Discussion on Several Issues Concerning the Starting Calculation of Project Interest- Zhiheng Law Firm

Introduction/Introduction

Article 27 of the Interpretation of the Supreme People's Court on the Application of Law in the Trial of Cases of Disputes over Construction Contracts for Construction Projects (1) stipulates that interest shall be paid from the date on which the project price is payable. If the parties have not agreed on the payment time or the agreement is unclear, the following time shall be regarded as the payment time:

(1) If the construction project has been actually delivered, the date of delivery shall be the date of delivery.

(2) If the construction project is not delivered, the date of submission of the completion settlement documents shall be the date.

(3) If the construction project has not been delivered and the project price has not been settled, it shall be the date of the litigation by the parties.

According to the above provisions (hereinafter referred to as the provisions of this article), this paper briefly discusses the relevant issues of interest starting from five angles: when the payment time of the project price is agreed, when the construction project is delivered as the time to pay the project price, when the closing document is submitted as the time to pay the project price, and when the lawsuit is filed as the time to pay the project price.

Article 18, paragraph 2, of the Construction Law and Article 799, paragraph 1, of the Civil Code clearly stipulate that the code packet of the released version shall pay the project price to the contractor in a timely manner in accordance with the contract, which is not only the legal obligation of the code packet of the released version, but also its agreed obligation. Article 676 of the Civil Code stipulates that if the borrower fails to return the loan within the agreed time limit, it shall pay overdue interest in accordance with the agreement or relevant state regulations.

The interest on the project price belongs to the statutory fruits. If the code packet of the released version overpays the project price, the overdue payment interest shall be paid to the contractor. The starting time of the overdue payment of the project price interest is naturally the time when the code packet of the released version shall pay the project price to the contractor, and the two are synchronized. If the payment time of the project price is agreed, it shall be dealt with according to the agreement.

If there is no agreement or the agreement is unclear, it shall be determined in the order from Items 1 to 3 of this Article.

There is an agreement on the payment time of the project price, and the issue will be handled according to the agreement

The project price includes the project advance payment, the project progress payment, and the project completion settlement payment. The payment time of the project advance payment is generally agreed to be paid within one month after the signing of the construction contract or no later than 7 days after the start date stated in the start-of-construction notice. The payment time of the project progress payment is generally agreed to be paid within 28 days after the contractor submits the progress payment application and related materials.

Among them, the supervisor completes the review and reports the code packet of the released version within 7 days after receiving the information submitted by the contractor, the code packet of the released version completes the approval and issues the progress payment certificate within 7 days, and pays the project progress payment to the contractor within 14 days after the certificate is issued. The payment time of the project completion settlement payment is generally agreed to be paid within 56 days after the contractor submits the completion settlement application.

Among them, the supervisor shall complete the verification and submit the code packet of the released version within 14 days after receiving the completion settlement application submitted by the contractor, the code packet of the released version shall complete the approval and issue the completion payment certificate within 14 days, and the contractor shall pay the completion payment to the contractor within 14 days after the certificate is issued. In the case that the time for payment of the project price can be determined through the contract, the time for delivery of the project, the time for submission of the completion settlement document and the time for prosecution shall not be applied to determine the time for payment of the project price.

Only when it is not possible to determine the payment time of the project price through the contractual agreement shall the provisions of Items 1 to 3 of this Article be applied for determination.

On the issue of taking the date of delivery of the construction project as the time for payment of the project price

Article 799 of the Civil Code stipulates that after the completion and acceptance of the construction project has passed, the person who uses the code packet of the released version shall pay the project price as agreed. Article 14 of the Construction Interpretation stipulates that if the person who uses the code packet of the released version without completion and acceptance of the construction project without authorization claims the right to use part of the quality that does not meet the agreement, the people's court will not support it.

If the construction project has been actually delivered, if the payment time is not agreed or the agreement is unclear, the code packet of the released version shall pay the project price to the contractor, which is "money and goods are cleared" in layman's terms. In addition, if the contractor withdraws halfway and the code packet of the released version has actually received the construction project, then the delivery time is the time when the project price is payable.

On the issue of taking the date of submission of closing documents as the time for payment of construction price

Article 16 of the Interim Measures for the Settlement of Construction Project Prices stipulates that after the code packet of the released version receives the completion settlement report and complete settlement information, it shall be deemed to be recognized if it does not put forward any opinions on the settlement report and information within the specified or agreed time limit. Under normal circumstances, the supervisor needs to check the corresponding time after receiving the completion settlement documents submitted by the contractor before submitting the code packet of the released version.

The code packet of the released version also needs corresponding time for approval before issuing the completion payment certificate. After issuing the completion payment certificate, it also needs corresponding time to pay the project price. If the supervisor and the code packet of the released version have objections to the information submitted by the contractor, the contractor also needs corresponding time to supplement the relevant information.

The provisions of this article do not set aside a reasonable time for the above matters, and directly use the time for submitting the completion settlement documents as the time for the payment of the project price. The main purpose is to prevent the code packet of the released version from deliberately delaying the review of the completion settlement documents submitted by the contractor, and to urge the code packet of the released version to conduct the completion settlement with the contractor in a timely manner. The basic legal principle is Article 159 of the Civil Code. If a conditional civil legal act is unjustly prevented by the parties for their own interests, the conditions shall be deemed to have been fulfilled.

In practice, if the contractor does not submit the completion settlement documents, but the two parties have carried out substantive processing on the settlement matters, such as the project cost appraisal, the provisions of this subparagraph may also be applied, and the date of the appraisal is made as the date of payment of the project price. In addition, attention should be paid to distinguish this subparagraph from the provisions of Article 9 and Article 17 (1) (3) of the Construction Interpretation.

The completion date stipulated in Article 9 is also subject to the date on which the contractor submits the report, while the time for returning the project quality deposit stipulated in Article 17 is 90 days after the contractor submits the project completion acceptance report.

On the issue of taking the date of prosecution as the time for payment of the project price

The premise of this item is that the construction project has not been delivered and the project price has not been settled, that is, the time before the lawsuit cannot be used as the time when the project price is payable, and only the time after the lawsuit can be used as the time when the project price is payable. The time after the lawsuit can be used as the project price payable includes the date of the lawsuit, the date when the judgment takes effect, and the date when the project cost appraisal is made.

This item chooses the date of prosecution as the time for the payment of the project price, and does not choose the date when the judgment takes effect and the date when the project cost appraisal is made. The main reasons include: 1. Prevent the code packet of the released version from using the long litigation procedure of the construction project to delay the payment of the project price, urge it to settle with the contract in a timely manner, and balance the interests of all parties to the contract.

The effective date of the judgment and the date of the project cost appraisal. Although the specific amount of the project price can be determined, the time for the payment of the project price stipulated in this article is "deemed", which is a legal fiction and does not require the sending and contracting parties to have no dispute over the project price. The reason for the delay in payment of the project price by the code packet of the released version is usually that the project has not been settled and the project has quality problems.

If both parties are required to pay interest on the project price without dispute, the provisions of this article will lose the significance of urging the code packet of the released version to settle the project price in a timely manner. 3. The date of prosecution is more specific and clear, and there may be several different appraisals of the project cost, and the time is not clear enough. Therefore, this item takes the date of prosecution as the time for the project price to be payable, and does not require the sending and contracting parties to have no dispute over the project cost or the project price to be specific.

In practice, there are cases that the price of the project on the date of prosecution is not clear, so the interest is calculated on the date when the judgment takes effect, which is a misreading of the legislative intent of this article.

When applying the provisions of this article, the following points should be noted

Where the contract can determine the time for payment of the project price, the time fixed in the contract shall be used as the time for interest accrual. 2. Where the time for payment of the project price is not agreed or the agreement is unclear, the date of delivery of the project, the date of submission of the completion settlement documents, and the date of prosecution shall be in order.

Where the former cannot be ascertained, the latter shall apply. III. The date of prosecution refers to the time when the contractor submits the complaint, not the time when the people's court files the case. IV. If interest on the project price is claimed through a counterclaim, the interest shall be calculated from the date of filing the counterclaim, not the date of prosecution. Of course, except where the contract can be determined, the project has been delivered, and the completion settlement documents have been submitted.

If the construction contract is invalid, the agreement on the payment time of the project price is also invalid, which means that there is no agreed time for the payment of the project price. The time for the payment of the project price should be determined according to the delivery time of the project, the time for submitting the completion and settlement documents, and the time for prosecution. This point is rather controversial in practice.

Disclaimer: The views in this article are for exchange and discussion only, not as a basis for handling cases. Please criticize and correct the deficiencies in this article.

About the Author

Shi Wenhui Lawyer

Deputy Director of Zhiheng Haikou Management Committee

Zhiheng Haikou Equity Senior Partner

Commercial mediator of Hainan Free Trade Port

Hainan Lawyers Association Construction Engineering and Real Estate

Deputy Director of Professional Committee

Contact number: 18689665886

Unit Address: Binhai Avenue, Longhua District, Haikou City

17th Floor, Block B, Baifang Plaza, No. 105

ZHIHENG

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