1. Decree 37/2015/ND-CP on Construction contracts,

2. Decree 50/2021/ND-CP (Amending Decree 37/2015/ND-CP),

3. Decree 35/2023/ND-CP (Amending Decree 37/2015/ND-CP).

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(English – Tiếng Anh)

1. Decree 37/2015/ND-CP on Construction contracts

DECREE 37/2015/ND-CP

April 22, 2015

Prescribing in detail construction contracts

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 18, 2014 Law on Construction;

At proposal of the Minister of Construction,

The Government promulgates the Decree prescribing in detail construction contracts.

Chapter I. GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Decree prescribes in detail construction contracts.

2. This Decree applies to organizations and individuals involved in the establishment and management of the performance of construction contracts of the following construction investment projects (including also construction contracts between investors implementing BOT, BTO, BT or PPP projects and contractors performing these projects’ bidding packages):

a/ Construction investment projects of state agencies, political organizations, socio-political organizations, socio-politico-professional organizations, socio-professional organizations, social organizations and units of people’s armed forces, and public non-business units;

b/ Construction investment projects of state enterprises;

c/ Construction investment projects other than those defined at Points a and b of this Clause that use state capital or capital of state enterprises accounting for 30% or more or under 30% but valued at more than VND 500 billion of their total investments;

Organizations and individuals involved in construction contracts of construction investment projects using other capital sources are encouraged to apply provisions of this Decree.

3. For construction contracts of projects using official development assistance (ODA) capital, if treaties to which Vietnam is a contracting party contain provisions different from those of this Decree, provisions of these treaties shall prevail.

Article 2. Interpretation of terms

In this Decree, the terms and phrases below are construed as follows:

1. Construction contract means a civil contract entered into in writing between the principal and contractor for performance of part or the whole of the work in construction investment.

2. Principal means the project owner or its representative, the general contractor or main contractor.

3. Contractor means the general contractor or main contractor if its principal is the project owner; a sub-contractor if its principal is the general contractor or main contractor. The contractor may be a partnership of contractors.

4. General terms of a construction contract are documents enclosed with the contract that define basic rights and obligations and relationship of the contractual parties.

5. Specific terms of a construction contract are documents enclosed with the contract that specify or add some provisions of general terms of the contract.

6. Annex to a construction contract is a document enclosed with the contract that details, clarifies, amends and supplements a number of clauses of the contract.

7. Workdays referred to in this Decree means calendar days except Sundays, public holidays and new year holidays as prescribed by law.

8. Technical instructions means a collection of technical requirements based on technical regulations and standards applied to works and construction designing to guide and define materials, products and equipment used for construction bidding packages and tasks of construction, supervision and pre-acceptance test of construction works.

9. Front-end engineering design (FEED) means overall technical design developed in conformity with international practice as the basis for development of detailed design.

10. Scope of work is defined in Clause 1, Article 12 of this Decree.

11. Main contractor means the contractor that directly enters into a construction contract with the construction project owner.

12. Sub-contractor means the contractor that enters into a construction contract with the main contractor or general contractor.

13. Foreign contractor means an organization established under foreign law or an individual holding foreign citizenship that is involved in the entry into and management of the performance of a construction contract in Vietnam. Foreign contractor may be main contractor, general contractor or sub-contractor.

Article 3.Types of construction contract

1. By characteristics and content of work, construction contracts have the following types:

a/ Construction consultancy contract (referred to as consultancy contract for short) for the performance of one, some or all of consulting tasks in construction investment;

b/ Contract for implementation of the construction of a work (referred to construction implementation contract for short) for the construction of a work or work item or performance of a construction task according to the work construction design. General construction implementation contract is the construction implementation contract for the construction of all works of an investment project;

c/ Technological equipment procurement contract (referred to as equipment procurement contract for short) for the procurement of equipment to be installed in a construction work according to the technological design. General technological equipment procurement contract is the contract for the procurement of equipment for all works of a construction investment project;

d/ Engineering and construction contract (or EC contract) for the engineering and construction of a work or work item. General EC contract is the contract for the engineering and construction of all works of a construction investment project;

dd/ Contract for engineering and procurement of technological equipment (or EP contract) for the engineering and procurement of equipment to be installed in a construction work according to the technological design. General EP contract is the contract for the engineering and procurement of technological equipment for all works of a construction investment project;

e/ Contract for procurement of technological equipment and construction (or PC contract) for the procurement of technological equipment and construction of a work or work item. General PC contract is the contract for the procurement of technological equipment for and construction of all works of a construction investment project;

g/ Contract for engineering, procurement of technological equipment and construction (or EPC contract) for the engineering, procurement of technological equipment for and construction of a work or work item. General EPC contract is the contract for the engineering, procurement of technological equipment for and construction of all works of a construction investment project;

h/ Turnkey contract for the performance of all tasks from project formulation, engineering, procurement of technological equipment and construction of work(s) of a construction investment project;

i/ Contract for supply of labor and working machinery and equipment for the supply of engineers and workers (referred collectively to as labor), working machinery and equipment and other necessary facilities for the construction of a work or work item, bidding package or construction task as designed;

k/ Other types of construction contract.

2. By form of contract price, construction contracts have the following types:

a/ Package contract;

b/ Fixed unit price-based contract;

c/ Adjustable unit price-based contract;

d/ Time-based contract;

dd/ Combined price-based contract, which is a construction contract using the combination of contract price types prescribed at Points a thru d of this Clause.

3. By relationship of contractual parties, construction contracts have the following types:

a/ Main contract, which is a construction contract between the project owner and main contractor or general contractor.

b/ Sub-contract, which is a construction contract between the main contractor or general contractor and sub-contractor.

c/ Internal assignment contract, which is a contract between the principal and contractor of the same agency or organization.

d/ Foreign-involved construction contract, which is a construction contract between a foreign contractor and a domestic contractor or project owner.

Article 4. Principles of entry into construction contracts

The entry into construction contracts must comply with the principles set out in Clause 2, Article 138 of Law No. 50/2014/QH13 on Construction and adhere to the following principles:

1. At the time of entry, the contractor must meet conditions on practice or operation capabilities prescribed in the law on construction. For a partnership of contractors, division of work volume in the partnership agreement must suit the operation capability of each partnership member. For foreign main contractors, they shall undertake to hire domestic sub-contractors to perform the contracted work projected to be assigned to sub-contractors when such domestic sub-contractors meet requirements of the bidding package.

2. The project owner or its representative may enter into contract(s) with one or more than one main contractor for the performance of work. In case the project owner enters into contracts with many main contractors, the contents of these contracts must ensure uniform and synchronous performance of the contracted work to ensure schedule, quality and investment efficiency of the investment construction project.

3. The general contractor or main contractor may enter into contract(s) with one or more than one sub-contractor, provided such sub-contractors are accepted by the project owner. All these sub-contracts must be consistent and conformable with the main contract with the project owner. The general contractor or main contractor must be responsible to the project owner for the schedule and quality of the contracted work including the work performed by sub-contractors.

4. The contract price must not exceed the successful bid or result of negotiation on the construction contract, except the additional volume outside the scope of work of the bidding package permitted by the competent investment decider.

Article 5. Principles of construction contract performance

When performing a construction contract, the contractual parties shall ensure the principles of construction contract performance set out in Clause 3, Article 138 of Law No. 50/2014/QH13 on Construction.

Article 6. Effectiveness and legality of construction contracts

1. A construction contract takes legal effect when it fully meets the following conditions:

a/ Persons who enter into the contract have full civil act capacity;

b/ The contract adheres to the principles of contract entry set out in Article 4 of this Decree;

c/ The contract is established in writing and signed by competent at-law representatives of the contractual parties. For any party being an organization, its name and stamp shall be appended in accordance with law.

2. The effective time of a construction contract is the time when it is entered into (and appended with a stamp, if any) or another specified time agreed in the contract and the principal has received contract performance security from the contractor (for a contract requiring contract performance security).

3. Legality of construction contracts:

a/ A construction contract that has taken legal effect is the highest legal basis that the principal, contractor and related parties have the obligation to perform;

b/ A construction contract that has taken legal effect is the highest legal basis for settling disputes between the parties. Any dispute that is not yet agreed by the parties in the contract shall be settled in pursuance to relevant laws;

c/ State management agencies; capital control, allocation and lending agencies; inspection, examination, audit and other related agencies shall base themselves on the contents of the legally effective construction contracts to perform their prescribed functions and duties without infringing upon lawful rights and interests of the contractual parties.

Article 7. Management of construction contract performance

1. Within the scope of their respective rights and obligations, the parties shall make a plan and take appropriate measures to organize the contract performance in accordance with the signed construction contract to realize the agreements set out in the contract.

2. Depending on construction contract types, management of construction contract performance includes:

a/ Management of contract performance progress;

b/ Quality management;

c/ Volume and contract price management;

d/ Management of labor safety, environmental protection and fire and explosion prevention and fighting;

dd/ Management of contract adjustment and other contractual contents.

3. Both the principal and contractor shall appoint and notify the other party of its representative who shall manage construction contract performance. Representatives of the parties must have full power to decide and take responsibility for their own decisions within the scope of their powers determined in the contract.

4. All recommendations, proposals, requests and feedbacks from any party during the management of construction contract performance shall be made in writing. Such recommendations, proposals and requests must specify their grounds and effects (if any) and deadline for response as agreed in the contract. Upon receipt of a recommendation, proposal or request from one party, the other party shall make a written reply about its acceptance or rejection according to the deadline as agreed in the contract within seven (7) working days after receiving such recommendation, proposal or request, unless otherwise agreed by the parties. After this deadline, if the receiving party fails to respond without plausible reason causing damage to the other party, it shall take full responsibility and pay compensation for damage (if any) to the other party.

5. Any recommendation, proposal or request from any party during the management of construction contract performance shall be sent to the address of transaction or information exchange as agreed by the parties in the construction contract.

6. Any matter that is not prescribed in this Decree shall be dealt with by the parties in accordance with relevant laws.

Chapter II. SPECIFIC PROVISIONS

Section 1. INFORMATION, BASES FOR ENTRY, CONTENT, DOSSIER, APPLICABLE LAW, AND LANGUAGE USED IN CONSTRUCTION CONTRACTS

Article 8. Information about construction contracts

Information about a construction contract must be written in the contract, including:

1. Contract type and number, name of bidding package, project name, construction site and bases for contract entry.

2. Transaction names of the parties to the contract, representatives of the parties, business registration addresses or transaction addresses, tax identification numbers, business registration certificates, account numbers, phone numbers, fax numbers, e-mail addresses, time and venue of contract entry, and other relevant information.

3. In case of a partnership of contractors, all the information about the leading member and other members of such partnership prescribed in Clause 2 of this Article shall be specified.

Article 9. Bases for entry into construction contracts

1. Bases for entry into a construction contract include requirements on the work to be performed as agreed by the parties, results of contractor selection, negotiation and finalization of the contract and other relevant legal bases.

2. For EPC, EC and EP contracts, in addition to the bases mentioned in Clause 1 of this Article, an approved feasibility study report on construction investment or FEED is also required.

3. For turnkey contracts, in addition to the bases mentioned in Clause 1 of this Article, other bases such as project implementation task, investment policy and approved pre-feasibility study report on construction investment are also required.

Article 10. Content, dossier and order of priority of documents of a construction contract

The content, dossier and order of priority of documents of a construction contract must comply with Articles 141 and 142 of Law No. 50/2014/QH13 on Construction.

Article 11. Applicable law and language used in a construction contract

1. A construction contract must apply the laws of the Socialist Republic of Vietnam and comply with provisions of this Decree.

2. Language used in a construction contract is Vietnamese.

3. For a foreign-involved construction contract, the language used is Vietnamese and a foreign language as agreed by the parties; in case no agreement on this is reached, English shall be used.

Section 2. CONTENT AND VOLUME OF WORK, REQUIREMENTS ON QUALITY AND IMPLEMENTATION SCHEDULE

Article 12. Content and volume of work under construction contracts

1. Content and volume of work under a construction contract are those agreed by the principal and contractor within the contract’s scope of work and shall be clearly stated in the contract. The scope of work shall be determined based on the bidding dossier or dossier of requirements, bid dossier or dossier of proposals, negotiation minutes and other relevant legal documents. Depending on each specific type of construction contract, the scope of work shall be determined as follows:

a/ For a consultancy contract: It covers planning; formulation of construction investment project; engineering; survey; project management; management of construction contract performance; construction supervision; verification of design, cost estimate and other consulting tasks in construction investment;

b/ For a construction implementation contract: It covers supply of building materials, labor, working machinery and equipment, and construction of works according to the approved design dossier;

c/ For a technological equipment procurement contract: It covers supply of equipment; instruction on installation, use, trial operation, operation, training and technology transfer (if any) according to the approved design dossier;

d/ For an EPC contract: It covers engineering, procurement of supplies and equipment and construction of works; training and instruction on operation, maintenance and repair; technology transfer; off-load and on-load trial operation; and other tasks according to the approved design dossier;

dd/ For a turnkey contract: It mainly covers formulation of construction investment project; engineering; equipment procurement and construction of works; training and instruction on operation, maintenance and repair; technology transfer; off-load and on-load trial operation; handover of the ready-to-operate works to the principal; and other tasks according to the approved project.

2. Revision of volume of contracted work is prescribed in Article 37 of this Decree.

Article 13.Requirements on quality, pre-acceptance test and handover of construction contract products

1. Requirements on quality of construction contract products:

a/ The quality of construction contract products must meet requirements set out in the contract and conform with quality requirements prescribed by law. In the construction contract, the contractual parties shall agree on regulations and standards (national standards and regulations) and technical instructions applied to the products;

b/For imported equipment and goods, in addition to the provisions of Point a of this Clause, there must be requirements on their origin.

2. Pre-acceptance test and handover of products of finished tasks:

a/ Agreements on procedures for pre-acceptance test and handover between the contractual parties must comply with the law on quality control of construction works;

b/ Tasks to be tested before acceptance and handed over; bases for pre-acceptance test and handover; procedures and time of pre-acceptance test and handover of products of finished tasks; personnel involved in pre-acceptance test and handover; paper forms used for pre-acceptance test and handover; signees, pre-acceptance test and handover minutes and documents must comply with law and be agreed upon by the parties in the contract;

c/ The parties may only test, accept and hand over products that meet quality requirements prescribed in Clause 1 of this Article;

d/ For the tasks that are required to be tested and accepted before proceeding to other tasks, the contractor shall send a prior notice to the principal for pre-acceptance test in accordance with the law on quality control of construction works;

dd/ Defective products (failing to meet requirements stated in the contract) shall be repaired or discarded if they cannot be repaired. Any party at fault shall pay all expenses for the repair and inspection and other expenses related to the correction of errors and contract performance schedule.

Article 14. Duration and schedule of construction contract performance

1. The duration of contract performance starts from the date the contract takes effect to the time all parties fulfill their obligations under the signed construction contract.

2. The contractor shall prepare a detailed performance schedule and submit it to the principal for approval as a basis for implementation.

3. The contract performance schedule must indicate deadlines for completion and handover of key tasks and products.

4. For a construction implementation contract of a large-sized bidding package with a long performance duration, performance schedule may be made for each stage.

5. For an equipment procurement contract, the schedule of equipment supply must indicate deadlines for handover of equipment, specifying the quantity and types of equipment in each stage of handover.

6. For an EPC contract or turnkey contract, in addition to contract performance schedules for each stage, schedule for each task (project formulation, engineering, procurement and construction) shall be also made.

7. Accelerating the contract performance progress while ensuring product quality is encouraged. In case such acceleration brings about higher efficiency to the project, the contractor shall be considered for rewards as agreed in the contract.

8. Adjustment of contract performance schedule is prescribed in Article 39 of this Decree.

Section 3. PRICE, ADVANCE PAYMENT, PAYMENT, FINALIZATION AND LIQUIDATION OF CONSTRUCTION CONTRACTS

Article 15. Construction contract price and conditions for application

1. Price of a construction contract is an amount of money that the principal undertakes to pay to the contractor for the performance of work according to the requirements on volume, quality, schedule, payment terms, advance payment and other requirements as agreed in the contract.

2. In a construction contract, the parties shall clearly state expenses, taxes and charges (if any) included or not included in the contractual price; the construction contract price to be adjusted must suit the type of contract and form of contract price and shall be agreed by the parties in the contract. For a construction contract in which payment in different currencies is agreed by the parties, the contract price in each currency shall be specified.

3. Construction contract price has the following types:

a/ Package contract price, which is the price that remains unchanged throughout the contract performance duration for the volume of tasks within the signed contract’s scope, except in force majeure events or change of the scope of tasks to be performed;

b/ Fixed unit price-based contract price, which is determined by multiplying the fixed unit price of each task by the volume of such task. Fixed unit price is the unit price that remains unchanged throughout the contract performance duration, except in force majeure events;

c/ Adjustable unit price-based contract price, which is determined by multiplying the unit price adjusted due to inflation as agreed in the contract by the volume of the corresponding task with the adjusted price. The method of adjusting unit prices due to inflation are prescribed in Clauses 3 and 4, Article 38 of this Decree;

d/ Time-based contract price, which is determined on the basis of remuneration for experts, their non-remuneration expenses and working time (volume) by month, week, day and hour.

– Remuneration for experts shall be determined by multiplying their salary rate and related expenses as agreed by the parties in the contract by the actual working time (on a monthly, weekly, daily and hourly basis).

– Non-remuneration expenses for experts include travel, working office and other reasonable expenses.

dd/ Combined price-based contract price, which is the contract price using the combination of the contract prices prescribed at Points a thru d of this Clause as suitable to characteristics of each type of contracted task.

4. Construction contract price shall be determined on the basis of successful bid or result of negotiation on the construction contract between the parties.

5. Conditions for applying different types of construction contract price are prescribed as follows:

a/ For package contracts:

Package contract price may be applied to bidding packages which, by the time of contractor selection and contract negotiation and entry, have fully met the conditions for clear determination of volume and unit price for the performance of tasks according to the requirements set out in the construction contract, or in some cases in which volume and unit price cannot be determined yet (such as EC, EP, PC, EPC and turnkey contracts) but the contractual parties have sufficient capability and experience to calculate and determine the package contract price.

When the package contract price is applied, all risks related to the bidding package price or contract price such as volume and inflation risks during the contract performance duration shall be taken into account and each party shall take responsibility for its own risks.

b/ For fixed unit price-based contracts:

Fixed unit price-based contract price may be applied to bidding packages which, by the time of contractor selection and contract negotiation and entry, have fully met the conditions for clear determination of unit price for the performance of tasks according to the requirements set out in the construction contract but the exact volume of work cannot be determined yet. Then, all risks related to contract price such as inflation during the contract performance duration shall be taken into account in the unit price of the tasks under the contract and each party shall take responsibility for its own risks. Then, the price of bidding packages and contract price must include provisions for the risks of inflation and volume change;

c/ For adjustable unit price-based contracts: The adjustable unit price-based contract price may be applied to bidding packages for which, by the time of contractor selection and contract negotiation and entry, the contractual parties lack conditions for clear determination of the volume, unit price and risks related to contract price such as inflation during the contract performance duration. Then the parties shall include provisions for the risks of inflation and volume change in the bidding package price and contract price;

d/ The time-based contract price may be applied to a number of construction contracts involving consulting work in construction investment. Consultancy contract may apply any of the types of contract price prescribed in this Decree.

Article 16. Security for construction contract performance

1. Security for construction contract performance means the application by the contractor of one of the measures of payment of deposit, collateral and guarantee for fulfillment of its obligations during the contract performance duration. It is encouraged to apply the measure of guarantee.

2. Contract performance security shall be paid to the principal before the contract takes effect as agreed by the parties on value, currency and security method and in the form accepted by the principal and must be valid until the contractor fulfills its obligations under the contract or after the principal has received warranty security for contracts involving construction and equipment procurement. Particularly for consultancy contracts, internal assignment contracts, construction contracts under target programs performed by households, and construction contracts in the form of self-performance, no performance security is required.

3. In case the contractor is a partnership of contractors, each member of such partnership shall pay contract performance security to the principal at levels corresponding to parts of the contract value undertaken by each member. If the partnership has an agreement that the leading member shall pay contract performance security, such leading member shall pay the performance security to the principal and each member of the partnership shall pay its own performance security to the leading member corresponding to the contract value it undertakes.

4. The value of contract performance security and security method shall be stated in the bidding dossier or dossier of requirements. Levels of contract performance security must be between 2% and 10% of the construction contract price. To prevent high risks, such level may be higher but must not exceed 30% of the contract price and approved by the competent investment decider.

5. The contractor shall not be refunded the contract performance security in case of refusing to perform the contract after the contract takes effect and committing other violations stated in the contract.

6. The principal shall refund the contract performance security to the contractor after the latter has fulfilled obligations under the contract or has shifted to warranty work and the principal has received warranty security for contracts involving construction and equipment procurement.

Article 17. Security for construction contract payment

1. Security for construction contract payment means the application by the principal of measures to prove its capability to fulfill payment obligations under the construction contract signed with the contractor through such forms as approved capital arrangement plan, security by a bank or credit institution , credit provision contract or loan agreement with financial institutions.

2. Before entering into a construction contract, the principal must have a payment security suitable to the payment schedule agreed in the contract. The principal is prohibited from entering into a construction contract without an approved capital plan for payment as agreed in the contract, except construction works built under urgent commands.

Article 18. Advance payment for construction contracts

1. Advance payment for a construction contract is an interest-free amount of money paid in advance by the principal to the contractor for necessary preparatory work before performance of tasks under the contract.

2. Such advance payment may be made only after the construction contract takes effect. Particularly for construction implementation contracts, there must be also a ground clearance plan as agreed in the contract and at the same time the principal has received advance payment guarantee (if any) corresponding to the value of each currency agreed by the parties.

3. The level of advance payment, time of payment and recovery of advanced amounts shall be agreed specifically in the contract.  Levels of advance payment and number of advance payments shall be specified in the bidding dossier or dossier of requirements or the draft construction contract sent to the contractor as a basis for calculation of bids or proposed prices.

4. Advance payment guarantee:

a/ For a construction contract with an advance payment value exceeding one billion Vietnam dong, before the principal makes the advance payment, the contractor shall pay to the principal an advance payment guarantee with a value and currency equivalent to the advanced amount.  Advance payment guarantee is not compulsory for construction contracts with an advance payment value of up to one billion Vietnam dong, and for construction contracts in the form of self-performance including contracts performed by the community under target programs;

b/ In case the contractor is a partnership of contractors, individual members of the partnership shall pay to the principal advance payment guarantee with a value equivalent to the amount advanced to each member, unless all the members of the partnership have decided to let the leading member pay the advance payment guarantee to the principal;

c/ The validity duration of advance payment guarantee shall be extended to the time the principal has recovered all the advanced amount. The value of advance payment guarantee will decrease gradually corresponding to the value of advance payment recovered upon each payment made between the parties.

5. The level of advance payment must not exceed 50% of the contract value at the time of entry (including provisions, if any). In special cases, this level shall be permitted by the competent investment decider, or by the ministers, chairpersons of provincial-level People’s Committees; chairpersons of the Members’ Councils or of the Boards of Directors of groups or corporations in case the competent investment decider is the Prime Minister. The minimum level of advance payment is prescribed as follows:

a/ For consultancy contracts:

– 15% of the contract price for a contract valued at over VND 10 billion.

– 20% of the contract price for a contract valued up to VND 10 billion.

b/ For construction implementation contracts:

– 10% of the contract price for a contract valued at over VND 50 billion.

– 15% of the contract price for a contract valued at between VND 10 and 50 billion.

– 20% of the contract price for a contract valued at under VND 10 billion.

c/ For technological equipment procurement contracts, EC contracts, EP contracts, PC contracts and EPC contracts, turnkey contracts and other types of construction contract: 10% of the contract price;

d/ In case the parties agree on an advance payment level higher than the minimum level prescribed at Point a, b or c of this Clause, the value of the contract corresponding to the advance payment exceeding the minimum level shall not be adjusted in price from the time of advance payment;

dd/ The advanced amount to be gradually recovered via payments and the amount recovered upon each payment shall be agreed by the two parties in the contract, ensuring that the advanced amount is fully recovered when 80% of the signed contract price is paid.

6. The contractor shall use effectively the advance payment for proper purposes and targets. Non-use or use of the advance payment for purposes not specified in the signed construction contract is prohibited.

7. For the manufacture of structures or semi-finished products of high value, or for some materials which must be seasonally reserved, the principal and contractor shall agree on the advance payment plan and level of advance payment to ensure the contract performance schedule.

Article 19. Construction contract payment

1. Construction contract payment must suit contract type, contract price and conditions agreed upon by the parties in the contract. When payment is made under the agreements in the contract, the parties are not required to sign any contract annex, except in case of addition of work not yet specified to the contract.

2. The parties shall agree in the contract on number of payments, stages of payment, time of payment, payment deadline, and payment dossier and conditions.

3. The principal shall fully pay the value of each payment to the contractor after subtracting advance payments and warranty money as agreed in the contract, unless otherwise agreed by the parties.

4. If, by the payment deadline, the two parties do not have sufficient conditions for payment according to the contract (having no data for price adjustment, insufficient time for determining product quality, etc.), temporary payment can be made. When the parties have sufficient conditions for payment, the principal shall make the payment to the contractor under Clause 3 of this Article.

5. For package contracts: Payment shall be made in percentage of the contract price or prices of works or work items or volume of work corresponding to the payment stage as agreed by the parties in the contract. Certification of specific completed work volume is not required when payment is made.

6. For fixed unit price- and adjustable unit price-based contracts: Payment shall be made on the basis of actual completed work volume (including increasing or decreasing volume, if any) already tested and accepted for each payment, and unit price specified in the contract or adjusted unit price as agreed in the contract.

7. For time-based contracts, payment shall be made as follows:

a/ Expenses for experts shall be determined by multiplying the expert’s pay rate and related expenses as agreed in the contract by accepted actual working time (on a monthly, weekly, daily or hourly basis);

b/ Non-remuneration expenses for experts shall be paid by the method stated in the contract.

8. For combined price-based contracts, payment shall be made according to the provisions on construction contract payment in Clauses 5, 6 and 7 of this Article.

9. Payment for additional volume (outside the contract) without unit price specified in the contract shall be made according to agreements in the contract or additional agreement reached by the parties before performance and in accordance with relevant laws.

10. Payment time limits shall be agreed by the parties in the contract in conformity with the scale and characteristics of each contract. Payment time limits must not exceed 14 working days after the principal receives complete and valid payment dossiers as agreed in the contract and are specified as follows:

a/ Within seven (7) working days after receiving a complete and valid dossier of payment request from the contractor, the principal shall complete procedures and send payment requests to the bank or state treasury to make the payment;

b/ Within seven (7) working days after receiving a complete and valid dossier of payment request from the principal, the bank or state treasury shall fully transfer the value of payment to the contractor.

c/ For construction contracts of construction investment projects using ODA capital or loans from foreign credit institutions, payment time limits must comply with relevant treaties. When negotiating about payment time limits, the parties shall base themselves on provisions of the treaty and investment capital finalization procedures prescribed by law.

11. The principal is prohibited from failing to make full payment or to make payment in time to the contractor as agreed in the contract.

Article 20. Payment dossiers for construction contracts

1. The contractor shall compile a payment dossier for the construction contract in conformity with contract type, contract price and agreements in the contract. Payment dossier (including forms) shall be specified in the construction contract and certified by the principal. A payment dossier for a construction contract must comprise the following principal documents:

a/ For a package contract:

– Written record of the testing and acceptance of completed work volume in the payment period with certification by the principal’s representative or consultant’s representative (if any) and by the contractor’s representative. This written record is the certification of completion of a work or work item or volume of work within the scope of work to be performed under the contract (within the scope of work to be performed according to design, for construction implementation contracts, or within the scope of consulting tasks to be performed, for consultancy contracts) without certification of specific completed work volume;

– Table of calculation of the value of additional work volume (if any) outside the signed contract’s scope with certification by the principal’s representative or consultant’s representative (if any) and the contractor’s representative;

– The contractor’s payment request must indicate the value of completed work volume under the contract and value of additional work volume (if any), subtraction of the advanced amount, and the value requested to be paid after subtracting these amounts with certification by the principal’s and contractor’s representatives.

b/For fixed unit price-based contracts:

– Written record of the testing and acceptance of actual completed work volume (higher or lower than that stated in the contract) in the payment period with certification by the principal’s representative or consultant’s representative (if any) and by the contractor’s representative;

– Table of calculation of values of tasks without unit price specified in the contract (if any) showing both volume and unit price for these tasks with certification by the principal’s representative or consultant’s representative (if any) and the contractor’s representative;

– The contractor’s payment request must indicate the value of completed work volume under the contract, value of additional work volume (if any), and subtraction of the advanced amount, and the value requested to be paid in the period after subtracting these amounts with certification by the principal’s and contractor’s representatives.

c/For adjustable unit price-based contracts:

– Written record of the testing and acceptance of actual completed work volume (higher or lower than that stated in the contract) in the payment period with certification by the principal’s representative or consultant’s representative (if any) and by the contractor’s representative;

– Table of calculation of unit price adjusted due to inflation (or payment unit price) as agreed in the contract with certification by the principal’s representative or consultant’s representative (if any) and by the contractor’s representative;

– Table of calculation of the value of tasks without unit price specified in the contract (if any), showing both work volume and unit price for these tasks with certification by the principal’s representative or consultant’s representative (if any) and the contractor’s representative;

– The contractor’s payment request must indicate the value of completed work volume under the contract, value of additional work volume (if any), and subtraction of the advanced amount, and the value requested to be paid in the period after subtracting these amounts with certification by the principal’s and contractor’s representatives.

d/ For time-based contracts:

– Written record of the testing and acceptance of actual working time or timekeeping table (on a monthly, weekly, daily or hourly basis) corresponding to the result of work in the payment period with certification by the principal’s representative or consultant’s representative (if any) and by the contractor’s representative. In case of addition of experts to perform additional tasks during the contract performance period, the parties shall negotiate and agree on the level of remuneration for such experts before performance. Then, the payment dossier must include the table of calculation of the value of additional work volume (if any) outside the scope of work to be performed under the contract with certification by the principal’s representative or consultant’s representative (if any) and the contractor’s representative;

– The contractor’s payment request must indicate the value of completed work volume under the contract, value of additional volume (if any), and subtraction of the advanced amount, and the value requested to be paid in the period after subtracting these amounts with certification by the principal’s and contractor’s representatives.

dd/ For a construction contract involving equipment procurement, the completed work volume may be based on invoices, documents, bills of lading, written records of testing and acceptance and handover of equipment, and other relevant documents.

e/ For a construction contract involving consulting tasks of which the completed work volume is difficult to determine (the completed work volume is only relative), the completed work volume shall be determined based on dossiers, documents or products finished by the contractor and certified by the principal in each payment period as agreed in the contract.

2. For a combined price-based contract, payment dossiers for each type of work under the contract must comply with Clause 1 of this Article.

3. When negotiating about the payment dossier, the parties shall base themselves on the size, nature and source of capital used to agree on specific documents required among principal documents prescribed in Clause 1 of this Article.

4. In addition to the principal documents prescribed in Clause 1 of this Article, for construction contracts using ODA capital or loans of foreign credit institutions, payment dossiers must comply with the relevant treaties.

5. The principals and agencies, organizations and individuals related to contract payment are prohibited from imposing requirements on payment dossiers against the contractual agreements and provisions of this Decree in order to obstruct the payment in accordance with the agreements in the legally effective contracts.

Article 21. Currency for and form of construction contract payment

1. The currency used for construction contract payment is Vietnam dong; use of foreign currencies may be negotiated by the contractual parties but must not be contrary to the law on foreign exchange.

2. For a construction contract involving some tasks that require payment to be made in different currencies, the parties shall clearly specify these tasks in the contract and ensure that the currencies for payment conform to the bidding dossier or dossier of requirements.

3. Payment may be made in cash, account transfer and other manners as agreed by the parties in accordance with law and specified in the contract.

Article 22. Construction contract finalization

1. Contract finalization means the determination of final total value that the principal shall pay to the contractor when the latter has fulfilled all the tasks as agreed in the contract.

2. A contract finalization dossier shall be prepared by the contractor in conformity with contract type and contract price. A finalization dossier must conform to the agreements in the contract, comprising the following documents:

a/ Written record of the testing and acceptance of all tasks within the contract’s scope and additional work outside the contract’s scope;

b/ Table of calculation of the contract finalization value (also called A-B finalization) showing the value of completed work volume under the contract; value of additional work volume (if any) outside the signed contract’s scope, value of payment or temporary payment already made and the remaining value to be paid by the principal to the contractor;

c/ As-built dossier, daily construction records for a construction contract involving construction activities;

d/ Other documents as agreed in the contract;

3. The time limit for construction contract finalization must comply with Clause 2, Article 147 of Law No. 50/2014/QH13 on Construction.

Article 23. Construction contract liquidation

The construction contract liquidation must comply with Clauses 3 and 4, Article 147 of Law No. 50/2014/QH13 on Construction.

Section 4. RIGHTS AND OBLIGATIONS OF PARTIES TO A CONSTRUCTION CONTRACT

Article 24. General rights and obligations of the principal and contractor

1. Rights and obligations of the parties to a construction contract shall be agreed by the parties in the contract which must not be contrary to law.

2. The principal or contractor shall send a written notice to the other party about rights and responsibilities of its representative for management of contract performance. When either party changes its representative for management of contract performance, it shall send a written notice to the other party. Particularly when the contractor changes its representative for management of contract performance or key personnel, such change shall be approved by the principal.

3. In case the contractor is a group or corporation, when performing a construction contract, it may directly assign work to its member units but shall ensure the principles of publicity, transparency and suitability to capabilities of individual members and this assignment shall be approved in advance by the principal.

4. Depending on each specific construction contract type, rights and obligations of the principal and contractor are also prescribed in Articles 25 thru 34 of this Decree.

Article 25. Rights and obligations of the principal of a consultancy contract

1. Rights of the principal:

a/ To own and use consultancy products under the contract;

b/ To refuse testing and acceptance of consultancy products of inferior quality under the contract;

c/ To inspect quality of the work performed by the contractor without obstructing its normal operation;

d/ Other rights as prescribed by law;

2. Obligations of the principal:

a/ To provide information about requirements on tasks, documents, payment security and necessary facilities for the performance of works as agreed in the contract (if any);

b/ To ensure copyright to copyrighted consultancy products under the contract;

c/ To settle the contractor’s proposals within its competence during the contract performance period within the time limit as agreed by the parties in the contract;

d/ To make full payment to the contractor according to the payment schedule agreed in the contract;

dd/ Other obligation as prescribed by law.

Article 26. Rights and obligations of the consultancy contractor

1. Rights of the consultancy contractor:

a/ To request the principal to provide information and documents relating to consulting tasks and working facilities as agreed in the contract (if any);

b/ To propose change of conditions for provision of consultancy services in the interest of the principal or upon detection of factors affecting the quality of consultancy products;

c/ To refuse performance of unreasonable tasks outside the contract’s scope and unlawful requests of the principal;

d/ To have the copyright protected in accordance with law (for copyrighted consultancy products);

dd/ Other rights as prescribed by law;

2. Obligations of the consultancy contractor:

a/ To complete the tasks on schedule and of quality as agreed in the contract;

b/ For engineering contracts: To take part in the testing and acceptance of the construction work together with the project owner in accordance with the law on construction quality control, and author’s supervision, and answer questions relating to the engineering dossier at the request of the principal;

c/ To preserve and hand over to the principal documents and working facilities (if any) provided by the latter under the contract after completing the tasks;

d/ To immediately send a written notice to the principal of the insufficiency of provided information and documents and poor quality of working facilities;

dd/ To keep confidential information relating to consultancy services as required in the contract or prescribed by law;

e/ Other obligations as prescribed by law;

Article 27. Rights and obligations of the principal of a construction implementation contract

1. Rights of the principal:

a/ To temporarily halt the construction and request remedy of consequences when the contractor violates regulations on construction quality, labor safety, environmental protection and fire and explosion prevention and fighting;

b/ To inspect quality of the performance and processing or production facilities of the contractor without hindrance to its normal operation;

c/ Other rights as prescribed by law.

2. Obligations of the principal:

a/ In case the principal is the project owner, to apply for a construction permit as prescribed;

b/ To hand over the whole or part of the construction ground area to the contractor for management and use in conformity with the schedule and other agreements in the contract;

c/ To appoint and send a written notice to the contractor of key personnel engaging in the management of contract performance;

d/ To promptly provide engineering dossiers, information, facilities, machinery and related equipment and supplies as agreed in the contract (if any) and as prescribed by relevant law;

dd/ To make payment to the contractor according to the payment schedule agreed in the contract;

e/ To organize construction supervision:

g/ To inspect the contractor’s measures to ensure labor safety, environmental protection and fire and explosion prevention and fighting;

h/ To conduct pre-acceptance test, payment and finalization of the contract on schedule as prescribed;

i/ If hiring organizations or individuals to provide consultancy services, to specify their tasks and powers in the management of contract performance and notify the contractor thereof;

k/ To consider and promptly approve in writing the contractor’s engineering and construction proposals during the construction period;

e/ Other obligations as prescribed by law.

Article 28. Rights and obligations of the construction contractor

1. Rights of the construction contractor:

a/ To propose additional work volume outside the contract to the principal; to refuse performance of tasks outside the contract’s scope without agreement between the two parties or unlawful requests of the principal;

b/ To change construction measures after obtaining consent of the principal in order to speed up the progress, ensure quality, safety and efficiency of the construction work on the basis of the signed contract price;

c/ To ask the principal to pay loan interest due to late payment as agreed in the contract; to claim compensation for damage caused by the late handover of the ground area and other losses caused by the principal;

d/ Other rights as prescribed by relevant law.

2. Obligations of the construction contractor:

a/ To provide labor, materials, working machinery and equipment, other related material conditions in sufficient quantities and of types under the contract; and the construction drawing design (in case the contractor performs drawing design) for the performance of the tasks under the signed contract;

b/ To receive and manage the ground area and protect borderline markers of the construction work;

c/ To carry out construction according to the design, technical instructions, standards and regulations, ensuring quality, schedule, safety, environmental protection and fire and explosion prevention and fighting;

d/ To keep daily records of construction activities;

dd/ To test materials, equipment and construction products according to the State’s regulations on construction quality control, technical instructions, standards and regulations on construction;

e/ To manage workers on the construction site; to ensure safety, security and order and no impact on surrounding residential areas;

g/ To work out construction measures, compile as-built dossiers and take part in the pre-acceptance test of construction works;

h/ To take responsibility for the quality of construction activities carried out; to remedy errors in the construction work committed in the tasks performed by the contractor;

i/ To coordinate with other contractors on the construction site;

k/ To make periodical reports to the principal on construction progress, labor and main equipment for construction activities;

l/ To move supplies, machinery, equipment and other assets out of the construction site within the prescribed time limit after the work has been tested, accepted and handed over or the contract is terminated under Article 41 of this Decree, unless otherwise agreed in the contract;

m/ To restore the ground area as agreed in the contract;

n/ To keep confidential information relating to the contract or as prescribed by law;

o/ Other obligations as prescribed by law.

Article 29. Rights and obligations of the principal of a contract for technological equipment procurement

1. To provide necessary information and documents and ground area for installation of equipment to the contractor.

2. To cooperate with the contractor during training and technology transfer; to provide instructions on installation, use and operation.

3. To refuse pre-acceptance test and receipt of technological equipment found contrary to the agreement in the contract in terms of quantity, quality, type and origin.

4. In case the principal carries out technological design for the contractor, to take full responsibility for quality and intellectual property rights of this design.

5. Other rights and obligations as prescribed by law.

Article 30. Rights and obligations of the contractor for technological equipment procurement

1. To hand over technological equipment to the principal as agreed in the contract on quantity, quality, location, time, packaging, preservation, origin and as otherwise agreed in the contract.

2. To provide to the principal all necessary information about technological equipment; instructions on installation, use, operation, preservation and maintenance of technological equipment; provide training for management staff and operators in using the works (if agreed in the contract).

3. To join the principal in the trial operation of technological equipment.

4. Regarding intellectual property rights to technological equipment:

a/ Technological equipment provided by the contractor must ensure intellectual property rights. The contractor may not provide technological equipment that infringes upon intellectual property rights. The contractor must be responsible for any dispute related to intellectual property rights to technological equipment provided;

b/ In case the technological equipment is manufactured according to the design or data provided by the principal, the contractor is not responsible for any complaints about infringements upon intellectual property rights to such technological equipment;

c/ Either contractual party must be responsible for failing to send prompt notice to the other party of complaints filed by a third party about intellectual property rights to the technological equipment after it knows or must have known these complaints.

5. Other rights and obligations as prescribed by law.

Article 31. Rights and obligations of the principal of an EPC contract

1. Rights of the principal:

a/ To refuse testing and acceptance of products failing to meet quality requirements set out in the contract; to refuse testing and acceptance of technological equipment failing to comply with the agreements in the contract in terms of quantity, quality, type and origin, and products that infringe upon intellectual property rights;

b/ To inspect the contractor’s performance of tasks set out in the contract without obstructing its normal operation;

c/ To temporarily halt the performance of tasks set out in the contract and request remedy of consequences upon finding that the contractor has violated the contract or state regulations;

d/ To request the contractor to hand over dossier and documents relating to the contract products as agreed in the signed contract;

dd/ To examine and approve the list of qualified sub-contractors not yet included in the EPC contract as requested by the contractor;

e/ Other rights as prescribed by law.

2. Obligations of the principal:

a/ To make payment to the contractor according to the payment schedule agreed in the contract;

b/ To appoint and send a written notice to the contractor of key personnel engaged in the management of contract performance;

c/ To provide information, documents and necessary facilities to the contractor for its performance (if agreed in the contract);

d/ To conduct pre-acceptance test of, appraise and approve or submit to competent agencies for approval technical designs and construction drawing designs of construction works and work items as prescribed;

dd/ To apply for construction permits under regulations and hand over clear ground areas to the contractor according to the contract performance schedule;

e/ To supervise the performance of tasks set out in the contract; to examine measures to ensure labor safety, environmental protection and fire and explosion prevention and fighting as prescribed;

g/ To reach agreement with the contractor on the bidding dossier for technological equipment procurement (if agreed in the contract);

h/ To conduct pre-acceptance test and contract payment and finalization as scheduled;

i/ To guarantee copyright for consultancy products under the contract;

k/ To organize training for management staff and workers in using the works;

l/ Other obligations as prescribed by law.

Article 32. Rights and obligations of the EPC contractor

1. Rights of the EPC contractor:

a/ To request the principal to provide information, documents and working facilities (if agreed in the contract) related to the contract’s scope of work according to the signed contract;

b/ To propose additional work volume outside the contract to the principal; to refuse performance of the tasks outside the signed contract’s scope without agreement between the two parties or unlawful requests of the principal;

c/ To organize and manage the performance of tasks set out in the signed contract;

d/ Other rights as prescribed by law.

2. Obligations of the EPC contractor:

a/ To provide adequate labor, materials, machinery, equipment and other necessary facilities for the performance of tasks under the contract;

b/ To receive, manage, preserve and return documents and facilities provided by the principal (if agreed in the contract);

c/ To make written notice to the principal of the inadequacy of provided information and poor quality of working facilities that affect the performance of tasks under the contract;

d/ To keep confidential contract-related information as agreed in the contract or as prescribed by law;

dd/ To perform tasks under the contract, ensuring safety, quality, schedule and other agreements in the contract;

e/ To draw up designs (technical design, construction drawing design) of work items and main works of the bidding package or project in conformity with the approved basic design or FEED, and submit them to competent agencies and the project owner for appraisal and approval according to the law on construction;

g/ To organize procurement, manufacture and supply of technological equipment to meet contract performance requirements and schedule; to select sub-contractors (if any) via bidding or appointment and submit them to the project owner for approval; to negotiate and agree with the project owner on the content of the bidding dossier for procurement of technological equipment (if agreed in the contract); 

h/ To provide training for management staff and workers in using the works, transfer technology and provide accompanying technical service (if agreed in the contract);

i/ To test, correct and operate on a trial basis the works and hand over the completed works to the principal as agreed in the contract and as prescribed by current law;

k/ To ensure that any product provided does not infringe upon intellectual property rights as prescribed by law;

l/ To hand over dossiers and documents relating to the contract product to the principal under the signed contract;

m/ Other obligations as prescribed by law.

Article 33. Rights and obligations of the principal of a turnkey contract

In addition to the rights and obligations defined in Article 31 of this Decree, the principal of a turnkey contract is also obliged to conduct pre-acceptance test of the construction investment project for submission to a competent agency as prescribed by the law on construction, or to the competent investment decider for appraisal and approval, or for appraisal and approval according to its competence.

Article 34. Rights and obligations of the contractor of a turnkey contract

In addition to the rights and obligations defined in Article 32 of this Decree, the contractor is also obliged to formulate the construction investment project, take part in defending the project together with the principal before the competent investment decider, and finalize the project as requested by the principal in accordance with agreements in the contract.

Section 5. ADJUSTMENT OF CONSTRUCTION CONTRACTS

Article 35. Adjustment of construction contracts

1. Adjustment of a contract includes adjustment of work volume, unit price, contract performance schedule, contract price and other matters (if any) as agreed in the contract.

2. A construction contract may be adjusted only in the cases prescribed in Clauses 2 and 3, Article 143 of Law No. 50/2014/QH13 on Construction.

Article 36. Principles of construction contract adjustment

1. Adjustment of a construction contract shall be made only during the contract performance period.

2. A package contract may only adjusted with regard to additional work volume outside the signed contract’s scope (or additional work volume outside the designed scope of work, requirements of the bidding dossier or dossier of requirements, for a construction implementation contract or procurement contract, or additional work volume outside the scope of consultancy tasks for a consultancy contract), and in force majeure events.

3. If the adjusted contract price does not exceed the bidding package’s approved price or cost estimate (including provisional fund of such bidding package), adjustments may be decided by the project owner; if the adjusted contract price exceeds the bidding package’s approved price or cost estimate, it shall be approved by the competent investment decider before adjustment is made and sufficient capital shall be ensured for payment to the contractor as agreed in the contract.

Article 37. Adjustment of work volume under a construction contract

1. The contractual parties shall agree on specific cases in which work volume may be adjusted, and the scope, order and procedures for such adjustment.

2. Adjustment of work volume under a construction contract is prescribed as follows:

a/ For a package contract: In case there arises reasonable additional work volume outside the signed contract’s scope (additional work volume outside the design’s scope of work, for a construction implementation contract or procurement contract, or additional work volume outside the scope of consultancy tasks to be performed, for a consultancy contract);

In this case, if the adjusted work volume does not result in an increase in the bidding package’s approved price, the project owner and contractor shall calculate, negotiate and sign an annex to the contract; if the adjusted work volume results in an increase in the bidding package’s approved price, it shall be examined and decided by the competent investment decider; if no agreement can be reached, a new bidding package shall be made for such additional volume of work and contractors for the execution of this biding package shall be selected under current regulations.

b/ For a fixed unit price contract or an adjustable unit price contract: If the addition of reasonable work volume without unit price specified in the contract does not result in an increase in the bidding package’s approved price, the project owner and contractor shall calculate, negotiate and sign an annex to the contract; if such addition of work volume results in an increase in the bidding package’s approved price, it shall be examined and decided by the competent investment decider. Any work volume with unit price specified in the contract shall be determined on the basis of actual completed work volume (higher or lower than the work volume set out in the contract) already tested and accepted.

3. For additional work volume outside the signed contract’s scope of work without unit price specified in the contract, the contractual parties shall agree on the unit price for this work volume before performance.

Article 38. Adjustment of unit prices and contract prices

1. In a construction contract, the parties shall make specific agreement on cases eligible for adjustment of unit price and contract price; and the order, scope, method and bases for adjustment of contract price. The method of adjustment of contract price must conform to contract price type and characteristics of work under the construction contract.

2. Adjustment of unit price is prescribed as follows:

a/ Adjustment of unit price for contract performance may apply only to adjustable unit price-based contracts and time-based contracts as agreed by the parties in the contract;

b/ If actual completed work volume increases or decreases more than 20% of the work volume set out in the contract, or additional work volume has no unit price specified in the contract, the parties shall agree on a new unit price for this work volume on the principle agreed in the contract;

c/ If actual completed volume of work increases or decreases by no more than 20% of the work volume set out in the contract, the unit price specified in the contract shall be applied for payment, including the unit price already adjusted as  agreed in the contract (if any);

d/ Adjustment of unit price for the work volume which the principal and contractor have reached an agreement on by the time of contract entry shall be made under Clause 3 of this Article and the guidance of the Ministry of Construction.

3. Method of adjusting contract prices:

a/ Application of price adjustment methods must conform to the characteristics of work, contractual price type and payment currency and shall be agreed by the parties in the contract;

b/ Input database for price adjustment must conform to the tasks specified in the contract. The source of information about prices or price index from competent state agencies to be used for contract price adjustment shall be specified in the contract. Contract price adjustment shall be made according to the following formula:

G_TT = G_HD x P_n

In which:

– “G_TT” is the payment price corresponding to completed work volume already tested and accepted.

– “G_HD” is the contract price corresponding to completed work volume already tested and accepted.

– “P_n” is the adjustment coefficient (increasing or decreasing) applied to payment for completed work volume already tested and accepted during a period “n”.

4. The Ministry of Construction shall guide in detail the adjustment of construction contracts.

Article 39. Adjustment of contract performance schedule

1. In a construction contract, the parties shall agree on cases eligible for adjustment of performance schedule. If the time of completion is delayed compared to the schedule set out in the contract, the parties shall clearly determine responsibilities of each party for any damage caused by such delay.

2. Contract performance schedule may be adjusted in the following cases:

a/ It is affected by an earthquake, a storm, flood, tsunami, fire, enemy sabotage or other force majeure events;

b/ It is affected by change or adjustment of the project, scope of work, design, construction measures as requested by the principal;

c/ Handover of ground area is inconsistent with agreements in the contract;  the contract performance is suspended due to the principal’s fault or other related procedures not caused by the contractor;

d/ The contract performance is suspended at the request of a competent state agency not due to the principal’s fault.

3. If the adjustment does not prolong the contract performance schedule (including permissible extension as prescribed in the construction contract), the principal and contractor may negotiate and agree on the adjustment. If the adjustment prolongs the contract performance schedule, the project owner shall report it to the competent investment decider for consideration and decision.

Section 6. SUSPENSION, TERMINATION, REWARDS, FINES FOR BREACHES OF CONSTRUCTION CONTRACTS

Article 40. Suspension of construction contract performance

1. Circumstances in which contract performance may be suspended, the right to suspend contract performance; order and procedures for suspension, and level of compensation for damage caused by suspension shall be agreed by the principal and contractor in the contract.

2. The contractual parties may suspend the construction contract performance in the following cases:

a/ The principal has the right to suspend the construction contract performance when the contractor fails to meet requirements on quality, labor safety and schedule as agreed in the signed contract;

b/ The contractor has the right to suspend the construction contract performance and prolong the contract performance schedule when the principal breaches the payment agreements, including failing to make sufficient payment as agreed to the contractor for the payment period after 28 days since the payment deadline prescribed in Clause 10, Article 19 of this Decree, unless otherwise agreed by the parties; providing no payment security for tasks to be performed.

3. At least twenty-eight (28) days before suspending the contract performance, one party shall send a written notice to the other party specifying the reason for suspension; the principal and contractor shall negotiate to continue implementing the agreements reached in the signed contract, except in force majeure events.

In case one party fails to make a notice of suspension or the reason for suspension is incompliant with the contract, it shall pay compensation for damage caused to the other party.

Article 41. Termination of construction contracts

1. Circumstances in which the contract may be terminated, the right to terminate the contract; the order and procedures for termination of the contract and level of compensation for damage caused by termination of the contract shall be agreed by the parties in the contract in accordance with the provisions of this Decree and relevant laws.

2. Either party has the right to terminate the contract without having to pay compensation in the cases prescribed in Clauses 7 and 8 of this Article.

3. In case the party that has breached the contract fails to correct its mistakes after fifty six (56) days from the date of suspension of contract performance as notified, unless otherwise as agreed, without plausible reason, the other party that requests the suspension has the right to terminate the contract.

4. In case either party unilaterally terminates the contract not due to the other party’s fault, such party shall pay compensation for damage caused to the other party.

5. At least twenty-eight (28) days before terminating the contract, one party shall send a written notice to the other party as agreed in the contract, specifying the reason for termination. If the party that terminates the contract without notice causes damage to the other party, it shall pay compensation for the damage.

6. The construction contract must no longer be effective from the time it is terminated and the parties shall complete the procedures for contract liquidation within the period of time agreed in the contract that must not exceed fifty-six (56) days from the date the notice of termination is sent, unless otherwise agreed by the parties. After this period, if either party fails to carry out the procedures for contract liquidation, the other party has full authority to decide on the contract liquidation.

7. The principal has the right to terminate the contract in the following cases:

a/ The contractor goes bankrupt, is dissolved or transfers the construction contract to another individual or organization without consent of the principal;

b/ The contractor refuses to perform the tasks under the contract or stops performing these tasks for fifty-six (56) consecutive days that results in a violation of the performance schedule agreed in the contract, unless otherwise permitted by the principal.

8. The contractor has the right to terminate the contract in the following cases:

a/ The principal goes bankrupt, is dissolved or transfers the construction contract to another individual or organization without consent of the contractor;

b/ The work has been suspended for fifty-six (56) consecutive days due to the principal’s fault, unless otherwise agreed by the parties;

c/ The principal fails to make payment to the contractor after fifty-six (56) days from the date of receipt of a complete and valid payment dossier, unless otherwise agreed by the parties.

9. Within two (2) working days after the construction contract is terminated, the contractor shall move all the materials, labor, machinery, equipment and other assets under its ownership out of the construction site. After this period, if the contractor fails to do so, the principal has the right to dispose of these assets, unless otherwise agreed by the parties.

Article 42. Rewards for contract performance and fines for contract breaches

Rewards for contract performance and fines for contract breaches must comply with Clauses 1 and 2, Article 146 of Law No. 50/2014/QH13 on Construction.

Article 43. Responsibilities for breaches of construction contracts

1. Responsibilities for breaches of contract must comply with Clauses 3 thru 7, Article 146 of Law No. 50/2014/QH13 on Construction, provisions of this Decree and relevant laws.

2. In case the principal fails to make timely and adequate payment as agreed in the contract, it shall pay compensation to the contractor at the interest rate of overdue debts announced by the commercial bank at which the contractor opens its payment account corresponding to the late payment periods. Interest on late payments shall be calculated from the first day of late payment until the payment is fully made to the contractor, unless otherwise agreed by the parties.

Section 7. COMPLAINTS ABOUT AND SETTLEMENT OF DISPUTES OVER CONSTRUCTION CONTRACTS

Article 44. Complaints during construction contract performance

1. Filing of complaint during construction contract performance in this Decree means that when one party detects the other party performs improperly or fails to perform the obligations as agreed in the contract, it has the right to request the other party to comply with the provisions of the signed contract. Then, the detecting party has the right to file a complaint against the other party about this matter.

2. When one party files a complaint against the other party, it shall present specific bases or pieces of evidence to clarify the complaint.

3. Within fifty-six (56) days after detecting the other party fails to properly perform the signed contract, the detecting party shall immediately notify such to the other party and file a complaint about this matter. After this time limit, if neither party files a complaint, the parties shall perform the contract as agreed.

4. Within twenty-eight (28) days after receiving a complaint, the receiving party shall present bases or pieces of evidence to prove that such complaint does not conform to the signed contract. If such bases or pieces of evidence are unpersuasive and unreasonable, it shall accept the complaint. After that time limit, if the receiving party gives no opinion, it shall be regarded as having accepted the complaint file by the other party.

5. Complaints filed by either party shall be sent to the transaction or information exchange address as agreed by the parties in the contract. Any complaint that is not settled by the contractual parties shall be settled according to Article 45 of this Decree.

Article 45. Settlement of disputes over construction contracts

1. When settling disputes arising during construction contract performance, the parties shall abide by the principles and procedures prescribed in Clause 8, Article 146 of Law No. 50/2014/QH13 on Construction.

2. If the contractual parties agree that disputes shall be settled through conciliation conducted by an agency or organization or one or some experts (collectively referred to as the dispute handling board), the handling of disputes through this board is prescribed as follows:

a/ The dispute handling board may be stated in the contract at the time of entry or be formed after the dispute arises. The number of members of the dispute handling board shall be agreed by the parties. Members of the dispute handling board must possess expertise relevant to the disputed contents, experience in the settlement of disputes over contracts and knowledge about the laws concerning construction contracts;

b/ Within twenty-eight (28) days after the parties receive the conciliation conclusion from the dispute handling board, if either party disagrees with such conclusion, it has the right to make a protest and the dispute shall then be brought to arbitration or court as prescribed by law; after that time limit, if neither party protests the conciliation conclusion, they shall be regarded as having accepted the conciliation conclusion and shall comply with such conclusion;

c/ Expenses for the dispute handling board shall be included in the construction contract price and divided equally to the contractual parties, unless otherwise agreed by the parties.

3. The statute of limitations for filing a lawsuit with an arbitration or a court for settlement of disputes over construction contracts must comply with relevant laws.

Section 8. OTHER CONTENTS OF CONSTRUCTION CONTRACTS

Article 46. Insurance and warranty under construction contracts

1. Insurance

a/ The project owner shall buy insurance during the construction period for the works that may affect community safety, environment or have special technical requirements and complicated construction conditions. In case this insurance cost has been included in the contract price, the contractor shall buy the insurance as prescribed;

b/ The consultancy contractor shall buy professional liability insurance for the tasks of construction survey and construction design of construction works of grade II and over;

c/ The contractor shall buy other necessary insurance types (insurance for workers on the construction site, insurance for equipment, insurance for third party, etc.) to ensure its activities in accordance with law.

2. Warranty

a/ The contractor shall provide warranty for the works and equipment as agreed in the contract. Agreements reached by the contractual parties on warranty period and level of warranty security must comply with the law on construction;

b/ Warranty security may take the form of guarantee or other forms as agreed by the parties but the form of guarantee shall be prioritized;

c/ Warranty security shall be refunded to the contractor only upon the end of the warranty period and certification by the project owner of completion of warranty work;

d/ During the warranty period, the contractor shall provide warranty within twenty-one (21) days after receiving a repair notice from the principal; if the contractor fails to provide warranty within this period, the principal has the right to use the warranty money for hiring other organizations or individuals to repair the work.

Article 47. Sub-contracts

1. One main contract may have multiple sub-contracts. When entering into a sub-contract, the general contractor, main contractor or foreign contractor shall comply with the following provisions:

a/ Sub-contracts may only be entered into with sub-contractors with relevant practice or operation capability;

b/ A foreign contractor performing a construction contract within Vietnamese territory as main contractor shall hire domestic sub-contractors that meet requirements of the bidding package and may hire foreign sub-contractors only when domestic sub-contractors do not meet the requirements of the bidding package. Supplies and equipment temporarily imported for export shall be specified in the contract, with priority given to domestic materials and equipment that meet the requirements of the bidding package;

c/ Any sub-contractor not included in the list of sub-contractors enclosed with the contract shall be approved by the project owner;

d/ The general contractor or main contractor must be responsible to the project owner for the contract performance progress, quality, labor safety, environmental protection, its own mistakes and other tasks performed by sub-contractors;

dd/ The general contractor or main contractor may not re-assign the whole work under the contract to sub-contractors.

2. Sub-contractors appointed by the project owner (if any)

a/ Sub-contractors appointed by the project owner are those appointed for the main contractor or general contractor by the project owner to perform some tasks subject to high technical requirements or when the main contractor or general contractor fails to meet requirements on safety, quality and performance progress as requested by the project owner;

b/ For a construction contract that has sub-contractors appointed by the project owner, the contractual parties shall agree on specific circumstances in which the project owner may appoint sub-contractors;

c/ The main contractor or general contractor has the right to reject sub-contractors appointed by the project owner if the tasks performed by the main contractor, general contractor or another sub-contractor still conform to the contract or has sufficient bases proving that sub-contractors appointed by the project owner fail to meet the contract’s requirements.

3. The project owner shall make payment directly to sub-contractors on the basis of payment requests made by the main contractor or general contractor, unless otherwise agreed by the parties.

4. Sub-contractors have all rights and obligations of the contractor prescribed in this Decree and other relevant laws.

Article 48. Labor safety, environmental protection and fire and explosion prevention and fighting

1. Responsibilities of the parties for labor safety shall be agreed in the contract and prescribed as follows:

a/ The construction contractor shall take measures to ensure safety for people, machinery, equipment and works on the construction site, including adjacent works. In case safety measures are related to multiple parties, they shall be agreed by these parties;

b/ Safety measures and labor safety rules shall be publicly displayed at the construction site for everyone to know and observe; at dangerous positions on the site people shall be arranged to provide guidance and warning about accidents;

c/ The construction contractor, project owner and related parties shall constantly examine and supervise labor safety on the construction site. Upon detection of any violation of labor safety, construction shall be suspended. Any person who lets labor safety violations happen within his/her management shall be held responsible before law;

d/ The construction contractor shall provide training and instructions and disseminate regulations on labor safety among its workers. For some tasks subject to strict safety requirements, workers shall obtain certificates of labor safety training;

dd/ The construction contractor shall provide adequate personal protective equipment to workers on the construction site as prescribed;

e/ When a labor safety incident occurs, the construction contractor and other related parties shall deal with it and report to state management agencies in charge of labor safety in accordance with law and at the same time take remedial measures and pay compensation for the losses caused.

2. Responsibilities of each party for environmental protection shall be agreed in the contract and are prescribed as follows:

a/ The construction contractor shall take measures to ensure environmental safety for workers on the construction site and protect the surrounding environment, including measures to control dust and noise and clean up the site; wastewater, solid waste and other types of waste shall be collected for treatment up to environmental standards and technical regulations. For construction works in urban centers, measures such as cover-up and transport of wastes to designated places shall be taken;

b/ During the transport of building materials and wastes, cover-up measures shall be taken to ensure safety and environmental sanitation;

c/ The construction contractor and the project owner shall examine and monitor the constructional environmental protection and at the same time are subject to examination and monitoring by the state management agencies in charge of environment. In case the construction contractor fails to comply with regulations on environmental protection, the project owner and state management agencies in charge of environmental protection have the right to suspend construction activities and request the contractor to properly implement environmental protection measures;

d/ Organizations and individuals that let any act harmful to the environment occur during the construction shall be held responsible before law and pay compensation for losses caused.

3. The parties to a construction contract shall comply with current regulations on fire and explosion prevention and fighting.

Article 49.Electricity, water and security at construction site

The parties shall agree in the contract on rights and obligations of each party in the supply of and payment of charges for electricity, water and security at the construction site.

Article 50. Transport of technological equipment

1. The contractor shall send at least twenty-one (21) days in advance as agreed by the parties a notice of the time of equipment delivery to the principal.

2. The contractor must be responsible for packaging, loading and unloading, transport, storage and preservation of equipment, unless otherwise agreed by the parties.

3. The contractor shall pay compensation to the principal for any damage, loss and costs arising from the transport of equipment by the contractor.

Article 51. Risks and force majeure events

1. Risks are possible negative effects on the performance of a construction contract in the future. Each party’s responsibilities for managing and handling its own risks and for remedying consequences in case of facing a risk shall be defined in the construction contract.

2. Force majeure event is a risky event that occurs objectively and is unforeseeable at the time of entering into the construction contract and cannot be controlled when it occurs even though all necessary measures have been taken and available capabilities have been utilized, such as natural disaster, environmental incident, enemy sabotage, fire and other force major events.

3. When one party falls into a force majeure event, it shall send a written notice to the other party as soon as possible.

4. In a construction contract, the parties shall agree on the handling of force majeure events such as notification of force majeure event; responsibilities of the parties; termination of and payment for the contract in case of occurrence of a force majeure event (if any).

Chapter III. IMPLEMENTATION PROVISIONS

Article 52. Effect

1. This Decree takes effect on June 15, 2015.

2. The Government’s Decree No. 48/2010/ND-CP of May 7, 2010, on contracts in construction activities, and Decree No. 207/2013/ND-CP of December 11, 2013, amending and supplementing a number of articles of Decree No. 48/2010/ND-CP cease to be effective on the effective date of this Decree.

Article 53. Transitional handling

1. Construction contracts entered into and performed before the effective date of this Decree shall be further performed according to the applicable regulations on construction contracts before the effective date of this Decree.

2. Construction contracts currently under negotiation and not yet entered into, if containing contents unconformable with this Decree, shall be reported to the competent investment decider for examination and decision on the basis of the principle of ensuring quality, progress and efficiency of the construction investment projects and causing no harm to lawful rights and interests of the parties.

3. Any contents concerning construction contracts in the approved but unreleased bidding dossiers or dossiers of requirements which are unconformable with this Decree shall be adjusted appropriately. If such bidding dossiers or dossiers of requirements have been released, any change to the contents concerning construction contracts in these dossiers shall be notified to all contracts that have bought the dossiers for making appropriate adjustments to their bid dossiers or dossiers of proposals; in case the bidding has been closed, Clause 2 of this Article shall be complied with.

Article 54. Organization of implementation

1. The compilation, appraisal and approval of bidding dossiers or dossiers of requirements covering issues related to construction contracts and the negotiation, entry into and management of construction contract performance must comply with this Decree.

2. The Ministry of Construction shall guide and examine the implementation of regulations on construction contracts; guide the adjustment of construction contracts, method of adjusting contract prices, construction contract types, model construction contracts, and detail other necessary provisions of this Decree to meet requirements of state management of construction contracts.

3. The use of the model FIDIC conditions of contract and model construction contracts for the formulation and performance of construction contracts is encouraged. When applying a model construction contract, adjustments shall be made to conform to Vietnamese laws.

4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and heads of political organizations, socio-political organizations and socio-politico-professional organizations, chairpersons of Boards of Directors of state-owned economic groups and corporations, and related organizations and individuals shall implement this Decree.

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2. Decree 50/2021/ND-CP (Amending Decree 37/2015/ND-CP)

DECREE 50/2021/ND-CP

April 1, 2021

Amending and supplementing a number of articles of the Government’s Decree No. 37/2015/ND-CP of April 22, 2015, prescribing in detail construction contracts

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the June 19, 2015 Law on Organization of Local Administration;

Pursuant to the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration;

Pursuant to the June 18, 2014 Law on Construction; and the June 17, 2020 Law Amending and Supplementing a Number of Articles of the Law on Construction;

Pursuant to the June 13, 2019 Law on Public Investment;

Pursuant to the June 18, 2020 Law on Investment in the Form of Public-Private Partnership;

Pursuant to the November 26, 2013 Bidding Law;

Pursuant to the November 26, 2014 Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

At the proposal of the Minister of Construction;

The Government promulgates the Decree amending and supplementing a number of articles of the Government’s Decree No. 37/2015/ND-CP of April 22, 2015, prescribing in detail construction contracts.

Article 1. To amend and supplement a number of articles of the Government’s Decree No. 37/2015/ND-CP of April 22, 2015, prescribing in detail construction contracts, as follows:

1. To amend and supplement Clause 2, Article 1 as follows:

“2. This Decree applies to organizations and individuals involved in the establishment and performance management of construction contracts of construction investment projects using public investment funds or state capital other than public investment funds and construction contracts between public-private partnership (PPP) project enterprises and construction contractors executing bidding packages of PPP projects.

Organizations and individuals may refer to this Decree to establish and manage construction contracts for projects using other funding sources.”

2. To amend and supplement a number of points of Clauses 1 and 2, Article 3 as follows:

a/ To amend and supplement Point c, Clause 1 as follows:

“c/ Procurement contract, which is a contract for procurement of supplies and equipment to be installed in a construction work according to technological design; general procurement contract, which is a contract for procurement of supplies and equipment for all works of a construction investment project.”

b/ To amend and supplement Point dd, Clause 1 as follows:

“dd/ Engineering-procurement (EP) contract, which is a contract for engineering and procurement of supplies and equipment to be installed in a construction work according to technological design; general EP contract, which is a contract for engineering and procurement of supplies and equipment for all works of a construction investment project.”

c/ To amend and supplement Point e, Clause 1 as follows:

“e/ Procurement-construction (PC) contract, which is a contract for procurement of supplies and equipment and construction of works or work items; general PC contract, which is a contract for procurement of supplies and equipment and construction of all works of a construction investment project.”

d/ To amend and supplement Point g, Clause 1 as follows:

“g/ Engineering-procurement-construction (EPC) contract, which is a contract for engineering, procurement of supplies and equipment, construction of works or work items, and trial operation, pre-acceptance test and handover thereof to the principal; general EPC contract, which is a contract for engineering, procurement of supplies and equipment, and construction of all works of a construction investment project.

EPC contracts shall be applied to complicated projects which are subject to high technical and technological requirements and must comply with regulations on synchrony and uniformity from the stage of engineering to the stages of equipment supply, construction, and training and technology transfer. Before deciding on application of EPC contracts, investment deciders shall organize assessment of technical and technological requirements, shortening of implementation durations of projects, synchrony from the stages of engineering, equipment supply and construction to the stages of training in operation and handover of works, in order to meet the objectives and requirements of approved projects and ensure the feasibility of EPC contracts as compared to contracts of other types.”

dd/ To add Point i1 below Point i, Clause 1 as follows:

“i1/ Simple, small-sized construction contract, which is a construction contract for execution of bidding packages and has a value not exceeding the limit of a small-sized bidding package specified in the bidding law, and covers the jobs with simple and easy-to-perform technical requirements.”

e/ To add Points d1 and d2 below Point d, Clause 2 as follows:

“d1/ Cost-plus-fee contract;

d2/ Other construction contracts.”

g/ To amend and supplement Point dd, Clause 2 as follows:

“dd/ Combined price-based contract, which is a construction contract applying the combination of the contract price types specified at Points a thru d2 of this Clause.”

3. To add Clause 5 below Clause 4, Article 4 as follows:

“5. Before signing an EPC contract, the parties shall reach agreement on the following principal contents:

a/ Scope of jobs to be performed under the contract;

b/ Location of construction, line directions of the work, type or grade of the work; scale, capacity and product options to be selected, and operation or use capacity;

c/ Documents and data on natural conditions, engineering geology, hydrogeology, and hydrology of the area where the work will be built;

d/ Requirements on construction engineering and some initial engineering parameters;

dd/ Technological, technical, equipment and commercial options; origin of equipment and products; connection technology solutions in adaptation to existing technical systems (if any);

e/ Options on connection of technical infrastructure facilities inside and outside the work; fire and explosion prevention and fighting solutions within the scope of the EPC bidding package;

g/ Solutions on construction and main materials to be used;

h/ Requirements on quality management of the work, testing, trial operation, warranty for and maintenance of the work;

i/ Solutions on architecture, plan, sections and elevations of the work, and main dimensions and structures of the work covered by the EPC bidding package;

k/ List and application of technical regulations and standards to be used in engineering, equipment supply and construction;

l/ Technical instructions for supplies, equipment and technical services; processes for operation of part and the whole of the work within the scope of the EPC bidding package;

m/ Requirements on environmental protection, assurance of fire and explosion prevention and fighting safety, and other matters;

n/ Requirements concerning approval procedures; quantities of dossiers and documents and deadlines for their submission to the principal;

o/ Implementation schedule and time landmarks for completion of main jobs and work items and the whole work for putting them into operation or use;

p/ Clarification of responsibilities of the principal and contractor regarding electricity and water supply, communication, internal roads and other services existing on the construction site, and handling of interface between biding packages within the same construction project.”

4. To add Clause 7 below Clause 6, Article 7 as follows:

“7. For EPC contracts:

a/ Before proceeding with procurement of supplies and equipment for an EPC contract, the contractor shall set requirements on technical parameters, technology and origin for submission to the principal for approval if such is agreed upon by the parties in the contract. The principal’s approval does not reduce the contractor’s responsibility for procurement of supplies and equipment for the contract. If the parties do not reach such an agreement in the contract, the contractor shall comply with the approved engineering dossier as well as requirements on technical parameters, technology and origin of supplies and technological equipment in the contract.

b/ The contractor may directly procure or hire a subcontractor to procure supplies and equipment for the EPC contract.”

5. To add a number of points to Clauses 3 and 5, Article 15 as follows:

a/ To add Point d1 below Point d, Clause 3 as follows:

“d1/ Cost-plus-fee contract price, which is the price of a contract whose value cannot be determined at the time of contract signing when the parties just reach agreement on management expense, general cost and profit as they do not have sufficient grounds to determine the scope of and direct costs for performance of contractual jobs.

The rate of management expense, general cost and profit shall be agreed upon by the parties in percentage (%) or in a specific value on the basis of reasonable and valid actual direct costs necessary for performance of contractual jobs as certified by the parties;

The rate of management expense, general cost and profit may be fixed or changed (increased or decreased within a limit or without any limit), depending on actual direct costs agreed upon by the parties in the contract in order to guarantee interests of the parties.”

b/ To add Point d1 below Point d, Clause 5 as follows:

“d1/ For cost-plus-fee contracts

The price of a cost-plus-fee contract shall only apply to bidding packages for which, at the time of contract signing, the parties do not have sufficient grounds for determining the scope of, and the need for use of materials, labor, and construction machinery and equipment for performance of, projected contractual jobs.”

6. To add one point to Clause 4 and one clause below Clause 5, Article 18 as follows:

a/ To add Point a1 below Point a, Clause 4 as follows:

“a1/ Particularly for a simple or small-sized contract, the project owner shall consider and decide on guarantee for advance payment for the contract as conformable with characteristics of contractual jobs while ensuring reduction of unnecessary procedures.”

b/ To add Clause 5a below Clause 5 as follows:

“5a. Particularly for a simple or small-sized contract, the principal and the contractor shall consider and reach agreement whether or not to make advance payment at the latter’s proposal in conformity with requirements of the bidding package while ensuring reduction of unnecessary procedures.”

7. To amend and supplement Clause 3, Article 22 as follows:

“3. The time limit for account-finalization of construction contracts must comply with Clause 2, Article 147 of Law No. 50/2014/QH13 on Construction, which was amended and supplemented under Point c, Clause 64, Article 1 of Law No. 62/2020/QH14 Amending and Supplementing a Number of Articles of the Law on Construction.”

8. To amend and supplement Article 23 as follows:

“Article 23.Liquidation of construction contracts

The liquidation of construction contracts must comply with Clause 3, Article 147 of Law No. 50/2014/QH13 on Construction, and Clause 4, Article 147 of Law No. 50/2014/QH13 on Construction, which was amended and supplemented under Point c, Clause 64, Article 1 of Law No. 62/2020/QH14 Amending and Supplementing a Number of Articles of the Law on Construction.”

9. To amend and supplement Point d, Clause 2, Article 31 as follows:

“d/ For EPC contracts established through selection of EPC contractors right after approval of basic designs: To conduct pre-acceptance test of, appraise, and approve or submit to competent agencies for appraisal and approval, the designs to be implemented after basic designs which have been decided by investment deciders upon approving projects in accordance with law, excluding cost estimates for construction of works and work items covered by EPC contracts.

For EPC contracts established through selection of EPC contractors right after approval of front-end engineering designs (FEEDs): To conduct pre-acceptance test of, appraise, and approve or submit to competent agencies for appraisal and approval, the designs to be implemented after FEEDs which have been decided by investment deciders upon approving projects in accordance with law, excluding cost estimates for construction of works and work items covered by EPC contracts.”

10. To amend and supplement Point e, Clause 2, Article 32 as follows:

“e/ For EPC contracts established through selection of EPC contractors right after approval of basic designs: To draw up designs to be implemented after basic designs which have been decided by investment deciders upon approving projects in conformity with the approved basic designs, excluding cost estimates for construction of works and work items covered by EPC contracts.

For EPC contracts established through selection of EPC contractors right after approval of FEEDs: To draw up designs to be implemented after FEEDs which have been decided by investment deciders upon approving projects in conformity with the approved FEEDs, excluding cost estimates for construction of works and work items covered by EPC contracts.”

11. To amend and supplement Clause 2, Article 35 as follows:

“2. A construction contract may be adjusted only in the cases specified in Clause 2, Article 143 of Law No. 50/2014/QH13 on Construction, and Clause 3, Article 143 of Law No. 50/2014/QH13 on Construction, which was amended and supplemented under Point c, Clause 64, Article 1 of Law No. 62/2020/QH14 Amending and Supplementing a Number of Articles of the Law on Construction. In case the State revises a policy, thus directly affecting the performance of a construction contract, the adjustment of such contract may only be made for the jobs affected by such revision and must comply with regulations of the agency that has issued and guided such policy.”

12. To amend and supplement Article 36 as follows:

“Article 36.Principles of adjustment of construction contracts

1. A construction contract may only be adjusted during the contract performance period, including the extended period of contract performance as provided by law.

2. For a fixed unit price-based contract, its unit price may only be adjusted in the cases specified at Points b, c and d, Clause 2, Article 143 of Law No. 50/2014/QH13 on Construction.

3. A package contract may only be adjusted for the job volumes in addition to the job volume stated in the signed contract (or for the job volumes in addition to the job volume to be performed according to designs and requirements of the bidding dossier or dossier of requirements, for a construction contract or equipment supply contract; or for the job volumes in addition to the consultancy tasks to be performed, for a consultancy contract), and in the cases specified at Points b, c and d, Clause 2, Article 143 of Law No. 50/2014/QH13 on Construction.

4. If the to-be-adjusted contract price does not result in an increase in the bidding package’s approved price or cost estimate (including the contingency amount for such bidding package), the project owner may decide on the adjustment; if the to-be-adjusted contract price results in an increase in the bidding package’s approved price or cost estimate, the adjustment shall be approved by the person competent to decide on investment or by a line minister or provincial-level People’s Committee chairperson as assigned for investment projects in which investment is decided by the Prime Minister, and it is required to make sure that capital is sufficient for payment to the contractor as agreed upon in the contract. The adjustment of construction cost estimates, bidding packages’ cost estimates or bidding packages’ prices must comply with regulations on management of construction investment costs and the bidding law.”

13. To amend and supplement Clause 3, Article 37 as follows:

“3. For job volumes in addition to the job volume stated in the signed contract which does not state the unit price or unit price determination method, the contracting parties shall, before performing such job volumes, agree on the unit price or unit price determination method and method for performance of such volumes.”

14. To amend and supplement a number of points of Clauses 2 and 3, Article 38 as follows:

a/ To amend and supplement Point b, Clause 2 as follows:

“b/ If the actually completed job volume increases or decreases by more than 20% of the job volume stated in the contract and, at the same time, results in a change of the contractual value by over 0.25% and a change of the unit price of such job by over 1%, or the contract does not state the unit price for the additional job volume, the parties shall agree on a new unit price for this job volume on the principle agreed upon in the contract to serve the payment.

If the actually completed job volume increases by more than 20% of the job volume stated in the contract, the new unit price may only be applied for the completed volume exceeding 120% of the volume stated in the contract.

If the actually completed job volume decreases by more than 20% of the job volume stated in the contract, the new unit price shall be applied for the whole of the actually completed job volume tested before acceptance.”

b/ To amend and supplement Point a, Clause 3 as follows:

“a/ Contract price adjustment methods include a direct clearing method and a method of adjustment by the adjustment formula specified at Point b of this Clause. The application of price adjustment methods must conform to the characteristics of relevant jobs, contractual price type and payment currency and shall be agreed upon by the parties in the contract. Price indexes for adjustment of construction contract prices by the formula specified at Point b, Clause 3 of this Article are construction price indexes.”

15. To amend and supplement Article 42 as follows:

“Article 42.Rewards for contract performance and fines for contract breaches

Rewards for contract performance and fines for contract breaches must comply with Clause 1, Article 146 of Law No. 50/2014/QH13 on Construction, and Clause 2, Article 146 of Law No. 50/2014/QH13 on Construction, which was amended and supplemented under Point c, Clause 64, Article 1 of Law No. 62/2020/QH14 Amending and Supplementing a Number of Articles of the Law on Construction.”

16. To amend and supplement Clause 2, Article 54 as follows:

“2. The Ministry of Construction shall guide and examine the implementation of regulations on construction contracts; guide the adjustment of construction contracts, methods of adjusting construction contract prices, types of construction contracts, and model construction contract; provide guidance on model EPC contract; simple or small-sized construction contracts, and other provisions of this Decree to meet requirements of state management of construction contracts.”

Article 2. Transitional provisions

1. Construction contracts already signed and being performed before the effective date of this Decree must comply with regulations on construction contracts which are effective before the date this Decree takes effect and their contents.

2. Construction contracts undergoing negotiation and not yet signed which have contents incompliant with this Decree shall be reported to persons competent to decide on investment for consideration and decision on the principles of ensuring quality, progress and efficiency of construction investment projects and causing no harm to lawful rights and interests of the contracting parties.

3. Contents on construction contracts in bidding dossiers or dossiers of requirements already approved but not yet issued which are incompliant with this Decree shall be adjusted as appropriate; in case bidding dossiers or dossiers of requirements have been issued but the bid has not yet been closed, if it is needed to make any change in contents on contracts in compliance with this Decree, such change shall be notified to all bidders that have purchased bidding dossiers or dossiers of requirements for adjustment of contents of bid dossiers or dossiers of proposals as appropriate; in case the bid has been closed, Clause 2 of this Article shall apply.

Article 3. Effect and organization of implementation

1. This Decree takes effect on the date of its signing.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, heads of political organizations, socio-political organizations and socio-political-professional organizations, chairpersons of Boards of Directors of economic groups and state corporations, and related organizations and individuals shall implement this Decree.

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3. Decree 35/2023/ND-CP (Amending Decree 37/2015/ND-CP)

DECREE 35/2023/ND-CP

June 20, 2023

Amending and supplementing a number of articles of the Decrees relating to the Ministry of Construction’s state management

[…]

Article 9. Amending and supplementing a number of articles of Decree No. 37/2015/ND-CP dated April 22, 2015, of the Government, prescribing in detail construction contracts, which was amended and supplemented under Decree No. 50/2021/ND-CP dated April 1, 2021 of the Government

1. To amend and supplement Clause 3, Article 18 as follows:

“3. The level of advance payment, number of advance payments, time of advance payment, and level of recovery of advanced amounts shall be specified in the bidding dossier or dossier of requirements or the draft construction contract sent to the contractor as a basis for calculation of bids or proposed prices, which must be specifically agreed upon by the parties and recorded in the contract in accordance with the law and the contract implementation schedule.”.

2. To amend and supplement the first paragraph of Clause 5, Article 18 as follows:

“5. The level of advance payment must not exceed 30% of the contract value at the time of entry (including provisions, if any). In case it is necessary to advance at a higher level, it must be approved by the investment decision maker. For projects where the investment decision maker is the Prime Minister, the decision on the higher advance payment level is decided by the Minister, the Head of ministerial-level agencies, and Chairperson of the Provincial-level People’s Committee; the minimum advance payment level is specified as follows:”.

[…]

Article 16. Transitional provision

[…]

6. Transitional provision for amendments and supplements to Decree No. 37/2015/ND-CP (amended and supplemented under Decree No. 50/2021/ND-CP)

a) Construction contracts signed and being implemented before the effective date of this Decree shall comply with the provisions of law on construction contracts before the effective date of this Decree and their signed contract contents;

b) For construction contracts that are in the process of negotiation and have not yet been signed, if their contents are not in accordance with this Decree, it shall be reported to the person competent to decide on investment for consideration and decision on the principle of ensuring the quality, progress, and effectiveness of construction investment projects and not harming the legitimate rights and interests of the parties;

c) If there is any content about construction contracts in bidding documents and proposal documents that have been approved but not yet issued, it must be adjusted accordingly; in case the bidding documents and proposal documents have been issued but the bid has not been closed, if there is a change in the contract-related content in accordance with this Decree, it must notify all contractors who have purchased bidding documents and proposal documents to adjust their contents accordingly; in case the bid has been closed, it shall comply with this Decree as in cases the contract is in the process of negotiation and has not yet been signed.

[…]

Article 17. Implementation provisions

1. This Decree takes effect from the date of its signing.

2. The Ministries, the Heads of ministerial-level agencies, the Heads of Government-attached agencies, the Chairpersons of the People’s Committees of centrally-run cities and provinces, the relevant organizations and individuals shall take responsibilities for implementation of this Decree.

* All Appendices are not translated herein.