Discussion on Several Issues Concerning the Subject of Priority of Receiving Compensation for Project Price

Introduction/Introduction

Article 35 of the Interpretation of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases concerning Disputes over Construction Contracts (1) provides that where a contractor who enters into a construction contract with a code packet of the released version requests, in accordance with the provisions of Article 807 of the Civil Code, that the price of the construction project be preferentially compensated for the discount or auction price of the construction project, the people's court shall support it.

According to the provisions of this article, from the general contractor of the project, the general contractor of the construction, the contractor of the released version of the dismemberment code packet, the survey and design unit, the supervision unit, the contractor of the subcontract relationship, the contractor of the subcontract relationship, the contractor of the borrowing qualification, the internal contractor Whether the project price is entitled to priority compensation and other angles are briefly discussed.

Article 807 of the Civil Code stipulates that if the code packet of the released version fails to pay the price as agreed, the contractor may urge the code packet of the released version to pay the price within a reasonable period of time. If the code packet of the released version fails to pay within the time limit, except that it is not suitable to discount or auction according to the nature of the construction project, the contractor may agree with the code packet of the released version to discount the project, or may request the people's court to auction the project according to law.

The price of the construction project shall be preferentially compensated for the discount or auction price of the project. According to the provisions of this article, the subject who enjoys the right of priority compensation for the project price shall meet the following two points at the same time: 1. The contractor shall have a contractual relationship with the code packet of the released version. The person of the code packet of the released version is the construction unit and the subject of rights of the project. The contractor who exercises the right of priority compensation and requests priority compensation for the discount or auction price of the project shall have a contractual relationship with the person of the code packet of the released version. This is from the perspective of protecting the safety of transactions.

Second, the contractor should contract the construction of the project. The purpose of establishing the right of priority compensation for the project price is to protect the wage rights and interests of migrant workers and other construction workers. The corresponding construction activities of migrant workers and other construction workers are mainly construction activities. Therefore, the contractor should contract the construction of the project, and the relationship with the code packet of the released version should be the construction contract relationship.

In addition, there is a view that the contractor who enjoys the right of priority compensation should be limited to the contractor who contracts the main project, and the contractor who does not have the main project should not enjoy it. The reason is that non-main projects account for a relatively small proportion, and supporting the right of priority compensation can easily lead to chaos in the construction and transaction order. This view is not supported by direct regulations. There are supports in practical cases, and some do not support it, which is not very uniform. The following are dealt with.

1

Issues concerning the priority right to compensation of the project price of the contractor who has a contractual relationship with the code packet released version

Contractors who have a contractual relationship with the code packet of the released version include the general contractor of the project, the general contractor of the construction, the contractor who dissects the code packet of the released version, the survey and design unit, the supervision unit, etc. The following categories are discussed:

General contractor and construction contractor. Article 24 of the Construction Law stipulates that general contracting of construction projects is advocated, and it is forbidden to dismember the code packet of the released version of construction projects. The code packet of the released version may contract the survey, design, construction and equipment procurement of construction projects to a general contractor, and may also contract one or more of the survey, design, construction and equipment procurement of construction projects to a general contractor.

The general contractor meets the constituent requirements of the project price priority right and belongs to the main body of the project price priority right.

The contractor who dismembered the code packet of the released version relationship. According to the provisions of the first paragraph of Article 791 of the Civil Code, the dismemberment of the code packet of the released version refers to the dismemberment of the construction project that should be completed by one contractor into several contractors. The contractor who dismembered the code packet of the released version relationship has a direct construction contract relationship with the code packet of the released version. According to the provisions of this article, he shall have the right of priority to be compensated for the project price.

However, due to the dismemberment of the code packet of the released version, there are multiple contractors, and there is a distinction between the contractor's main project and the non-main project, so the opinions on whether they all enjoy the priority right to compensation for the project price are not very unified. The Supreme People's Court Civil Code Implementation Leading Group's "Understanding and Application of the Civil Code of the People's Republic of China Contract Compilation [3]" (People's Court Press, p. 2037) on "Pay attention to accurately grasp the right subject of the priority right to compensation for the construction project price" part of the view that contractors who contract non-main projects should not enjoy the priority right to compensation for the project price, and the right subject is limited to the contractor of the main project.

There are also opinions that the existence of multiple contractors is a common phenomenon. As long as the project completed by the contractor belongs to the construction project, and the jointly completed construction project is suitable for discount and auction, the contractor's priority right of compensation should be guaranteed according to law. The author believes that in accordance with the provisions of this article and the project has discount or auction conditions, it is more reasonable for the contractor to enjoy the priority right of compensation for the project price.

Three, survey and design unit, supervision unit. Although it has a direct contractual relationship with the code packet of the released version, but because of the code packet of the released version of the person who concluded a survey and design contract, entrusted supervision contract, not a construction project construction contract, survey, designer and supervisor are not migrant workers and other construction workers.

Therefore, the survey and design unit and the supervision unit are not the subject of the right of priority compensation for the project price. The exception is that if the survey and design belong to the contracting scope of the general contractor of the project, such as the design-procurement-construction general contracting and the design-construction general contracting, at this time, the design cost belongs to the scope of the general contractor's project price and also has the right of priority compensation.

2

On the code packet of the released version of the contractor does not have a contractual relationship with the project price priority

Contractors who do not have a contractual relationship with the code packet of the released version include subcontractors, subcontractors, contractors who borrow qualifications, and internal contractors, etc., which are classified as follows:

The contractor of the subcontracting relationship and the contractor of the subcontracting relationship (this item does not include the contractor who has illegally subcontracted the code packet of the released version of the project, and has classified it as a contractor with a contractual relationship with the code packet of the released version). According to the provisions of Articles 7 and 11 of the Administrative Measures for the Identification and Punishment of Illegal Acts in Construction Engineering Construction Code packet of the released version and Contracting, subcontracting refers to the act of the contractor not performing the responsibilities and obligations stipulated in the contract after contracting the project, and transferring all the projects contracted by it or dismembering all the projects contracted by it to other units or individuals for construction in the name of subcontracting.

Subcontracting refers to the act of subcontracting the unit project or sub-project project to other units or individuals for construction after the contractor contracts the project, including legal subcontracting and illegal subcontracting. Because the effectiveness of subcontracting does not affect the priority right to compensation for the project price, this article does not distinguish between legal subcontracting and illegal subcontracting.

The contractor of the subcontract relationship and the contractor of the subcontract relationship do not have the right to be compensated for the project price because they have no contractual relationship with the code packet of the released version and do not comply with the provisions of this article on the relativity of the contract. It should be noted that if the contractor of the subcontract relationship or the contractor of the subcontract relationship enters into a tripartite contract with the general contractor or the code packet of the released version, or the code packet of the released version designates a subcontract, etc., it may have a contractual relationship with the code packet of the released version, and the priority of the project price should be judged according to the circumstances.

Second, the contractor who borrows qualifications. According to the provisions of the first paragraph of Article 9 of the "Administrative Measures for the Identification and Punishment of Construction Engineering Construction Code Packet of the released version and Contracting Illegal Acts", the loan qualification contract project is also called affiliation, which refers to the contractor's act of contracting the project in the name of other qualified construction units. Because in the loan qualification contract project relationship, there are two contractors, the qualification lender and the qualification borrower, and at the same time there is the formal contractual relationship between the qualification lender and the code packet of the released version, and the substantive contractual relationship between the qualification lender and the code packet of the released version.

Therefore, whether the contractor enjoys the right of priority to be compensated for the project price and whether the qualified lender or the qualified borrower enjoys the right of priority to be compensated for the project price, there is a big dispute. The opinion of the "Judicial Interpretation of the Supreme People's Court on the New Construction Project Construction Contract (1) Understanding and Application" (People's Court Press, 2021 edition, p. 363) edited by the First Civil Trial Division of the Supreme People's Court holds that the contractor who borrows the qualification to contract the project should not enjoy the right of priority to be compensated for the project price. The main reasons are that the contract is invalid and the code packet of the released version does not have the relativity of the contract.

The Supreme People's Court Civil Code Implementation Leading Group edited the "Understanding and Application of Contracts in the Civil Code of the People's Republic of China [III]" (People's Court Press, page 2037), which holds that whether a contractor who borrows qualifications to undertake a project has the right of priority to receive compensation for the project price is determined on the basis of the principle that the qualified lender or one of the qualified borrowers enjoys it, and on the basis of the true intentions of the parties.

The author believes that, according to the provisions of Article 38 of this Interpretation, the priority of compensation for the project price is only directly related to the quality of the project, not directly related to the effectiveness of the contract. Therefore, in the relationship between borrowing qualifications to contract projects, the priority of compensation for the project price should be affirmed first, and should not be denied on the grounds that the contract is invalid.

As for the subject of rights, from the perspective of protecting transaction security, it is appropriate to belong to the qualification lender, except that the person of the released version of the code packet knows the existence of qualification borrowing.

III. Internal Contractor. Internal contractor refers to the act by which the contractor hands over the project to the internal staff of the unit for specific execution after contracting the project. Because the act of contracting a project by an internal contractor is a duty act, the unit to which it belongs should enjoy corresponding rights and assume corresponding obligations. Therefore, the right of priority compensation for the project price is enjoyed by the unit where the internal contractor is located, but not by the internal contractor.

In addition, it should be noted that if the internal contractor borrows the name of internal contracting, but actually relies on hanging, subcontracting, or illegal subcontracting, the project price shall be judged according to the situation of relying on hanging, subcontracting, or illegal subcontracting.

3

On Whether the Assignee of the Assignment of the Right of the Project Price Has the Priority Right to Receipt of the Project Price

There are two diametrically opposite views in practice: First, the assignee should not enjoy the priority of the project price, the reason is: (1) The priority of the project price is exclusive to the contractor who entered into a contract with the code packet of the released version, and has personal exclusivity.

(2) The transferee of the project price claim is not the construction unit, which does not meet the legislative purpose of protecting the wage rights and interests of migrant workers and other construction workers with the priority of the project price claim. Second, the transferee shall enjoy the priority of the project price claim, on the grounds that: (1) The priority of the project price claim belongs to the subordinate right of the project price claim. If the main right is transferred, the subordinate right shall be transferred accordingly.

(2) This article stipulates that the contractor who enters into a contract with the code packet of the released version has the right of priority to be compensated for the project price, and cannot draw the conclusion that the right of priority to be compensated for the project price is exclusive to the contractor. The author believes that the assignee should enjoy the right of priority to be compensated for the project price, for the following reasons: 1. This article stipulates that the contractor who enters into a contract with the code packet of the released version has the right of priority to be compensated for the project price. Its purpose is to protect the security of transactions and prevent subcontractors, subcontractors, contractors who borrow qualifications, and internal contractors from claiming the right of priority to be compensated for the project price to the code packet of the released version.

The transferee of the project price claim does not belong to the above subject, and has no impact on the security of the transaction. Second, the purpose of establishing the priority of the project price claim is to protect the wage rights and interests of migrant workers and other construction workers, and to protect the priority of the project price claim of the transferee, which can promote the circulation of the project price claim, ensure that the contractor obtains the transfer consideration of the project price claim in a timely manner, and then protect the wage rights and interests of migrant workers and other construction workers, which is consistent with the establishment purpose of the project price priority claim.

Article 547 (1) 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, except where the subordinate right is exclusive to the creditor himself. Through the analysis of the first point mentioned above, this article stipulates that the contractor who enters into a contract with the code packet of the released version enjoys the right of priority to be paid for the project price, mainly to protect the safety of the transaction, not to explain that the right of priority to be paid for the project price is personal.

Therefore, if the project price claim is transferred, the assignee should obtain the priority right to be paid for the project price as the right of the project price claim.

4

When applying this article, the following points should be noted

1. According to the provisions of Article 38 of this Interpretation, whether the contractor enjoys the priority right to compensation for the project price is related to the quality of the project, but not to the effectiveness of the contract. 2. The priority right to compensation for the project price is a legal priority. According to the principle of property law, the subject of its rights and the way of exercise must be clearly stipulated by law.

Article 43 of this Interpretation gives the actual constructor the right to break through the relativity of the contract and claim the project price to the code packet of the released version, but does not give the project price priority to be compensated at the same time, so the actual constructor should not enjoy the project price priority. Some people think that since the actual constructor has the right to claim the project price to the code packet of the released version, the project price priority is the subordinate right of the project price claim, and the actual constructor should also enjoy it.

This viewpoint is contrary to the principle of property right and is inconsistent with the provisions of this article, so it has not been adopted 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

Director of Zhiheng Haikou Construction Engineering Department

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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