[Case Summary]This case is a second-instance dispute over a construction contract. In 2021, Zhang Yong signed a subcontract with A Construction Company to undertake the renovation project of a shantytown. After the project was accepted, the company failed to pay the construction fees. In the first instance, the appraisal was terminated due to the unpaid appraisal fees. In the second instance, it was confirmed that Zhang Yong lacked qualifications and the subcontract was deemed invalid. A Company appealed and denied the basis for settlement. Zhang Yong entrusted Beijing Henglu Law Firm to handle the case.Xue Suhua、Zhang JunThe attorney, on behalf of the client, pointed out that the project acceptance could be compensated at a discounted price according to the contract, and the settlement could be confirmed by the signature of the agent in his official capacity. The second-instance court upheld the core claims and ruled that the contractor should pay the project price of 573,233.76 yuan and interest. The core disputes include: the basis for settlement of the project price after the contract is invalidated, the determination of the evidence chain when there is no appraisal opinion, and the accounting of the payments already made. The applicable legal provisions include the provisions on compensating at a discounted price for an invalid contract and on official agency in the judicial interpretations related to construction contracts.

I. Review of the Case

The most pressing concern for contractors is whether they can recover the project payments when the construction contract is deemed invalid and no appraisal can be conducted. In June 2021, Zhang Yong signed a "Beijing Construction Subcontract Contract" with Beijing A Construction Engineering Co., Ltd. to undertake the decoration project of a shantytown renovation project, with a provisional estimate of 1.8 million yuan and settlement based on fixed unit prices and actual project quantities. After the project was completed and passed the acceptance inspection, A Construction Company failed to pay in full. Zhang Yong sued the court to demand payment of over 770,000 yuan in arrears and interest, and claimed the right of priority compensation. In the first instance, Zhang Yong applied for a judicial appraisal, but the appraisal was terminated due to unpaid fees, leaving the determination of the project price in a stalemate. In the second instance, it was confirmed that Zhang Yong lacked the qualification for labor construction and the subcontract was legally invalid. A Company took the opportunity to appeal, denying the settlement basis and claiming that it had already overpaid.

II. The focus of the case

  • Focus 1: How should the project payment be settled after the contract is invalidated?If the contract is invalid due to the lack of qualifications, can the party concerned refer to the contract provisions to request a discounted compensation?
  • Focus II: How to determine the project price when there is no appraisal opinion?Can the settlement materials signed and confirmed by the duty agent be used as a basis for reference?
  • Focus 3: How to account for disputes over the amount of project payments already made?Whether the other party's new payment claims are valid or not.

III. Professional intervention by Hengluo Lawyers

The client (Zhang Yong) claimed that:The project has been accepted and qualified, and A Construction Company should pay the overdue project funds and interest; even if the contract is invalid, it can be compensated at a discounted rate in accordance with the contract, and the settlement documents can confirm the amount of the arrears.

The other party's (A Construction Company's) position:The appeal denies the validity of the settlement basis, claims that the project payment has been overpaid, and attempts to overturn the core findings of the first-instance judgment.

Legal Opinion from Hengluo Law Firm:

  • The contract is invalid, but the project has passed the acceptance. According to the regulations, the compensation can be calculated based on the provisions of the contract, which lays a legal foundation for claiming the project payment;
  • Without an appraisal opinion, the focus of the evidence is on Wang Tianhui's performance of his duties in the project. Combined with WeChat chats, visa orders, and settlement confirmation orders, it is demonstrated that he constitutes a duty agent. The settlement materials signed and confirmed by him can be used as the basis for accounting. The existing evidence forms a complete chain of evidence;
  • Thoroughly check the payment vouchers, combine the other party's admission in the first instance, refute the new payment claims, and accurately calculate the outstanding payment of 573,233.76 yuan.

IV. Outcome of the case

The appellate court fully adopted the defense arguments of the attorney, determined that the appeal request of A Construction Company was unfounded, ruled that the contract in question was invalid, and ordered it to pay Zhang Yong 573,233.76 yuan in project funds and corresponding interest, with the main portion of the preservation fees and case acceptance fees also being borne by it. Even in the face of unfavorable circumstances such as the invalidity of the contract and the lack of appraisal opinions, through meticulous evidence review, the project arrears were successfully recovered.

5. Hengluo Law Firm's Advice

Administrative litigation and administrative reconsideration are highly specialized, with strict procedural deadlines and evidentiary requirements. It is recommended that when your rights are infringed, you should engage a professional lawyer as soon as possible to assist you in identifying administrative violations, collecting evidence, and drafting legal documents. In this case, Xue Shuhua and Zhang Jun from Beijing Henglu Law Firm (practice license number: 11101201211769926, issued by the judicial administrative authority) acted as the attorneys. Relying on their accurate understanding of legal norms and practical adjudication rules in the relevant field, they helped the client achieve a favorable outcome.

VI. Common Questions and Answers about Cases Involving Arrears in Construction Project Payments

  1. Q: If the construction contract is invalid, can I still demand payment for the project?
    A: Yes. If the project passes the acceptance, the compensation can be calculated at a discounted rate according to the contract, and the court will calculate the amount of the outstanding payment based on the actual situation.
  2. Q: How to determine the project payment if an appraisal cannot be conducted?
    A: Evidence such as settlement notes, visa forms, and chat records signed and confirmed by project managers and other authorized personnel can be provided to form a complete chain of evidence to verify the payment amount.
  3. Q: What should I do if the other party says they have overpaid?
    A: The other party should provide the payment receipts as evidence; the lawyer can check the transaction records and use the other party's own admissions to refute the claim of improper payment.
  4. Q: Is it valid to sign a subcontract without qualifications?
    A: Usually, the contract is deemed invalid due to violations of the qualification requirements, but this does not affect the request for discounted compensation for projects that have been completed and passed the acceptance inspection.
  5. Q: How can Beijing Jianghong Law Firm assist in recovering unpaid debts?
    A: Lawyers can accurately sort out the validity of the contract and the evidence of settlement. Even without appraisal, they can recover the project payment through evidence chains such as agency by virtue of office.