Supreme People’s Court: are all construction contracts invalid in the case of affiliated construction?

XC intermediate people’s court held that on the issue of validity determination of “construction contract of construction project”, Niu, without qualification, borrowed the name of a qualified construction enterprise as the actual constructor to carry out the construction of the project in this case

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The contract stipulates that company B shall undertake the construction of an investment building project developed and constructed by company a (2 floors underground, 21 floors above the ground, 23 floors in total, with a construction area of 51000 square meters)

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Therefore, the judgment: confirm that the “construction contract” and ancillary contracts signed by company a and company B are invalid

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The scope of the contract is the construction of all civil engineering and installation works contracted and undertaken by company B of the investment building involved in the case

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According to Article 146 (1) of the general provisions of the civil law (Article 146 of the civil code), the contract is invalid

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On September 10, 2012, company B signed the “internal contract agreement” with Niu

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After the judgment of the first instance, company a refused to accept the judgment of the first instance and appealed to the higher people’s Court of HN province

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If the employer does not know the affiliation fact and has reason to believe that the real contractor is the affiliated party, the interests of the bona fide counterpart should be protected first

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The court of first instance held that the construction contract involved in this case was invalid due to the violation of the mandatory provisions of laws and administrative regulations, which was in line with the provisions of the law

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The scope of contract includes: all contents within the scope of construction drawings, design changes, Q & a minutes, main decoration of civil engineering, general water supply and drainage, electrical installation and buried pipe engineering, etc

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Company B signed the “construction contract of construction project” with the construction unit If financial account books are set up independently, accounting independently and settling accounts with foreign company B, then settle accounts with Niu after settlement, and pay the money to Niu

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Among them, the contract between the employer and the affiliated party lacks effect intention, which belongs to conspiracy and hypocrisy

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this group of evidence can not prove that company B sent employees to organize the construction and management of the project

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The contract between the employer and the affiliated party is a contract signed by the affiliated party in the name of a qualified construction enterprise with the employer

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Niu as the company’s agent, who was responsible for all matters involved in the investment building project, and the legal consequences were borne by the company

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The reason was that the “construction contract” and ancillary contracts signed by company a and company B were valid contracts, and the judgment of the first and second instance that the contract was invalid was a mistake of applicable law.

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The content is as follows: Niu, as the Department Manager of the project Department of the investment building project involved in the case of company B, reached a cost agreement on Niu’s contracting the project

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[basic case] on September 12, 2012, company a and company B signed the construction contract of construction project through negotiation

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[gist of judgment] the validity of the construction contract signed by the affiliated party in the name of the affiliated party should be determined according to whether the employer is in good faith and whether he knows the affiliated facts when signing the construction contract

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The contracting mode is to contract labor and materials, ensure safety, quality and promise

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On December 24, 2014, the investment building involved in the case provided a report on the acceptance of the divisional works of the main structure, which proved that the acceptance of the frame, 21 floors and building area of 51535.68 square meters of the investment building involved in the case was carried out, and the acceptance opinions of the construction unit, the supervision unit and the design unit were qualified

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The relevant contract involving the construction of the project in this case is invalid due to violation of the mandatory provisions of laws and administrative regulations

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The judgment only determines the validity of the contract, and other claims of both parties shall be judged separately

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That is to say, the three parties hide the contract between the employer and the affiliated party with the contract between the employer and the affiliated party

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On October 12, 2013, Han and Niu of company a signed a supplementary agreement on construction, which stipulates that company A shall pay 3 million yuan of project progress payment to company B before October 23, 2013, and company B shall guarantee the timely payment of migrant workers’ wages; company B must resume work unconditionally on October 13, 2013, and the main project must be completed before December 20, 2013, and company A shall implement the contract Party B shall guarantee the continuous construction and the original schedule of the contract as agreed in the contract; Party A agrees to extend the total duration of the contract by 30 days, except for force majeure; Party A agrees to check with the third party cost company for the final accounts made by the third party cost company jointly entrusted by the three parties due to Party B’s objection, which shall be approved by both parties According to the new final accounts, etc

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On December 25, 2012, the construction company a, the supervision company C and the construction company B signed and sealed the commencement report, confirming that the commencement date of the investment building involved in the case was December 25, 2012

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The project is undertaken by Niu himself and contracted by company B externally

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The behavior of the affiliated person to hand over the contracted project to the affiliated person for construction is a subcontracting behavior

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Company a paid 50.5 million yuan in total

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Niu is also responsible for the coordination and handling of disputes between the two sides

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If payment is made to foreign company B, payment can only be made with written payment letter signed by Niu

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After the judgment of the second instance was made, company a refused to accept it and applied to the Supreme People’s court for retrial

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Ma, entrusted Mr

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The contracting method is to pay 1% of the management fee, independently employ staff, raise funds, carry out construction and bear risks

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On October 20, 2012, company B issued the power of attorney, and the legal representative of the company, Mr

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In the actual construction, Niu is responsible for raising funds, advancing funds for the preliminary project, and has full control and decision-making power over the construction of the project, the application of funds, the control of account funds, and the deployment of personnel

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According to item (2) of Article 1 of judicial interpretation of construction contract (1), the contract is also invalid

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If the employer knows the affiliation fact when signing the contract, and the employer, the affiliation person and the affiliated person all know that the affiliation person signs the contract with the employer in the name of the affiliated person when signing the construction contract of the construction project, the behavior belongs to the hidden behavior

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The second instance of HN Provincial Higher People’s court held that although the “construction contract” in this case was signed by company B and company a, company B signed the “internal contract agreement” with Niu, which clearly agreed that the project in this case was contracted by Niu himself and contracted by company B externally; Niu independently employed staff, raised funds, carried out construction independently and independently set up financial institutions Account books, independent accounting, Niu only paid 1% of the management fee to company B

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Subcontracting behavior violates the mandatory provisions of the law and is an invalid contract

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Niu filed a counterclaim with XC intermediate people’s Court: to order company a to pay the project payment and interest owed to Niu; to order company a to compensate for the loss and interest caused by the default of project price; to order company a to return the project deposit and interest; to confirm that Niu has the legal priority to be compensated for the auction or discount price of the investment building project involved in the case

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Company a filed a lawsuit to XC intermediate people’s court to terminate the “construction contract” and supplementary contract signed by company a and company B; require company Niu and company B to repair the leakage wall of the basement of the investment building project involved in the case, so as to make it reach the qualified quality standard; require company Niu and company B to jointly pay the project delay penalty

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To sum up, the court maintains that the contract is invalid in the first instance judgment

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They were not employees of company B

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The construction contract signed by both parties directly binds the employer and the affiliated party, and the contract is invalid not only because of the affiliation relationship

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The seven technical and management personnel in the first group of evidence submitted by company a in the second trial were also employed by Niu in the name of company B in Dingshi city in order to complete the project

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