Paragraph 1 of Article 793 of the Civil Code stipulates that if the construction contract of a construction project is invalid, but the experience of the construction project is qualified, the contractor may be compensated with reference to the agreed discount of the project price in the contract. In judicial practice, there are three main views on how to determine the scope of "the agreement on the project price with reference to the contract": the first view is that the scope of the reference contract should be understood in a narrow sense, which only refers to the agreement related to the amount of the project price, such as the pricing standard and pricing method; The second view is that the application by reference is understood in a broad sense, and in addition to the project price, factors such as the payment time, payment node, and project quality also belong to the scope of reference application. The third point of view is that the agreement on the project price, the warranty money and its payment node belongs to the settlement and liquidation clause, and the construction contract of the construction project is invalid, which does not affect the agreement on the payment time and payment node of the project payment. In the author's opinion, when determining the scope of "the agreement on the project price with reference to the contract", the text should be interpreted as the cornerstone, and the connotation of the first paragraph of Article 793 of the Civil Code should be accurately understood, and the scope of reference application should not be excessively expanded.
1. The legal consequences of the invalidity of the construction contract of the construction project
Article 157 of the Civil Code provides an umbrella set out the legal consequences of the invalidity of civil juristic acts, including the return of property, compensation at a discount and compensation for losses, and "where it cannot be returned or it is not necessary to return, compensation shall be made at a discount". Article 793 of the Civil Code specifically stipulates the rules for dealing with the invalidity of construction contracts. The Civil Code stipulates that when a construction contract is invalid, the project price can be settled with reference to the contract, because there are many calculation standards for the project price in the construction market, and the calculation methods are complex and diverse. Compensating the contractor at a discount with reference to the agreement on the project price in the contract is conducive to balancing the interests between the contractor and the employer, resolving disputes conveniently and reasonably, standardizing the order of the construction market and protecting the legitimate rights and interests of construction workers.
2. The scope of reference is limited to the project price
Before the implementation of the Civil Code, Article 2 of the original Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts stipulated that a construction contract was invalid, but the contractor requested payment of the project price with reference to the contract after the completion and acceptance of the construction project, it should be supported. However, this article is vague about the scope of clauses agreed in an invalid contract, which is likely to lead to the generalization of the scope of application of reference in judicial practice, and not only the clauses of the project price agreed in the invalid contract can be referred to, but also other contract clauses. The Civil Code restricts the scope of the agreed clauses of the invalid contract, and clarifies that the scope of application by reference is limited to the "project price" and does not include other clauses. That is to say, the settlement with reference to the contract generally refers to the valuation method and pricing standard of the project price, and the payment terms, payment methods, payment time nodes and other contents agreed in the contract do not belong to the scope of reference application after the construction contract is found to be invalid. This is because in the case of invalidity of the contract, it is a legal presumption to determine the amount of discount compensation as provided for in Article 157 of the Civil Code, and it is mainly aimed at the amount of discount compensation, and other invalid contract provisions no longer have applicable effect.
3. If the loss cannot be determined, it can also be dealt with with with reference to the contract
The Civil Code does not clearly stipulate whether the calculation method of losses arising from breach of contract agreed in an invalid contract can be used as a reference basis, and there is considerable controversy in judicial practice. Because the calculation method of loss for breach of contract is generally stipulated in the liability clause for breach of contract, this involves the issue of whether the liability clause for breach of contract can be applied by reference when the construction contract of a construction project is found to be invalid. In this regard, Article 6 of the Interpretation (I) of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts stipulates that if a construction contract is invalid and one party requests the other party to compensate for losses, it shall bear the burden of proof on the fault of the other party, the size of the loss, and the causal relationship between the fault and the loss. Where the size of the loss cannot be determined, and one party requests that the size of the loss be determined with reference to the quality standards, construction period, time of payment of the project price, etc., as agreed in the contract, the people's court may make a judgment based on factors such as the degree of fault of both parties, the causal relationship between the fault and the loss, and other factors. Accordingly, if the parties cannot determine the amount of loss by adducing evidence, and there is a clear agreement on the standard of compensation for losses in the contract, according to the principle of fairness and from the perspective of balancing the interests of both parties to the contract, if one party requests to determine the size of the loss by reference to the quality standards, construction period, project price payment time and other contents agreed in the contract, the contract may be used as the basis for reference and application, but the degree of fault of both parties needs to be considered when adjudicating. and factors such as the causal relationship between the fault and the magnitude of the loss.
4. The settlement and liquidation clauses in the contract do not fall within the scope of application
Article 567 of the Civil Code stipulates that the termination of the rights and obligations of the contract shall not affect the validity of the settlement and liquidation clauses in the contract. This article deals with the validity of settlement and liquidation clauses after the termination of the contract. Settlement and liquidation refers to the thorough accounting of the claims and debts of both parties, and the liquidated damages clauses, deposit clauses, and quality margin clauses also belong to the settlement and liquidation clauses in nature. If a construction contract is invalid, whether the settlement and liquidation clauses in the contract can be applied by reference depends on whether the invalidity of the contract falls under the "termination of the rights and obligations of the contract" as stipulated in Article 567 of the Civil Code. Paragraph 2 of Article 557 of the Civil Code stipulates that if a contract is terminated, the rights and obligations of the contract shall be terminated. Generally speaking, the termination of a contract is for a valid contract, and the termination of the rights and obligations of the contract is a consequence of the termination of the contract. If the contract is invalid, the contract is not binding from the beginning, there is no need to terminate it, and there is no premise for the termination of the relationship of rights and obligations, and the consequences of the invalidity of the contract are directly stipulated by law. It can be seen that Article 567 of the Civil Code does not cover the invalidity of a contract, and the "settlement and liquidation clause" naturally cannot be applied to the invalidity of the contract. The view that the construction contract of the construction project is invalid, and the settlement and liquidation clauses can be applied with reference to the viewpoint confuses the different legal consequences of contract termination and contract invalidity.
*: People's Court Daily.