SOCIALISTREPUBLICOF VIET NAM
Independence - Freedom - Happiness
Hanoi, May 07, 2010
ON CONTRACTS IN CONSTRUCTION ACTIVITIES
Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the June 14, 2005 Civil Code;
Pursuant to the November 26, 2003 Construction Law;
Pursuant to the November 29, 2005 Bidding Law;
Pursuant to the June 19, 2009 Law Amending and Supplementing a Number of Articles of the Laws Concerning Capital Construction Investment;
At the proposal of the Minister of Construction,
Scope of regulation and subjects of application
1. This Decree provides for contracts in construction activities (below referred to as construction contracts) under construction investment projects with 30% or more state capital.
2. This Decree applies to organizations and individuals involved in construction contracts under projects with 30% or more state capital in the Vietnamese territory. Organizations and individuals involved in construction contracts under projects with less than 30% state capital are encouraged to apply the provisions of this Decree.
3. Construction contracts under projects funded with official development assistance (ODA) may comply with relevant treaties to which the Socialist Republic of Vietnam is a contracting party and which contain provisions different from those of this Decree.
Interpretation of terms
In this Decree, the terms below are construed as follows:
1. Construction contract means a civil contract established in the form of a written agreement between a principal and a contractor on the establishment, change or termination of the rights, responsibilities and obligations of the contracting parties for the performance of one, some or all of jobs in construction activities.
2. Principal means an investor or a general contractor or a principal contractor.
3. Contractor means a general contractor or principal contractor in case the principal is an investor; a sub-contractor in case the principal is a general contractor or principal contractor. A contractor may be a partnership of contractors.
4. General conditions of a construction contract means a document enclosed with the contract defining basic rights and obligations of and relationships between parties to the contract.
5. Particular conditions of a construction contract means a document enclosed with the contract specifying or supplementing a number of general conditions applicable to the contract.
6. Construction contract annex means a document enclosed with a construction contract detailing, clarifying, amending or supplementing some clauses of the construction contract
7. Working day referred to herein means calendar day, except Sundays and public holidays prescribed by law.
8. Project standards means technical regulations, economic-technical norms, job performance processes, technical specifications and natural condition indicators elaborated or compiled by investors or their consultants for application to specific construction investment projects. Project standards must conform to regulations and standards promulgated or accredited by the State.
9. FEED design means a design made by a foreign consultant according to international practices after a work construction investment project is approved to serve as a basis for realizing detailed designs for works.
10. Main contract means a construction contract signed between an investor and a principal contractor or general contractor.
11. Sub-contract means a construction contract signed between a principal contractor or general contractor and a sub-contractor.
12. Lump-sum contract, fixed unit-price contract, adjustable unit-price contract, time-based contract and percentage contract referred to herein means the forms of lump-sum contract, unit-price (contract unit price or adjustable unit price) contract, time-based contract and percentage contract specified in the Government's Decree No. 85/2009/ND-CP dated October 15, 2009, guiding the implementation of the Bidding Law and selection of contractors under the Construction Law.
Types of construction contract
1. By characteristics of work, construction contracts are divided into the following types:
a/ Construction consultancy contract (below referred to as consultancy contract) means a contract for the performance of one, some or all of consultancy jobs in construction activities;
b/ Work construction contract (below referred to as construction contract) means a contract for the construction of works, work items or construction jobs according to work construction designs: work construction general contract means a construction contract for the construction of all works of an investment project.
c/ Technological equipment provision contract (below referred to as equipment provision contract) means a contract for the provision of equipment for installation in construction works according to technological designs; technological equipment provision general contract means a contract for the provision of equipment for all works of an investment project.
d/ Work engineering and construction (EC) contract means a contract for the performance of work or work item engineering and construction jobs; work engineering and construction general contract means a contract for engineering and construction of all works of an investment project.
e/ Engineering and technological equipment provision (EP) contract means a contract for the performance of engineering jobs and provision of equipment for installation in construction works according to technological designs; engineering and technological equipment provision general contract means a contract for engineering and provision of technological equipment for all works of an investment project.
f/ Technological equipment provision and construction (PC) contract means a contract for the provision of technological equipment for and construction of works or work items; technological equipment provision and construction general contract means a contract for the provision of technological equipment for and construction of all works of an investment project.
g/ Engineering-technological equipment provision-construction (EPC) contract means a contract for the performance of all jobs from engineering, provision of technological equipment to construction of works and work items; EPC general contract means a contract for the engineering of, provision of technological equipment to and construction of all works of an investment project.
h/ Turnkey general contract means a construction contract for the performance of all jobs of project formulation, engineering, provision of technological equipment and construction of works of a work construction investment project.
2. By contract prices, construction contracts are divided into the following types:
a/ Lump-sum contract;
b/ Fixed unit-price contract;
c/ Adjustable unit-price contract;
d/ Time-based contract;
e/ Percentage contract.
Principles of signing construction contracts
1. A construction contract shall be signed on the principles of free will, equality, good will, cooperation, lawfulness and in accordance with social ethics.
2. A construction contract shall be signed after the principal completes the selection of contractor(s) under regulations and involved parties finish contract negotiations.
3. The contract signing price must not exceed the bid-winning price (in case of bidding) or the approved bid package cost estimate (in case of contractor appointment). In case of addition of a work volume or an equipment quantity outside the volume or quantity indicated in the bidding dossier (dossier of requirements) which results in a contract signing price higher than the bid-winning price (proposed price) but neither changes investment objectives nor cause an excess of the approved total investment capital, the investor may decide on the contract signing price. In case such an addition results in a change in investment objectives or an excess of the approved total investment capital, the investor shall report such to the person with investment-deciding competence for decision.
4. For contracts for the performance of simple and small jobs or bid packages, all contractual contents may be written in a single contract document. For contracts for the performance of complex and large jobs or bid packages, contractual contents may be divided into general conditions and particular conditions of the contract.
5. In case a project investor signs contracts with multiple contractors for the performance of different bid packages, these contracts must be consistent and uniform in terms of schedule and quality, ensuring overall investment efficiency of the project.
6. In case the contractor is a partnership of contractors, partners shall reach a partnership agreement and the contract must contain signatures of all partners.
7. The principal and contractor shall appoint their representatives to negotiate and sign a construction contract. The parties’ representatives have full power to decide on contract-related matters and shall take responsibility for their decisions.
Principles of performing construction contracts
1. Parties to a construction contract shall strictly comply with the contract's provisions on scope of jobs, requirements on quality, quantity, category, deadline and mode, and other agreements in the contract.
2. A construction contract shall be performed in an honest and lawful manner, ensuring cooperation and mutual trust.
3. Parties to a construction contract may not infringe upon state and public interests and lawful rights and interests of other persons.
Validity and legality of construction contracts
1. A construction contract is valid when fully meeting the following conditions:
a/ The contracting parties have the full civil act capacity;
b/ The contract signing principles specified in Clauses 1, 2, 3,6 and 7, Article 4 of this Decree are adhered to;
c/ The contract is made in writing and signed by authorized representatives at law of the contracting parties. In case a contracting party is an institution, this party shall give a signature and append a seal;
d/ The contractor has adequate operation and practice capability as required by law.
2. The date when a construction contract becomes valid is the date of its signing (with a seal, if any) and after the principal receives a contract performance security from the contractor (for contracts requiring contract performance security) or another date agreed upon by the parties in the contract.
3. Legality of construction contracts:
a/ A valid construction contract is a legal ground binding on the principal, contractor and involved parties;
b/ A valid construction contract serves as a ground for settling disputes between parties. Disputes arising outside a construction contract shall be settled in accordance with relevant provisions of law;
(This translation is for reference only)