In practice, there has always been a great deal of controversy over the subject of the priority right to be compensated for the project price. During the compilation process of the Civil Code, there was no content on the subject of the priority right to be compensated for the project price, but the word "contractor" was mentioned in Article 807. According to Article 35 of the 2021 Interpretation, only the contractor who has entered into a construction contract with the employer has the right to claim priority for the payment of the construction project price. In addition, the concept of "contractor" is also relatively vague, whether the contractor is the general construction contractor, the general contractor of the project, the subcontractor, the subcontractor or the affiliated contractor or the internal contractor of the enterprise? Therefore, it is necessary to make further analysis of the scope of the subject (contractor).
Article 788 of Chapter 18 of Part III of the Civil Code stipulates that a construction project contract is a contract in which the contractor carries out the construction of the project and the employer pays the price. Construction contracts include engineering survey, design and construction contracts. But do all contractors have the priority right to be compensated for the project price?
One view is that Article 807 of the Civil Code should be interpreted in a narrow sense, which only refers to the construction contract of the construction project, and does not include the survey and design unit. There are three reasons for this, 1The Civil Code differently describes remuneration between survey and design units and construction contractors, with surveying and design units being described as expenses and contractors being expressed as prices; 2.Survey and design units belong to intellectuals and do not belong to the objects of special protection under the priority system of project price; 3.The priority compensation of the survey and designer costs is not possible before the start of the project construction. Therefore, there is no room for the survey and design unit to apply the system of priority to compensation of the project price. Another view is that Article 788 of the Civil Code stipulates that construction contracts include engineering survey, design and construction contracts, and the contractor provided for in Article 807 does not restrict or exclude survey and design units, so priority protection should also be granted.
In the author's opinion, Article 791 of the Civil Code stipulates that the employer may enter into a construction contract with the general contractor, and may also enter into a survey, design and construction contract with the surveyor, designer and constructor respectively. The employer shall not break up a construction project that should be completed by one contractor into several parts and award the contract to several contractors. The former view advocates that according to a narrow understanding, it only refers to the construction contract of the construction project, and the general contractor of the project, including the survey and design fees, cannot claim the right of priority. In practice, there are at least some such as the design-and-construction general contracting model (DB model) and the design-procurement-construction general contracting model (EPC), and how to understand them in a narrow sense.
There is little controversy in practice on this issue, and the construction contract stipulated in Article 788 of the Civil Code includes engineering survey, design and construction contracts, and there is no project supervision contract. Article 796 stipulates that if a construction project is supervised, the employer shall conclude a contract with the supervisor in writing for entrusted supervision. The rights and obligations and legal liabilities of the employer and the supervisor shall be in accordance with the provisions of the entrustment contract and other relevant laws and administrative regulations in this Part. According to the above provisions, the supervision contract is not a construction contract, but an entrustment contract, so the provisions of Article 807 of the Civil Code on the priority right to compensation are naturally not applicable.
The author has already discussed some discussion on the actual constructor in the article "Problems Existing in the System of the Actual Constructor of Construction Contracts", and what I want to discuss here is whether the "subordinate right" in the subrogation lawsuit filed by the actual constructor due to the negligence of the subcontractor or illegal subcontractor in exercising the subordinate rights related to the claim related to the project price includes the right of priority to be compensated for the project price. Although there are no clear provisions in the Civil Code, the Interpretation and Application of the Civil Code of the People's Republic of China (Legislators' Authoritative Interpretation Version of the Civil Code Huang Interpretation and Application Series) prepared by the National People's Working Committee says that the subordinate rights related to the creditor's right mainly refer to the security right (including security interest and guarantee). As discussed by the author in the part of the nature of the priority right to be compensated for the construction project price in "The Priority Right to Compensation of the Construction Project Price and Other Rights", if it is considered that the priority right to be compensated for the project price is a statutory mortgage right, then the actual constructor has the priority right to be compensated for the project price, otherwise it does not exist. Of course, the Supreme People's Court's interpretation of "subordinate rights" does not include the right of priority to be compensated for the project price.
In practice, when the employer appoints a subcontractor and requires the contractor to sign a contract with the subcontractor, there are two ways for the subcontractor to receive the project price, one is for the employer to pay the subcontractor directly, and the other is for the employer to pay the general contractor, and the general contractor then pays the subcontractor. In these two cases, the contractor undertakes the main construction task and the designated subcontractor only undertakes part of the work, which is generally understood to mean that the designated subcontractor still does not enjoy the priority right to be compensated for the project price. If the employer and the subcontractor directly sign the contract, and the project price is also paid directly to the subcontractor, the author is inclined to believe that the subcontractor who directly signs the contract with the employer can enjoy the priority right to be compensated for the project price.
Article 547 of the Civil Code stipulates that if a creditor assigns a creditor's right, the assignee obtains a subordinate right related to the creditor's right, unless the subordinate right is exclusive to the creditor itself. The assignee's acquisition of a subordinate right is not affected by the fact that the subordinate right has not been registered for transfer or has not transferred possession. Therefore, there are opinions that the assignee of the claim for the project price has the priority right to be repaid for the project price. There are also opinions that the right of priority for repayment of the project price protects the labor remuneration of the construction workers who are attached to the contractor, and the issue of labor remuneration can be realized after the consideration is obtained for the assignment of creditor's rights, so it is claimed that the priority is no longer enjoyed.
Similarly, Article 554 of the Civil Code provides that if the debtor transfers the debt, the new debtor shall bear the subordinate debts related to the principal debt, unless the subordinate debts are exclusive to the original debtor. Article 551 stipulates that if the debtor transfers all or part of the debt to a third party, it shall obtain the consent of the creditor. Therefore, the contractor shall have the priority right to be compensated for the project price.