[Case Summary]This case involves a dispute over a construction contract. After Wang Jingfeng organized the construction of the 10 Jie Old House Renovation Project, three confirmers including A Company issued the "Project Arrears Confirmation Letter", confirming that a total of 9.86 million yuan was owed. After deducting the repayments, there was still an outstanding balance of 9.26 million yuan. Beijing Henglu Law FirmLi YonghuiThe attorney for the plaintiff, Wang Jingfeng, claimed that the confirmation letter is valid and that the shareholders, Zhang Ming and Liu Xiang, should bear joint and several liability. The core disputes include the validity of the confirmation letter, whether the shareholders should bear joint and several liability, and the interest rate standard. In the end, the court ruled that the three defendants should jointly pay 9,266,521.55 yuan and interest. Applicable legal provisions: Article 269 of the Contract Law, the provisions on the temporal effect of the Civil Code, etc.

I. Review of the Case Facts

"Is the construction contract valid without construction qualifications?" and "Do the shareholders who signed the debt confirmation letter need to repay the debt jointly?" are key issues for actual builders to protect their rights. From 2011 to 2017, Company A contracted out construction projects in Chaoyang District and Dongcheng District to Wang Jingfeng, claiming that Company A subcontracted the projects to a first-level qualified enterprise to carry out old house renovation, reinforcement, and building repair. Ten projects were successively contracted out to Wang Jingfeng, and the projects were completed and delivered to the owners in 2017. Wang Jingfeng organized laborers to carry out the construction and paid their wages. On September 18, 2020, after verification by Wang Jingfeng and the confirmers (Company A, Zhang Ming, and Liu Xiang), the three confirmers confirmed that the plaintiff was owed 986,5646.55 yuan in project payments, and agreed to pay off the debt by the end of February 2021, otherwise interest would be calculated at 1.2% per month from the date of signing the debt confirmation letter until the debt was paid off. However, after repeated demands, Wang Jingfeng failed to recover the debt and subsequently entrusted Beijing Henglu Law Firm to handle the matter.Li YonghuiAs the litigation agent, we file a lawsuit and request the three defendants to jointly pay the project price of 986,5646.55 yuan and the interest thereon.

II. The focus of the case

  • Focus 1: The effectiveness of the "Engineering Debt Confirmation Letter" and the responsibilities of shareholders.Zhang Ming and Liu Xiang argued that the signature was merely the project manager's confirmation of the settlement, and they were not joint debtors or guarantors.
  • Focus II: The amount of payments deducted and the amount of outstanding debts.Company A argued that it had already paid part of the amount, and after deducting it, the remaining amount was 9,266,521.55 yuan. It also claimed that the interest rate was too high and requested a reduction in the amount of interest.
  • Focus Three: The Effectiveness of Subcontracts and the Right to Request Payment for Construction Projects.Company A subcontracted the project to Wang Jingfeng, who lacks the necessary qualifications. What is the legal validity of the contract, and can Company A claim the payment?

III. Professional intervention by Henglue Lawyers

The party (the plaintiff) claims that:The three defendants issued a "Confirmation of Project Arrears" confirming the arrears of more than 9.86 million yuan and agreeing to pay interest. Zhang Ming and Liu Xiang, as shareholders, signed the document, which constitutes a commitment to jointly assume the liability for payment. Therefore, they should jointly pay the project funds and interest.

The defense argued that:Company A claimed that it had paid part of the project funds and, after deductions, still owed 9,266,521.55 yuan. It argued that the interest rate was too high and requested a reduction, and also claimed that the confirmation letter was not the true intention of the three defendants and that there was a mistake in subcontracting. Zhang Ming and Liu Xiang claimed that the signatures were only for the project managers to confirm the settlement, and that they were not joint debtors or guarantors.

Henglue Lawyer's Representation Opinion:Li YonghuiThe lawyer sorted out the facts of the case, clearly presented the contractual relationship between Wang Jingfeng and Company A and the facts of the arrears, and refuted the defenses of the three defendants one by one. Especially on the issue of the validity of the "Engineering Arrears Confirmation Letter", the lawyer pointed out that Zhang Ming and Liu Xiang, as adults with full capacity for civil conduct and shareholders of Company A at that time, should have understood the content and legal consequences of the confirmation letter when signing it and should have fulfilled their commitments. He emphasized that the two signatures were not only a confirmation of the engineering arrears, but also a commitment to assume joint and several payment responsibilities.

IV. Outcome of the case

The court held that A Company subcontracted the project involved in the case to Wang Jingfeng for construction, forming a construction contract relationship; Wang Jingfeng, a natural person without construction qualifications, engaged in illegal subcontracting. The subcontracting acts of both parties constituted an invalid contract. However, since Wang Jingfeng organized workers to carry out the construction and the project has been completed and put into use, he has the right to request the subcontractor to pay the corresponding project price. Based on the "Project Arrears Confirmation Letter" and the "Settlement Summary Sheet", A Company confirmed that it owed 986,5646.55 yuan; A Company claimed to have paid 49,912.5 yuan and 100,000 yuan respectively, while Wang Jingfeng claimed that these amounts were interest and personal loans but failed to provide sufficient evidence. The court accepted A Company's claim for deduction, and after deduction, the project price was 926,6521.55 yuan. Regarding interest, the confirmation letter stipulated a monthly interest rate of 1.2%, which was of a penalty nature but the standard was too high, so the court determined it reasonably. Zhang Ming and Liu Xiang, as persons with full civil capacity and shareholders at the time of signing, should have foreseen the implications and consequences of the contract when signing and should fulfill their obligations according to the commitment. In summary, the court ruled that the defendant Beijing A Construction Co., Ltd., Zhang Ming, and Liu Xiang shall, within seven days after the judgment takes effect, jointly pay the plaintiff Wang Jingfeng the project price of 926,6521.55 yuan and interest (based on the one-year lending market rate announced by the National Interbank Funding Center, from September 18, 2020 to the date of full payment); and reject the plaintiff's other claims.

5. Henglu Law Firm's Reminder

This case is handled by Beijing Henglu Law FirmLi YonghuiAgent. In the construction of building projects, when signing contracts, the rights and obligations should be clearly defined to ensure their legality and effectiveness. In the event of disputes, evidence should be collected in a timely manner. Written evidence such as the "Confirmation Letter of Project Arrears" is of great importance, as it can clarify the amount of arrears, the payment period, and serve as a legal basis for expressing the true intention of the parties. If a shareholder signs the confirmation letter in the capacity of an agent, they may be held liable for joint and several payment, so the signing must be done with caution.

VI. Common Questions and Answers about Practical Construction in Human Cases

  1. Q: Is it valid to sign an engineering contract without having the necessary construction qualifications?
    A:When a contractor undertakes a project without qualifications and subcontracts the project, the subcontract is usually deemed invalid. However, if the project is completed and put into use, the actual constructor still has the right to claim the project price in accordance with the agreement.
  2. Q: Do the shareholders who signed the debt confirmation letter need to repay the debt jointly and severally?
    A:If a shareholder signs the confirmation form as a person with full capacity for civil conduct and promises to make payments, they may be held jointly and severally liable for the payments, so it's necessary to be cautious when signing the form.
  3. Q: Is the agreed monthly interest rate of 1.2% too high? Can it be lowered?
    A:If the agreed interest rate has the nature of a penalty and is set too high, the court may adjust it at its discretion in accordance with the law, usually calculated based on the LPR.
  4. Q: Can the actual constructor directly demand money from the subcontractor?
    A:Where the project has been completed and delivered, the actual contractors may require the subcontractors to pay the corresponding project price, which shall not be affected by the invalidity of the internal subcontracting.
  5. Q: How can I determine if the other party has actually repaid the debt?
    A:For payments already made, sufficient evidence must be provided. If the claim is for interest or a loan but there is no evidence, the court will generally handle it as a deduction from the outstanding debt.