Through receiving and responding system to businesses’ recommendations he Thai Cuong Architecture and Construction Co., Ltd. (in Can Tho Province) requests the authorities to answer questions related to the construction contract when the investor is unable to hand over the site to the construction contractor. According to the Thai Cuong Architecture and Construction Co., Ltd., before the project implementation, the investor has partially cleared the ground and is in the stage of further site clearance, but there are disputes. For households in the project area, the investor cannot hand over the site partially to the construction contractor. Although in the bidding process, the bidder has taken into account the price slippage factor throughout the contract performance period. So far, the contract has expired but the work has not been implemented yet because the ground clearance has not been cleared.
At present, the material market has complicated developments, the iron price increases by 40% compared to the bid time, the sand price is in a scarce time, so it has increased by nearly 80% compared to the bid price.
In addition, the prices of some other materials also increased from 15% to 20% compared to the bid.
In case the contractor requests the termination of the construction contract because this is not the contractor's fault, the investor must submit for re-approval and organize the bidding again, which seriously affects the progress of project implementation. However, if the contractor continues to carry out the construction, the contractor will suffer great losses.
If the damage is not compensated while waiting for the handover of the site, the contractor will not be able to execute the work due to insufficient cost to cover the loss.
In the worst case of contract termination (where the contractor does not agree to continue the construction because this is not the fault caused by the contractor), the investor will have to select another contractor to implement and will incur a higher cost due to higher prices. The large fluctuation in fuel, material, and equipment prices is beyond the control of the investor and the contractor.
Unable to site clearance at the time of signing the contract is an objective factor, not due to the contractor's fault.Thai Cuong Company asked, isthis case considered force majeure according to Decree 37/2015 / ND – CP and areinvestors allowed to adjust the contract price with the contractor according to the current time?
In order not to damage the interests of the construction contractor, as well as for the project owner to have sufficient grounds and basis to pay the contractor under the law, the Architecture Co., Ltd. and Thai Cuong Construction proposed the Ministry of Construction for comments and specific directions to solve the above problems.
Regarding this issue, the Ministry of Construction has the following opinions:
According to Article 36 of Decree 37/2015 / ND-CP dated April 22, 2015 of the Government detailing construction contract: “Adjustments to the contract shall be made only during the contract implementation”.
Article 39 of Decree 37/2015 / ND-CP stipulates: “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.”.
According to the recommendation of Thai Cuong Architecture and Construction Co., Ltd,due to the site clearance, after the contract implementation period, the investor has not yet handed over the construction site to the contractor. Therefore, in case the contract stated in the document is governed by Decree No. 37/2015 / ND-CP, the investor should report to the person determining investment for consideration and decision on the adjustment of contract performance time.
In case the adjustment of the contract performance time causes damage to the contractor, the contractor has the right to request the investor to compensate for damage caused by the delay in the handover of the ground, including compensation due to market prices. fluctuations in the field while waiting for the construction site.
The process and procedures for contract adjustment and compensation (if any) should be consistent with the terms of the signed contract and applicable law provisions.
