According to judicial practice and relevant cases, the settlement issues of fixed-price construction contracts can be summarized as follows:
1.The contract is clearly stipulated. According to Articles 16 and 22 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts, the parties shall settle the project price in accordance with the valuation standards or pricing methods agreed in the contract. If there is a clear agreement in the contract to fix the total price or unit price, and the agreement is voluntarily reached by both parties, this clause of the contract should be respected.
2.Change the way items are handled. In a fixed-price contract, for items that are increased or decreased, the settlement shall be made according to the specific agreement in the contract. For example, (2020) Yu Min Shen No. 4074 mentioned that the contract involved in the case contained provisions on the settlement of changes, additions and reductions, and if there was no express agreement in the contract, the settlement should be based on the facts.
3.The relationship between the change notice and the actual quantities. When a design change occurs, as shown in (2019) Xiang Min Shen No. 5343, the project price should be adjusted according to the actual amount of work and the actual situation. At the same time, if the contractor fails to provide sufficient evidence to prove that it is aware of the relevant change notice, it may affect the final settlement result.
4.Effect of the Settlement Agreement. As mentioned in (2021) Yue 01 Min Zhong No. 28024, even if there is a claim for an increase in the amount of work, as long as the two parties have reached an agreement on the settlement of the construction project price before the lawsuit, the court generally does not allow the appraisal of the project cost.
5.Risk sharing. The parties should fully consider the risks of construction when signing the contract, and make it clear in the contract. As mentioned in (2019) E 03 Min Zhong No. 531, a fixed-price contract reflects that the parties have foreknowledge of the risks of construction and should respect the autonomy of the parties.
6.Consistency of actual execution with the terms of the contract. In the cases (2019) Chuan Min Shen No. 807 and (2021) Xin 01 Min Zhong No. 805, although there was a dispute between the two parties over the ultra-deep foundation or the relevant fee collection standards, the final project price should be implemented in accordance with the contract.
7.Common practice in judicial practice. Judging from the case (2020) Su 02 Min Zhong No. 3346, even if the actual performance of the contract is a fixed unit price, the court may still decide to settle the settlement at the fixed total price based on various evidence and agreements, especially if the contract is signed behind the actual commencement date and the information such as the quantity and unit price is supplemented.
To sum up, the settlement of the construction contract of the fixed total price construction project should be based on the agreement of the contract, taking into account factors such as the notice of change, the actual quantity of the project, the validity of the settlement agreement and the wishes of both parties. If there is a dispute between the parties about the settlement method, the judgment will usually be made based on the specific facts of the case and the provisions of the law.