Article
18. Advances
1. Advance on a construction contract
is an amount of money offered in advance by the employer to the contractor
without interest rate for necessary preparations before implementation of the
tasks under the contract.
2. Such advance is made only after the
construction contract takes effect. Particularly for work execution contract, a
site clearance plan must be included in the contract and at the same time the
employer has received advance payment guarantee (if any) corresponding to value
of each currency agreed by the parties.
3. Level of advance payment, date of
payment and recovery of advance shall be agreed specifically in the contract.
Level of advance payment and number of advance payments must be specified
in the invitation to bid, request for proposals or a draft construction
contract dispatched to the contractor as foundation for calculation of bid
price, proposal price.
4. Advance payment guarantee:
a) For a construction contract with an
advance payment value higher than one billion Vietnam dong, before the employer
carry out the advance payment, the contractor must submit to the employer an
advance payment guarantee with value and currency equivalent to the advanced
amount of money. Any construction contract with value from one billion
Vietnam dong and lower, and construction contracts in the form of
self-performing including the contract executed by a community under the target
programs, advance payment is not obligatory.
b) In case the contractor is a
partnership contractor, individual members of the partnership must submit to
the employer advance payment guarantee with value equivalent to the amount
advanced to each member except all the members of the partnership decide on the
leading member for submission of payment guarantee to the employer.
c) Validity period of advance payment
guarantee must be extended until the employer has recovered all the advanced
amount of money. Value of advance payment guarantee shall decrease gradually in
proportion to value of advance payment recovered via each payment made between
the parties.
5. Level of advance payment is not
allowed to exceed 50% of the contract value at the time of signing. In special
cases, this must be approved by a competent person, or the Minister, presidents
of People’s committees of provinces; President of the Member Council, President
of the Board of Directors of the group, corporation in case the competent
person is the Prime Minister; minimum level of advance payment is prescribed as
follows:
a) Contract for consultancy:
- 15% of the contract value for a
contract valued over VND 10 billion.
- 20% of the contract value for a
contract valued up to VND 10 billion.
b) Work execution contract:
- 10% of the contract value for a
contract valued over VND 50 billion.
- 15% of the contract value for a
contract valued from VND 10 to 50 billion.
- 20% of the contract value for a
contract valued under VND 10 billion.
c) Procurement contract, EC contract,
EP contract, PC contract and EPC contract, turnkey contract and other construction
contracts: 10% of the contract value;
d) In case the parties agree on a level
of advance payment that is higher than the minimum level as prescribed in
Points a, b, c of this Clause, value of the contract in proportion to such
level of advance payment shall not be adjusted in price since the date of
advance payment.
dd) The advanced amount of money is
gradually recovered via payments. The amount recovered from each payment shall
be agreed by the two parties in the contract but must ensure that all the
advanced amount of money is recovered when 80% of the signed contract value is
paid.
6. The contractor must use the advance
as intended, planned and effectively. Use of the advance for purposes outside
the contract’s scope of work is prohibited.
7. As for production of structures,
semi-finished products of high value, some materials reserved by season, the
two parties must negotiate on advance payment plan and level of advance payment
to ensure the contract implementation progress.
Article
19. Construction contract payment
1. Construction contract payment must
be in accordance with contract type, contractual price and conditions
prescribed in the signed contract. When payment is made under the contract, the
two parties do not have to sign the appendices except some supplements are made
to the contract.
2. The parties shall negotiate in the
contract about number of payments, stage of payment, date of payment, payment
term, payment documents and conditions.
3. The employer must pay 100% of each
payment value to the contractor after advances and maintenance expenses are
subtracted according to agreement under the contract except otherwise as
negotiated.
4. If the two parties are not eligible
to carry out the payment under the contract during the payment period (no data
to adjust price, insufficient time to determine product quality...), temporary
payment can be made. When the two parties are eligible to carry out the
payment, the employer must make the payment to the contract as prescribed in
Clause 3 of this Article.
5. Lump sum contract: payment shall be
made on percentage of contractual price or construction works price, work
items, quantity of work in proportion to payment stages as agreed in the
contract. Confirmation of completed quantity of work is not required when
payment is made.
6. Contracts of fixed unit price and
adjustable unit price: Payment shall be made on the basis of actual completed
quantity (including increasing or decreasing quantity if any) inspected and
accepted for each payment, and unit price in the contract or adjustable unit
price as agreed in the contract.
7. As for time-based contract, payment
shall be made as follows:
a) Expenses for experts’ work are
determined by multiplying the expert’s pay rate and relevant expenses as agreed
in the contract by actual accepted work time (on a monthly, weekly, daily and
hourly basis).
b) Expenses apart from the expenses for
experts’ work shall be paid according to provisions of the contract.
8. As for contracts of combined price,
payment shall be made according to regulations on contract payment as
prescribed in Clauses 5, 6, 7 of this Article.
9. Payment of additional quantity
(apart from the contract) without unit price in the contract shall be made
according to agreement in the contract or additional agreement and in
accordance with relevant law provisions.
10. Payment term as agreed by the two
parties in the contract must be in conformity with scale and nature of each
contract. Time for payment should not prolong over 14 working days since the
employer receives adequate payment documents as agreed in the contract and
specifically prescribed as follows:
a) Within seven working days since
receipt of adequate payment request from the contractor, the employer must
complete procedures and transfer payment request to the bank or State
Treasuries to facilitate the payment.
b) Within seven working days since
receipt of adequate payment request from the contractor, the employer must
complete procedures and transfer payment request to the bank or State Treasuries
to facilitate the payment.
c) For contracts of ODA projects, loans
from foreign credit institutions, payment term is prescribed in International
Agreement. When negotiating about payment term, the parties must rely on
provisions of the International Agreement and investment capital payment
procedures according to law provisions.
11. The employer's failure to pay or
overdue payment to the contractor as agreed in the contract shall not be
accepted.
Article
20. Payment documents
1. 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:
a) 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.
b) 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.
c) 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.
d) 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.
dd) 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.
e) 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.
2. As for a contract of combined price,
payment documents for each type of work under the contract shall be prescribed
in Clause 1 of this Article.
3. 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
this Article.
4. In addition to the key documents as
prescribed in Clause 1 of this Article, for a contract using ODA, loans of
foreign credit institutions, payment documents must be done according to
International Agreement.
5. 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.
Article
21. Currency and payment term
1. 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.
2. 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.
3. 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.
Article
22. Construction contract settlement
1. Contract settlement is the
determination of total final value that the employer is responsible for paying
to the contractor when the contractor has fulfilled all the works as agreed in
the contract.
2. The settlement documents are
formulated by the contractor in accordance with contract type and contractual
price. Subject matters of the settlement documents must be in accordance with
agreement in the contract, including:
a) Report on inspection and acceptance
of the entire works within the contract's scope of work and additional works
beyond the contract.
b) Tabular calculation of contract
settlement value (also called A-B settlement) on which the followings must be
specified: value of completed works, value of additional quantity (if any)
beyond the signed contract’s scope of work, value of payment or temporary
payment and the remaining value that the employer is responsible for paying to
the contractor.
c) As-built documents, construction diary for a
construction contract covering construction execution.
d) Other documents as agreed in the
contract;
3. Time limit for contract settlement
is instructed in Clause 2, Article 147 of the Law on Construction No.
50/2014/QH13.
Article
23. Construction contract liquidation
Contract liquidation is instructed in
Clauses 3, 4 of Article 147 of the Law on Construction No. 50/2014/QH13.
Section 4. RIGHTS AND OBLIGATIONS OF THE PARTIES TO A
CONSTRUCTION CONTRACT
Article
24. Rights and obligations of the employer and contractor
1. Rights and obligations of the
parties to a construction contract shall be negotiated by the two parties in
the contract ensuring no opposition to the law.
2. Either party must make written notice
to the other party about rights and responsibilities of representatives for
management of contract performance. When either party changes its
representative for management of contract performance, a written notice must be
made to the other party. Particularly when the contractor changes its
representative or key personnel for management of contract performance, this
must be approved by the employer.
3. In case the contractor is an
economic group or corporation, it can assign work to its members but must ensure
openness, transparency and suitability for qualifications of individual members
and this must be approved in advance by the employer.
4. Depending on specific contract type, rights and
obligations of the two parties are also prescribed in Articles 25-34 hereof.
Article
25. Rights and obligations of the employer (contract for consultancy)
1. Rights of the employer:
a) Be entitled to ownership and use of
consultancy products;
b) Refuse acceptance of consultancy
products of non-conformity under the contract;
c) Inspect quality of the work
performed by the contractor without hindrance to its normal operation;
d) Other rights as prescribed;
2. Obligations of the employer:
a) Provide requirements for works and
documents to the contractor ensuring payment and necessary means for
implementation of works as agreed in the contract (if any).
b) Ensure copyright for any copyright
consultancy product under the contract;
c) Settle the contractor’s proposals on
schedule within competence during the implementation of the contract as agreed.
d) Make full payment to the contractor
according to the payment schedule agreed in the contract;
dd) Other rights as prescribed;
Article
26. Rights and obligations of the contractor (contract for consultancy)
1. Rights of the contractor:
a) Request the employer to provide
information and documents relating to consulting duties and working means as
agreed in the contract (if any).
b) Propose changes on conditions for
provision of consultancy services for the benefit of the employer or upon
detection of factors imposing adverse effects on quality of consultancy
products;
c) Refuse performance of inappropriate
works beyond the contract’s scope of work and unlawful requirements by the
employer;
d) Get guarantee of copyright for any
copyright consultancy product under the contract;
dd) Other rights as prescribed by the
law;
2. Obligations of the contractor:
a) Complete the works that meet
schedule and quality as agreed in the contract;
b) For engineering contract: Take part
in work acceptance with the investor according to the Law on Construction
Quality Control, designer's supervision and answer questions of engineering
document at the request of the employer.
c) Preserve and return to the employer
documents and working means provided by the employer under the contract after
the work is completed (if any);
d) Make written notice to the employer
about inadequacy of provided information and poor quality of working means;
dd) Keep confidential information
relating to consultancy services as prescribed in the contract or the law;
e) Other obligations as prescribed by
the law;
Article
27. Rights and obligations of the employer (contract for work execution)
1. Rights of the employer:
a) Temporarily halt the construction
and request remedial work to consequences when the contractor has violated
regulations on construction quality, labor safety, environmental protection and
fire and explosion prevention and fighting;
b) Inspect quality of the work
performed by the contractor, production facilities without hindrance to its
normal operation;
d) Other rights as prescribed by the
law;
2. Obligations of the employer:
a) In case the employer is an investor,
license for construction must be obtained as prescribed.
b) Hand over whole or part of the construction
site to the contractor for management and use in accordance with the
implementation progress and other agreement in the contract;
c) Appoint and make a written notice to
the contractor about key personnel engaging in management of contract performance;
d) Provide design documents,
information, means, machinery, equipment and materials as agreed in the
contract (if any) and as prescribed by relevant law;
dd) Make full payment to the contractor
according to the payment schedule agreed in the contract;
e) Organize construction supervision:
g) Inspect the contractor’s measures to
ensure labor safety, environmental protection and fire & explosion
prevention and fighting;
h) Conduct inspection, acceptance,
payment and settlement of contract on schedule as prescribed;
i) If organizations or individuals are
hired to provide consultancy services, specify their duties, authority in the
management of contract performance and make notification to the contractor;
k) Review and approve in writing the
contractor’s proposals about engineering and construction during the
construction period;
e) Other obligations as prescribed by
the law;
Article
28. Rights and obligations of the contractor (contract for work execution)
1. Rights of the contractor:
a) Propose additional quantity of work
beyond the contract to the employer; refuse performance of the works beyond the
contract without agreement between the two parties or unlawful requirements by
the employer;
b) Change construction measures
approved by the employer in order to quicken the progress, ensure quality,
safety and efficiency of the construction works on the basis of signed
contractual price;
c) Be entitled to ask the employer to
pay loan interests due to late payment as agreed in the contract; be entitled
to ask for compensation for damages caused by late handover of plan layout and
other losses caused by the employer.
d) Other rights as prescribed by the
law;
2. Obligations of the contractor:
a) Provide human force, materials,
working machinery and equipment, other related material conditions with
adequate quantity and type under the contract; design shop drawings (in case
the contractor performs shop drawing design) for implementation of the works
under the contract;
b) Receive and manage site plan,
protect borderline markers of the construction site;
c) Carry out construction in accordance
with the design, technical instructions, regulations and standards, ensuring
quality, schedule, environmental protection safety and fire & explosion
prevention and fighting.
d) Keep daily records of construction;
dd) Test materials, equipment and
construction product as prescribed in the Law on Construction Quality Control,
technical instructions, standards and regulations on construction;
e) Manage workers on the site; ensure
safety, order and security and no adverse effect on surrounding residential
area;
g) Establish construction measures,
as-built dossiers and take part in work acceptance;
h) Take responsibility for quality of
the construction undertaken; Take remedial work to any mistake committed during
the construction;
i) Cooperate with other contractors on
the site;
k) Make regular reports to the employer
on construction schedule, human force and main equipment for the construction;
l) Move materials, machinery, equipment,
and other properties out of the site within a defined time limit after the
works have been accepted, handed over or the contract is terminated according
to Article 41 hereof except otherwise as agreed in the contract;
m) Return the site plan as agreed in
the contract;
n) Keep confidential information
relating to the contract or as prescribed by the law;
o) Other obligations as prescribed by
the law;
Article
29. Rights and obligations of the employer (contract for procurement of
technological equipment)
1. Provide necessary information, site
plan for installation of equipment to the contractor;
2. Cooperate with the contractor during training,
technology transfer; provide instructions on installation, use and operation;
3. Refuse acceptance of technological
equipment found contrary to the agreement in the contract in terms of quantity,
quality, type and origin;
4. In case the employer carries out
technological design for the contractor, the employer must take full
responsibility for quality and intellectual property rights of this design;
5. Other rights and obligations as
prescribed by the law;
Article
30. Rights and obligations of the contractor (contract for procurement of
technological equipment)
1. Hand over technological equipment to
the employer as agreed in the contract on quantity, quality, location, time,
packaging, preservation, origin and other agreement in the contract;
2. Provide to the employer all
necessary information about technological equipment; instructions on
installation, use, operation, preservation and maintenance of technological
equipment; provide training for management staff and operators in using the
works (if agreed in the contract);
3. Cooperate with the employer in
conducting trial operation of technological equipment;
4. Intellectual property rights of
technological equipment:
a) Technological equipment provided by
the contractor must ensure intellectual property rights. The contractor is not
permitted to provide technological equipment that violates intellectual property
rights. The contractor shall be responsible for any dispute relating to
intellectual property rights of technological equipment provided;
b) In case the technological equipment is manufactured
according to the design or figures provided by the employer, the contractor
shall not be responsible for any complaints relating to violations of
intellectual property rights arising from such technological equipment.
c) Either party shall be responsible
for failing to make immediate notice to the other party about complaints filed
by the third party about intellectual property rights of the technological
equipment upon notification.
5. Other rights and obligations as
prescribed by the law;
Article
31. Rights and obligations of the employer (EPC contract)
1. Rights of the employer:
a) Refuse acceptance of products
failing to meet quality as set out in the contract; refuse acceptance of
technological equipment found contrary to the agreement in the contract in
terms of quantity, quality, type and origin and products that violate
intellectual property rights;
b) Inspect the contractor’s performance
of works as set out in the contract without causing any hindrance to its normal
operation;
c) Temporarily halt the works as set
out in the contract and request remedial work to the consequences upon finding
that the contractor has been in breach of the contract or state regulations;
d) Request the contractor to hand over
documents, information relating to the contract products as signed;
dd) Examine and approve the lists of qualified
sub-contractors not yet included in the EPC contract as requested by the
contractor;
e) Other rights as prescribed by the
law;
2. Obligations of the employer:
a) Make full payment to the contractor
according to the payment schedule agreed in the contract;
b) Appoint and make a written notice to
the contractor about key personnel engaging in management of contract
performance;
c) Provide information, documents and
necessary means to the contractor for its performance (if agreed in the
contract);
d) Conduct inspection, examination and
approval of technical design, shop drawing design with respect to the works,
work items, or make submission to competent agencies for appraisal and early
approval as prescribed;
dd) Apply for license for construction
and hand over clean site plan to the contract under the contract implementation
progress;
e) Supervise implementation of works as
set out in the contract; examine measures to ensure labor safety, environmental
protection and fire & explosion prevention and fighting as regulated;
g) Negotiate with the contractor on the ITB for
procurement of technological equipment (if agreed in the contract);
h) Conduct inspection, acceptance,
payment and settlement of contract on schedule as prescribed;
b) Ensure copyright for any consultancy
product under the contract;
k) Organize training for management
staff and operators in using the works;
e) Other obligations as prescribed by
the law;
Article
32. Rights and obligations of the contractor (EPC contract)
1. Rights of the contractor:
a) Request the employer to provide
information, documents and working means (if agreed in the contract) relating
to the contract’s scope of work.
b) Propose additional quantity of work
beyond the contract to the employer; refuse performance of the works beyond the
contract without agreement between the two parties or unlawful requirements by
the employer;
c) Organize, manage and carry out tasks
or activities as set out in the contract;
d) Other rights as prescribed by the
law;
2. Obligations of the contractor:
a) Provide adequate human force,
materials, machinery, equipment and other necessary means for construction work
under the contract;
b) Receive, manage, preserve and return
documents and means provided by the employer (if agreed in the contract);
c) Make written notice to the employer
about inadequacy of provided information and poor quality of working means that
affect execution of tasks or activities under the contract;
d) Keep confidential any contract
related information as agreed in the contract or as prescribed by the law;
dd) Carry out tasks under the contract
ensuring safety, quality, schedule and other agreement;
e) Establish design (technical design,
shop drawing design) of work items, main works of the bid package, project in accordance
with approved fundamental design or FEED, and make submission to competent
agencies, the investor for appraisal, approval according to the Law on
Construction;
g) Organize procurement, manufacture
and supply of technological equipment to meet requirements and contract
implementation progress; select sub-contractors (if any) via bidding or no-bid
contracts and make submission to the investor for approval; negotiate and agree
with the investor on intent of the ITB for procurement of technological equipment
(if agreed in the contract).
Provide to the employer all necessary information
about technological equipment; instructions on installation, use, operation,
preservation and maintenance of technological equipment; provide training for
management staff and operators (if
agreed in the contract);
i) Carry out tests, corrections and
trial overall operation of the works and hand over the completed works to the
employer as agreed in the contract and as prescribed by the applicable law;
k) Ensure any product provided does not
violate intellectual property rights as prescribed by the law;
l) Hand over documents, information
relating to the contract product to the employer under the contract;
m) Other obligations as prescribed by
the law;
Article
33. Rights and obligations of the employer (turnkey contract)
In addition to rights and obligations
as prescribed in Article 31 hereof, the employer shall be also responsible for
carrying out inspection and acceptance of the construction project for
submission to competent agencies as prescribed by the Law on Construction, or
to a person (who is competent to decide investment) for appraisal and approval
or for appraisal and approval within competence.
Article
34. Rights and obligations of the contractor (turnkey contract)
In addition to rights and obligations
as prescribed in Article 32 hereof, the contractor shall be also responsible
for establishing construction project, taking part in protecting the project
together with the employer before the competent person’s decision to invest to
invest and completing the project as requested by the employer in accordance
with agreement in the contract.
Article 5. ADJUSTMENT TO CONSTRUCTION CONTRACT
Article
35. Adjustments to construction contract
1. Adjustments made to the contract
include adjustments in quantity, unit price, contract implementation progress,
contractual price and other matters (if an) as agreed in the contract
2. The contract shall be brought out
for adjustment only in the cases as prescribed in Clauses 2, 3, Article 143 of
the Law on Construction No. 50/2014/QH13.
Article
36. Principles for adjusting construction contract
1. Adjustments to the contract shall be
made only during the contract implementation.
2. As for a lump sum contract, only
additional quantity of work beyond the signed contract's scope of work is
adjusted (as for the contract for work execution, procurement contract,
adjustments are made to additional quantity of work beyond the design’s scope
of work, requirements of the ITB or request for proposals; and as for the
contract for consultancy, adjustments are made to additional quantity of work
beyond the scope of consultancy work as agreed in the contract) and other force
majeure events.
3. If the adjusted contractual price
does not exceed the bid package’s price or its approved cost estimates
(including contingency cost of such package), adjustments can be made by the
investor; if the adjusted contractual price exceeds the bid package’s price or
its approved cost estimates, it must be approved by the competent person before
adjustments are made and must ensure sufficiency of capital for payment to the
contractor in accordance with the agreement in the contract.
Article
37. Adjustments in quantity of work to construction contract
1. The parties to the contract must
carry out negotiations on specific adjustments in quantity of work, scope,
sequence and procedures for adjustments;
2. Adjustments in quantity of work to
construction contract are prescribed as follows:
a) As for a lump sum contract: additional
quantity of work beyond the signed contract's scope of work are considered as
appropriate (as for the contract for work execution, procurement contract,
additional quantity of work beyond the design’s scope of work; and as for the
contract for consultancy, additional quantity of work beyond the scope of
consultancy service as agreed in the contract).
In this case, if the adjusted price
does not exceed the bid package’s price, both the investor and contractor shall
carry out calculations, negotiations and sign an appendix to the contract; if
the adjusted price exceeds the bid package’s price, this must be examined and
decided by the competent person; if no agreement is reached, such additional
quantity of work shall constitute a new bid package and selection of
contractors for the execution of this package shall conform to applicable
regulations.
b) As for a fixed unit price contract
and an adjustable unit price contract: if the addition of appropriate quantity
of work (without unit price in the contract) to the contract does not make the
price exceed the bid package’s price, both the investor and contractor shall
carry out calculations, negotiations and signing an appendix to the contract;
if such addition of quantity of work makes its price exceed the bid package's
price, it must be examined and decided by the competent person; any quantity of
work (with unit price in the contract) shall be determined on the basis of
actual completed quantity of work (increasing or decreasing versus the quantity
of work set out in the contract.
3. As for additional quantity of work
beyond the signed contract’s scope of work without unit price in the contract,
the parties to the contract must commonly agree on the unit price for this
quantity of work before execution.
Article
38. Adjustments in unit price and contractual price
1. The parties to the contract must
make specific negotiations on cases subject to adjustments in unit price and
contractual price; sequence, scope, method and foundations for adjustments in contractual
price; method of adjustment must accord with contractual price type, nature of
work in the contract.
2. Adjustments in unit price are
prescribed as follows:
a) Adjustments in unit price are made
only to adjustable unit price contract and time-based contract as agreed by the
two parties.
b) If actual completed quantity of work
increases or decreases by more than 20% of the respective quantity of work set
out in the contract, or additional quantity of work has not yet unit price
established in the contract, the two parties must jointly agree on a new unit
price for this quantity of work under the principle as agreed in the contract.
c) If actual completed quantity of work increases or
decreases by a maximum of 20% of the respective quantity of work set out in the contract, the
unit price as established in the contract shall be applied including the unit
price being adjusted according to the agreement in the contract (if any).
d) Adjustments in unit price to the
quantity of work that both the employer and contractor have reached an
agreement on adjustment in unit price at the date of signing the contract shall
be made in accordance with Clause 3 of this Article and the Ministry of
Construction’s instructions.
3. Method of adjusting unit price and
contractual price:
a) Application of price adjustment
methods must accord with nature of work, contractual price type, payment
currency and must be agreed in the contract.
b) Database inputs for price adjustment
must accord with the contract’s scope of work. Use of source of information of
price or price index from competent state agencies for price adjustment must be
specified in the contract, specifically in the following formula:
GTT = GHĐ x Pn
Where:
- “GTT”: Payment price in
proportion to completed quantity of work
- “GHĐ”: Contractual price
in proportion to completed quantity of work
- “Pn”: Adjustment
coefficient (increasing or decreasing) applied for payment with respect to
completed quantity of work during a period “n”.
4. The Ministry of Construction shall
provide specific guidance on adjustments to construction contract
Article
39. Adjustments to contract implementation progress
1. In the contract, the parties must
negotiate on adjustments to implementation progress. If the period of
completion is delayed versus the progress set out in the contract, the parties
must define responsibilities of each party for any damages caused by such
delay.
2. Contract implementation progress is
adjusted in the following cases:
a) Under effects of earthquake, storm,
floods, tsunami, conflagration, enemy-inflicted disaster or other force majeure
events;
b) Changes or adjustments made to the
project, scope of work, design, construction measures as requested by the
employer;
c) Handover of site plan not consistent
with agreement in the contract; temporary suspension of contract caused by the
employer's fault; other procedures caused by neither party;
d) Temporary suspension of construction
work at the request of competent state agencies without the employer’s fault;
3. If the adjustments do not prolong
the contract implementation progress (including permissible extension as
prescribed in the construction contract) both the employer and contractor shall
negotiate and agree on the adjustments. If the adjustments prolong the contract
implementation progress, the investor must make the report to the competent
person for examination and decision.
Section 6. TEMPORARY SUSPENSION, TERMINATION, REWARDS,
PENALTIES FOR VIOLATIONS TO CONTRACT
Article
40. Temporary suspension of construction contract performance
1. Situations resulting in temporary
suspension of construction contract performance, rights to temporary
suspension; procedures for temporary suspension, level of compensation for
damages caused by temporary suspension shall be negotiated and agreed by the
employer and contractor in the contract;
2. The parties to the contract are
entitled to temporarily suspend the contract in the following cases:
a) The employer has the right to
temporarily suspend the contract performance when the contractor fails to meet
requirements for quality, labor safety and contract progress as agreed in the
contract.
b) The contractor has the right to
temporarily suspend the contract performance and prolong the contract progress
when the employer is in breach of payment terms, specifically no adequate
payment is made to the contractor as agreed after 28 days since the payment
deadline as prescribed in Clause 10, Article 19 hereof except otherwise as
agreed by the two parties; no payment guarantee is made for quantity of work to
be executed.
3. Before one party temporarily
suspends the contract performance, a written notice must be made to the other
party 28 days in advance with reasons for temporary suspension being specified;
the employer and contractor shall be responsible for carrying out negotiations
to continue to maintain agreements as signed in the contract except force
majeure events.
In case one party fails to make a notice about
temporary suspension or reasons specified are found contrary to the signed
contract, it shall be responsible for making compensation for losses caused to
the other party.
Article
41. Termination of construction contract
1. Situations resulting in termination
of the contract, rights to terminate the contract; sequence, procedures for
termination of the contract, level of compensation for losses caused by
termination of the contract must be agreed in the contract and in accordance
with the provisions set out hereof and relevant law provisions.
2. Either party has the right to
terminate the contract without compensation for losses caused in the cases as
prescribed in Clauses 7 and 8 of this Article.
3. In case the default party (party in
breach of the contract) fails to correct its mistakes after 56 days since the
date of temporary suspension by notice without proper reason except otherwise
as agreed, the other party (party ordering suspension temporary) has the right
to terminate the contract.
4. In case either party unilaterally
terminates the contract without the other party’s fault, such party must make
compensation for damages caused to the other party.
5. Before terminating the contract, one
party must make a written notice to the other party some time in advance but no
later than 28 days with reasons being specified except otherwise as agreed in
the contract. If the party that terminates the contract fails to make the
notice causing losses to the other party, such party must make compensation for
the losses.
6. The contract shall become ineffective since the
date of termination and the parties must fulfill the procedures for liquidation
with a period of time as agreed in the contract but no later than 56 days since
the notice about termination is issued except otherwise as agreed in the
contract. After
this period, if either party fails to fulfill the procedures for liquidation,
the other party is fully entitled to liquidate the contract.
7. The employer has the right to
terminate the contract in the following cases:
a) The contractor goes bankrupt,
dissolved or transfers the contract to other individuals or organizations
without consent of the employer.
b) The contractor refuses to execute
the construction work under the contract for 56 straight days that results in
violations of the contract progress as agreed in the contract except otherwise
as approved by the employer.
8. The contractor has the right to
terminate the contract in the following cases:
a) The employer goes bankrupt,
dissolved or transfers the contract to other individuals or organizations
without approval of the contractor.
b) The construction work has been
suspended for 56 straight days by the employer’s fault except otherwise as
agreed by the two parties.
c) The employer fails to make the
payment to the contractor after 56 days since receipt of adequate payment
documents except otherwise as agreed by the two parties.
9. Within two working days since the
contract is terminated, the contractor must move all the materials, human
force, machinery, equipment and other properties in its possession out of the
construction site. After this period, if the contractor fails to do so, the
employer has the right to settle these properties.
Article 42: Rewards and penalties
Rewards and penalties are instructed in
Clauses 1, 2, Article 146 of the Law on Construction No. 50/2014/QH13.
Article
43. Responsibilities for breach of contract
1. Responsibilities for breach of the
contract are prescribed in Points 3-7, Article 146 of the Law on Construction
No. 50/2014/QH13, provisions set out hereof and relevant law provisions;.
2. In case the employer fails to make
timely and adequate payment as agreed in the contract, it must pay interest on
late payments at the commercial bank where the contractor opens its payment
accounts. Interest on late payments shall be calculated from the first day of
late payment until the payment is fully made to the contractor except otherwise
as agreed by the two parties.
Section 7. COMPLAINTS AND DISPUTE SETTLEMENT
Article
44. Complaints during contract performance
1. Complaints during contract performance
in this Decree mean one party detects the other party malfunctions or fails to
perform the obligations as agreed in the contract, it has the right to request
the other party to fulfill. Therefore, the detecting party (the party that
detects the violation) has the right to lodge a complaint against the other
party about this matter.
2. When one party lodges a complaint
against the other party, it must give foundations or specific proof to clarify
intent of the complaint.
3. Within 56 days since detecting one
party fails to perform the contract as agreed, the detecting party must make
immediate notice to such party and lodge a complaint. After this period,
if neither party makes a complaint, the two parties must continue to perform
the contract as agreed.
4. Within 28 days since receipt of a
complaint, the receiving party (the party that receives the complaint) must
give foundations or proof to prove if such complaint is in accordance with the
signed contract. After this period, if the receiving party shows abstention, it
is deemed as approved the intent of the complaint lodged by the other party.
5. Complaints made by either party must
be dispatched to the address as agreed in the contract. Any complaint that is
not settled by the parties shall be settled according to Article 45 hereof.
Article 45. Dispute settlement
1. When settling disputes arising
during contract performance, the parties must comply with principles and
procedures as prescribed in Clause 8, Article 146 of the Law on Construction No.
50/2014/QH13.
2. If the two parties agree that
dispute settlement is conducted by an agency, organization or one or some
expert individuals (commonly referred to as the settlement committee), the
settlement via this committee shall be prescribed as follows:
a) The dispute settlement committee can
be specified in the contract at the time of signing or can be formed after the
dispute arises. Number of members of the dispute settlement committee shall be
negotiated by the parties. Members of the dispute settlement committee are
required to be highly qualified and experienced in dispute settlement and have
good knowledge of the law provisions on construction contract.
b) Within 28 days since the two parties
receive result of dispute settlement from the dispute settlement committee, if
such result is not accepted by either party, the dispute settlement shall then
be brought to arbitrator or court as regulated; after this period, if neither
party opposes the result, the result shall be deemed as agreed by the parties.
Hence, the two parties must comply with such result.
c) Expenses for the dispute settlement
committee’s works shall be included in the contract and incurred equally by
both parties except otherwise as agreed.
3. Statute of limitations for filing a
complaint to the arbitrator or to the court for settlement shall be instructed
by relevant law provisions.
Article 8. OTHER SUBJECT MATTERS OF CONSTRUCTION CONTRACT
Article
46. Insurance and maintenance
1. Insurance
a) The investor shall buy insurance for
the works during the construction period that may impose adverse effects on
community safety, environment or for the works of peculiar technical structures
and complicated construction conditions. In case this insurance cost has been
included in the contractual price, the contractor must buy the insurance as
regulated.
b) The contractor (in case of the
contract for consultancy) shall buy professional liability insurance for the
tasks of construction survey, construction design of construction works from
Grade II and over.
c) The contractor must buy other
necessary insurance types (insurance for workers on the site, insurance for
equipment, insurance for the third party...) to ensure its activities according
to the law provisions.
2. Maintenance
a) The contractor shall be responsible
for carrying out maintenance to the works and equipment as agreed in the
contract. Agreements by the two parties on period of maintenance, level of
maintenance guarantee must accord with the law on construction.
b) Maintenance guarantee can be made in
the form of guarantee or other forms as agreed by the two parties but form of
guarantee is preferred.
c) Maintenance guarantee shall be
refunded to the contractor only after the period of maintenance is completed
and confirmation from the investor on completion of maintenance is issued.
d) During the period of maintenance,
the contractor must carry out maintenance within 21 days since receipt of
repair notice from the employer; during this period, if the contractor fails to
carry out maintenance, the employer has the right to use the maintenance cost
for hiring other organizations, individuals to do the work.
Article
47. Sub-contractor contract
1. One main contractor contract may
have multiple sub-contractor contracts When signing a sub-contractor contract,
main contractor, general contractor or foreign contractor must execute the
following provisions:
a) Only qualified sub-contractors are
permitted to sign the sub-contractor contract;
b) Any foreign contractor executing a
construction contract within Vietnam’s territory as main contractor must hire
domestic sub-contractors that meet requirements of the bid package and is
permitted to hire foreign sub-contractors only when domestic sub-contractors do
not meet the requirements of the bid package. Materials and equipment
temporarily imported for export must be specified in the contract on the
principle that use of domestic materials and equipment that meet the
requirements of the bid package is prioritized.
c) Any sub-contractor not included in
the lists of sub-contractors with contracts enclosed must be approved by the
investor.
d) General contractor, main contract
must be responsible to the investor for the contract progress, quality, labor
safety, environmental protection, its mistakes and other works performed by
sub-contractors.
dd) Main contractor, general contractor
are not permitted to re-assign all the works as undertaken under the contract
to sub-contractors for execution.
2. Sub-contractors as appointed by the
investor (if any)
a) Sub-contractors as appointed by the
investor are sub-contractors appointed to the main contractor or general
contractor by the investor for carrying out some work of high technique or when
the main contractor or general contractor fails to meet requirements for
safety, quality and progress as requested by the investor.
b) As for a construction contract that
engages sub-contractors appointed by the investor, the two parties must carry
out negotiations on the situations by which the investor is permitted to appoint
sub-contractors.
c) Main contractor or general
contractor has the right to reject sub-contractors appointed by the investor if
the works performed by main contractor or general contractor, sub-contractor
still conform to the contractor or have adequate foundations proving that
sub-contractors appointed by the investor do not meet the contract’s
requirements.
3. The investor shall make payment
direct to sub-contractors on the basis of payment request issued by main
contractor or general contractor except otherwise as agreed.
4. Sub-contractors have all rights and
obligations of the contractor as prescribed hereof and other relevant law
provisions.
Article
48. Labor safety, environmental protection and fire & explosion prevention
and fighting
1. Responsibilities of the parties for
labor safety must be agreed in the contract and prescribed as follows:
a) Construction contractor must
establish safety measures for people, machinery, equipment and the works on the
site including adjacent construction works. In case safety measures are related
to multiple parties, they must be agreed by the two parties.
b) Safety measures, rules on labor
safety must be made public on the construction site; dangerous positions on the
site must be set up with people for guidance and warnings about accidents.
c) Construction contractor, the
investor and related parties must frequently examine and supervise labor safety
on the site. Upon detection of any violation of labor safety, construction must
be suspended immediately. Any person who leaves labor safety violations to
happen within his/her management shall be responsible to the law.
d) The construction contractor shall be
responsible for training, instructing and disseminating regulations on labor
safety among its workers. As for some works of strict safety requirements,
workers must obtain certificate of labor safety training.
dd) The construction contractor shall
be responsible for providing adequate personal protective equipment to the
workers on the site as prescribed.
e) When an incident in labor safety
happens, the construction contractor and other related parties shall be
responsible for handling and making the report to state management agencies
according to law provisions and at the same time taking remedial work and
making compensation for the losses caused.
2. Responsibilities of either party for
environmental protection must be agreed in the contract and prescribed as
follows:
a) The construction contractor must
take measures to ensure environmental safety to the workers on the site and
surrounding area including measures to control dust, noise and site clean-up;
wastewater, solid waste and other types of waste must be collected for
treatment to reach technical regulations and standards on environment. As for
the construction works in urban area, measures such as screening and transport
of scraps to right place must be taken.
b) During the transport of building
materials, measures for screening scraps must be taken to ensure safety and
environmental hygiene.
c) The construction contract, the
investor must be responsible for examining and monitoring the implementation of
constructional environmental protection, at the same time being subject to
examination and monitoring by state management agencies. In case the construction
contractor fails to comply with regulations on environmental protection, the
investor and state management agencies have the right to temporarily suspend
the construction and ask the contractor to comply with environmental protection
measures.
d) Organizations, individuals that
leave any harmful act to the environment during the construction shall be
responsible to the law and make compensation for losses caused.
3. The parties to the contract must
comply with applicable regulations on fire & explosion prevention and
fighting.
Article
49. Electricity, water and site security
The two parties must negotiate in the
contract on rights and obligations of either party for supply and payment for
electricity, water and site security.
Article
50. Transport of technological equipment
1. The contractor must make a notice to
the employer for some time in advance as agreed by the two parties but no less
than 21 days.
2. The contractor must be responsible
for packaging, material handling, transport, storage and preservation of
equipment except otherwise as agreed.
3. The contractor must make
compensation to the employer for any damage, loss and costs arising during the
transport of equipment caused by the contractor.
Article
51. Risks and force majeure
1. Risks are possible negative effects
on the implementation of construction contract in the future. Under the
contract, either party must be responsible for managing and handling its own
risks, carrying out remedial work to consequences on its side in case of risk.
2. Force majeure is an risky event that
takes place objectively, unforeseeably and can not be controlled even though
all necessary measures and are taken and capabilities are employed such as
natural disaster, environmental problem, enemy-inflicted disaster, conflagration
and other irresistible factors.
3. When either party meets with the
force majeure event, such party must make a written notice to the other party
as soon as possible.
4. Under the contract, the parties must
carry out negotiations on handling of force majeure such as making written
notice about the force majeure event, responsibilities of both parties;
termination of contract and payment in case of force majeure (if any).
Chapter III. IMPLEMENTATION
Article
52. Effect
1. This Decree takes effect since June
15, 2015.
2. The Government’s Decree No.
48/2010/NĐ-CP dated May 07, 2010 on construction contracts; Decree No.
207/2013/NĐ-CP dated December 11, 2013 amending and supplementing a number of
articles of the Decree No. 48/2010/NĐ-CP shall become ineffective since the
effective date of this Decree.
Article
53. Transitional handling
1. Any construction contract signed and
currently in execution before the effective date of this Decree shall be
executed according to the regulations on construction contract before the
effective date of this Decree.
2. Any construction contract under
negotiation must be reported to the competent person for examination and
decision if any subject matter contrary to this Decree is found on the basis of
the principle that quality, progress, efficiency of the investment project and
no infringement of lawful rights and interests of the two parties must be
ensured.
3. Any subject matter of the
construction contract as set out in the approved but unreleased ITB, request
for proposals must be adjusted appropriately if found contrary to this Decree;
Any change to the construction contract as set out in the ITB, request for
proposals approved and released must be notified to all the bidders (who
already buy the ITB and request for proposals) for making adjustments to the
ITB and request for proposals; in case the bid is closed, provisions set out in
Clause 2 of this Article shall be executed.
Article
54. Implementation
1. Any organization, individual that
conducts formulation, appraisal and approval of the ITB, request for proposals
covering subject matters relating to construction contract and carries out
negotiation, signing and management of the contract performance must comply
with the provisions set out hereof.
2. The Ministry of Construction shall
instruct and monitor the execution of law provisions on construction contract;
instruct adjustments to construction contract, method of adjusting contractual
price, construction contract types, model construction contracts and other necessary
provisions set out hereof to meet state management requirements for
construction contract.
3. Use of model FIDIC conditions of
contract, model construction contracts for the formulation and implementation
of construction contract is encouraged. Adjustments to the contract on the
basis of model construction contract employed must be made to suit Vietnamese
laws.
4. The Ministers, heads of
ministerial-level agencies, heads of governmental agencies, presidents of
People’s committee of central-affiliated cities and provinces, heads of
political organizations, political – social organizations,
political-social-occupational organizations, presidents of board of directors
of economic groups, corporations and relevant organizations, individuals shall
be responsible for executing this Decree./.