Paper Keywords: priority of creditor's rights in construction disputes
"People's Republic of China (PRC) contract law" the 286th regulation? If the employer fails to pay the price as agreed, the contractor may urge the employer to pay the price within a reasonable period of time. If the employer fails to pay within the time limit, the contractor may agree with the employer to discount the project or apply to the people's court for auction of the project, except that it is not suitable for discount or auction according to the nature of the construction project. The price of a construction project shall give priority to the compensation for the discount or auction price of the project. ? This is the principle of priority compensation for construction project price.
June, 2002 1 1, the Supreme People's Court released Law Interpretation (2002) No. Reply on the priority right of compensation for construction project price? The judicial interpretation of (hereinafter referred to as the judicial interpretation of the Supreme People's Court) clearly stipulates? A, the people's court in the trial of real estate disputes and handling enforcement cases, should be in accordance with the provisions of Article 286th of the "People's Republic of China (PRC) Contract Law", that the contractor's construction project priority is superior to the mortgage and other creditor's rights. ? On June 1 1, 2002, the Supreme Court issued the Reply on the Priority of Compensation for the Construction Project Price (hereinafter referred to as the Reply) in response to the request of the Shanghai Higher People's Court on the understanding and application of Article 286 of the Contract Law, which clarified that the priority of compensation for the construction project price of the construction unit is prior to the mortgage and other creditor's rights. In order to protect the interests of consumers who purchase houses, the Reply also specifically stipulates that after consumers pay all or most of the purchase price, the contractor's priority right to compensation for the project price of the commercial house shall not be against the buyer. ?
Case: A county water affairs bureau established a reservoir management bureau (hereinafter referred to as the management bureau) to build a reservoir located in the county. The Reservoir Management Bureau conducted a tender for the construction of the reservoir, and a construction company (hereinafter referred to as "A") obtained the qualification to build the reservoir through the tender. A company signed a construction contract with the Reservoir Management Bureau, which stipulated the rights and obligations of both parties. The engineering quantity was 230 million, and the construction period was 18 months. A immediately enter the site for construction. A construction company subcontracted part of the project to a labor service company (hereinafter referred to as Company B) for the needs of the project. In the process of construction, there is a problem with the funds of the Reservoir Management Bureau, and the project funds cannot be allocated according to the schedule stipulated in the contract. Part of the project cost is funded by Party A. After the completion of the reservoir, the Administration defaulted on the project cost of 80 million yuan. Party A also owes Party B the labor and material fees of many suppliers. Because Party A can't ask the administration for the project payment, it has been unable to pay Party B and suppliers. Party B organizes employees and suppliers to come to Company A for demands every day, which seriously affects the normal working order of Party A. Therefore, Party A and Party B bring the Administration to the people's court. In the end, the court ruled that B's claim was rejected and A's claim was supported. In the implementation stage, due to the inability of the Administration to pay Party A, the court auctioned the management right of the reservoir built by Party A to pay the project cost. Previously, because some of the main materials were provided by the Administration, the Administration failed to pay all the materials to the supplier, and the supplier also sued the Administration to the court, and handled the pre-litigation property preservation and sealed up some equipment of the reservoir. In the execution stage, the court gave the money from the reservoir auction to A first, and the rest was distributed to the accused supplier.
This case reminds us that construction enterprises should pay attention to several issues when using the priority right of compensation:
First, the conditions for the priority of compensation for construction projects
(a) the subject of litigation should be qualified
B why didn't you get the support of the court? That is, the litigant subject of B is not qualified. Party B is only a subcontractor of the project, and has only a legal relationship with Party A. If it wants to sue, Party B can only sue Party A, not the administration. It can be seen that the main body that can exercise the priority of compensation for the project should be the contractor of the project. Generally speaking, the construction unit is the general contractor, and the general contractor can subcontract the project to subcontractors, that is, project subcontracting and labor subcontracting. Generally speaking, the priority is only exercised by the general contractor, and the subcontractor does not have the subject qualification to legally exercise the priority.
(2) overdue project funds that must be paid by the employer.
The employer's failure to pay the project payment as agreed in the contract is the primary legal condition for the contractor to use the priority. It's just that the employer fails to perform the contract on time and does not actively remedy it afterwards. After being urged by the contractor, the employer still fails to pay within a reasonable period of time. According to the provisions of the Contract Law, the priority can only be exercised if the employer is required to pay within a reasonable period after being urged, and the employer still fails to pay (or fails to pay in full) after the reasonable period.
(three) the project can be auctioned at a discount.
At present, there are no relevant provisions in the law, but projects involving national security or other important national interests obviously cannot be auctioned or discounted. In reality, it is impossible for such projects not to pay the project cost; Schools, hospitals and other public welfare projects, generally can not be discounted auction. Excluding such items that are not suitable for discount or auction, other items can generally exercise the preemptive right.
Second, the legal characteristics of the priority of compensation for construction projects
1. The priority of compensation for construction projects is a legal security right, which is fixed in the form of law in the Contract Law. Is a right that exists according to law without agreement between the two parties, and it also exists in China's laws at present? The only legal security right in a specific industry.
2. Take precedence over mortgage. The principle of priority in compensation is stipulated in the contract law, and it is clearly stipulated in the Supreme People's Court's judicial interpretation that it takes precedence over mortgage. Legal mortgage is different from agreed mortgage. The legal mortgage does not take registration as an effective requirement, but directly comes from the legal provisions, and its credibility is more reliable than registration. The author thinks that the mortgage here only refers to the mortgage of the project itself, not including the mortgage of the land use right used by the project. Therefore, in practice, the exercise of the priority of compensation must be negotiated with the land use right holder (including the mortgagee) before it is operable.
3. Priority over other creditor's rights. The average employer has multiple debts. If the main materials in some projects are purchased and supplied by the employer, the employer will often owe money to the material supplier. Since it is the right of priority, the contractor's right of compensation for the project has priority over these creditors.
The above case illustrates a truth: the priority of compensation is prior to the mortgage, and it can confront and take precedence over the preservation of the people's court.
4. In the bankruptcy liquidation procedure, the priority of compensation should be ranked before the mortgage payment. According to the jurisprudence, once the employer enters the bankruptcy and debt repayment procedure, that is, except for bankruptcy expenses, wages of enterprise employees, labor insurance expenses and taxes owed, the contractor does not need to claim compensation, and naturally has the priority to be compensated. This changed the situation that the employer divided and repaid the creditors according to the proportion of shares after entering the bankruptcy debt repayment procedure.
5. Can't fight against the' buyers' who have paid all or most of the purchase price. Answer the second provision? After the consumer pays all or most of the money for the purchase of the commercial house, the contractor shall have the priority to be compensated for the arrears of the contracted project funds of the commercial house and shall not oppose the buyer. ? The judicial interpretation of the Supreme People's Court does not stipulate whether the purchase contract must be filed or notarized, but only takes whether all or most of the house payment has been paid as the defense standard. Developers are likely to create a false buyer and exercise the right of defense against priority. The relationship between the priority of compensation and the right of confrontation of consumers' commercial housing buyers. Consumers' purchase of commercial housing is a right of existence and also related to social stability; The right to contract is mainly a kind of business right, and the superiority of the right to subsistence over the business right not only conforms to the actual situation of our country, but also embodies the protection of basic human rights. Therefore, in order to ensure the exercise of priority, the contractor should try to reach an agreement with the employer to limit the sales of the commercial housing projects built. For example, it is limited that only some houses can be sold or housing advance payment can be deposited. Otherwise, the so-called priority compensation will be difficult to implement.
Third, the scope of the right of priority.
Article 3 of the judicial interpretation of the Supreme People's Court stipulates that the construction project price of the priority right of compensation for the construction project can only include the actual expenses that the contractor should pay for the construction project. The meaning of this provision is as follows:
1. refers to the actual expenses paid by the contractor for the project itself. Does not include the creditor-debtor relationship outside the project itself. The construction project and the project exercising the priority of compensation are the same project.
2. The contractor shall pay and actually pay the fees. In order to prevent the contractor from expanding the scope of the priority of compensation indefinitely, the Supreme Court made clear the expenses that the contractor should spend in the process of construction projects in the judicial interpretation. Here? Should? Refers to the expenses that must be paid for project construction, usually refers to the expenses that have been paid according to the actual situation of the project, but there may be a price difference for the same project. The employer and the contractor, right? Should I pay? There may be a big difference.
In addition to the personnel remuneration (i.e. labor costs) and materials listed in the judicial interpretation, it should also include the expenses paid by the contractor to the subcontractor for the employer's approval of subcontracting.
The project price is generally within the scope agreed in the contract, and the amount obtained by the employer, contractor and supervisor through the final accounts or unsettled documents recorded by several parties. The unit price disputed by both parties can be calculated with reference to the quota. The disputed quantity can be calculated through the audit of a third party.
3. The priority of compensation does not include liquidated damages and losses due to breach of contract. The priority of compensation for construction projects only guarantees the basic rights of contractors, that is, the cost of project funds, so liquidated damages and losses due to breach of contract are not included in the priority of compensation.
Reply to Article 3: The construction project price includes the actual expenses such as personnel remuneration and material payment that the contractor should pay for the construction project, and does not include the losses caused by the breach of contract by the employer. ? The "Reply" determines the scope of priority compensation for the project price and excludes the losses caused by the employer's breach of contract by the contractor. The author believes that the priority right of compensation for the construction project price protected by Article 286 of the Contract Law is the actual expenditure incurred by the contractor for the construction and repair of the project, excluding the expected profit. Although the expected profit is the benefit target that the contractor wants to achieve in the contracted project, it is not the embodiment of the work value. The actual investment and expenditure can reflect and enhance the value of the work, but what is the scope and extent of this reflection and improvement? It is possible that projects of the same nature will generate different profits in different environments. Since the law does not stipulate whether profits are the priority right of compensation, this gives the trial judge great discretion.
Four, the construction project price priority exercise time limit and right identification procedures
Article 4 of the Reply stipulates that the contractor's exercise of the priority right of compensation shall take effect within six months from the date of completion of the project. The time limit for the contractor of a construction project to exercise the priority is six months, counting from the date of completion of the construction project or the completion agreed in the construction project contract. If the project has not yet been completed, the employer is in arrears with the progress payment, and the contractor fails to pay it within a reasonable period of time, he may exercise the priority of compensation within six months from the agreed completion date of the project.
If the priority must be exercised on the project completion date or the agreed project completion date, it may be very unfavorable to the project contractor.
1. Construction enterprises should pay attention to the time limit for claiming the priority of compensation determined in Article 4 of the Reply. When the contractor fails to exercise the priority of compensation within the time limit stipulated in the reply, it will lose the priority of compensation for the project price, that is to say, the general limitation of action is two years. As long as the parties have not lost the limitation of action, they should generally be protected by law, but Article 4 of the Reply clearly stipulates? Six months? Time, regardless of whether the employer and the contractor can voluntarily coordinate and solve it, the contractor must sue within six months after the date of completion and get priority compensation.
Second, the contractor should claim the right to get the project price first to the court. The priority of compensation for project price is a kind of substantive right. Only through the proper channels of the people's court can we protect the litigation rights of the parties and make the case of the priority of compensation for the project price fair in procedure and entity. In practice? Because most of the cases claiming the priority of payment for construction projects occurred in the process of execution, the court of execution ruled and made a ruling on the priority of payment. This method is also used in the implementation of the above cases, which improves the implementation efficiency, but there are also some defects. This requires construction enterprises to fully coordinate and communicate with the trial court and the executive board of the people's court, make good use of the provisions of Article 286 of the Contract Law, and safeguard their legitimate rights and interests.
In practice, the priority of compensation for construction projects gives construction enterprises a means of self-protection. If we can make full use of this means, construction enterprises will have a powerful weapon to protect themselves when realizing their creditor's rights.