Wan Wenqing, lawyer of Leshan Construction Project | Compliance risk based on the audit conclusion of the Employer


(2) “Overdue reply is deemed as approval” rule overview “Overdue reply is deemed as approval”, also known as “subject to the price submitted by the Contractor for approval”, refers to that if the parties agree in the contract that the Employer will not reply within the agreed period after receiving the completion settlement documents, the settlement price submitted by the Contractor to the Employer for approval can be used as the final settlement price of both parties, [Written by the 8th Working Group of the Permanent China Construction Engineering Law Forum: China Construction Engineering Construction Contract Law Book – Explanation of Terms and Practice Guidelines, Law Press, 1st Edition, 2019, page 338.] Its purpose is to urge the Employer to actively exercise the right to review the Contractor’s price for review, prevent the Employer from exercising its rights passively, which leads to the long-term uncertainty of the legal relationship between the Employer and the Contractor, so as to protect the transaction security and stability.

On the premise that the Employer and the Contractor agree that “the final settlement price shall be subject to the price audited by the Employer”, the pattern of what settlement mode may be formed is rooted in the fact that the trigger of the agreement that “the Employer’s overdue reply is deemed to be recognized” must apply, or the agreement that “the Contractor loses its rights after the deadline” has binding effect.

For example, Article 11.3.1 of the Code for Valuation of Bill of Quantities of Construction Projects (GB50500-2013) stipulates that “after the completion of the contract project, the Contractor…

Many normative documents stipulate the settlement mode based on the audit conclusion of the Employer.

(2) The contract letting party investing in construction projects with state-owned funds shall entrust a project cost consulting enterprise with corresponding qualifications to review the completion settlement documents, and put forward the review opinions on the completion settlement documents issued by the project cost consulting enterprise to the contractor within the agreed period after receiving the completion settlement documents; The contractee of a construction project invested by non-state-owned funds shall give a reply within the agreed period after receiving the completion settlement documents.

“.

The theoretical basis of “overdue reply is regarded as approval” comes from the provision of “implied presumption”, namely the provision of Article 141 of the Civil Code.

completion settlement documents,…

shall submit the completion settlement document to the Employer at the same time as submitting the completion acceptance application” Article 11.3.2 stipulates: “The Employer shall check the completion settlement documents submitted by the Contractor within 28 days after receiving them”, and Article 11.3.7 stipulates: “For…

In fact, the core of the settlement model based on the audit conclusion of the Employer is the game struggle between the two settlement results of “subject to the price submitted by the Contractor for approval” and “subject to the price audited by the Employer”, and the settlement consequence of “subject to the price submitted by the Contractor for approval” comes from the agreement that “late reply shall be deemed as approval”, The settlement consequence of “subject to the price audited by the Employer” comes from the agreement of “overdue loss of rights”.

Silence can be regarded as an intention only if it is stipulated by law, agreed by the parties or in accordance with the trading habits between the parties.] According to the provisions of the Civil Code, only when the “legal provisions”, “parties’ agreement” or “parties’ trading habits” are met, the “implied presumption” can take effect..

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01 Overview (1) The behavior mode of taking the audit conclusion of the Employer as the basis for project price settlement The behavior mode of taking the audit conclusion of the Employer as the basis for project price settlement is: First, the Employer and the Contractor agree in the construction contract that “the project price settlement shall be subject to the project price approved/reviewed/audited by the Employer”; Second, within a certain period of time after the project passes the completion acceptance, the Contractor shall submit comprehensive and complete completion settlement materials to the Employer; Third, within a certain time after receiving the completion settlement materials submitted by the Contractor, the Employer shall complete the review of the completion settlement materials; Fourth, according to the objection raised by the Employer in the review procedure, the Contractor shall negotiate with the Employer to modify, adjust and confirm; Fifthly, the Employer shall pay the Contractor according to the amount of project funds determined in the settlement agreement when the Employer and the Contractor reach an agreement on project price settlement.

the Employer shall sign on the completion settlement documents for confirmation”; Item (3) of Article 14 of the Interim Measures for the Settlement of Construction Project Price stipulates that “after the completion of a single project within the project completion settlement review period, the Contractor shall submit the completion settlement report and complete settlement data to the Employer at the same time as submitting the completion acceptance report”, Item (IV) stipulates: “After receiving the completion settlement report and complete settlement materials submitted by the Contractor, the Employer shall verify, confirm or propose modification opinions within the time limit specified in the Measures (if there is a time limit agreed in the contract, it shall prevail)”; Article 18 of the Measures for the Administration of Construction Contracting and Contracting Pricing stipulates: “After the completion of the project, the completion settlement shall be carried out in accordance with the following provisions: (1) The contractor shall submit the completion settlement documents within the agreed period after the completion of the project.

[Article 141 of the Civil Code stipulates that the actor may express or imply his intention.

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