[Case Summary]This case involves a dispute over a decoration contract. Liu * contracted the interior decoration project of a hotel, but the project was halted due to A Company's funding issues. After the two parties settled the accounts, A Company failed to make the payment. Liu * then entrusted Henglu Law Firm to handle the case.Wang FangliThe lawyer filed a lawsuit, claiming that Companies A, B, and C should jointly pay 1,551,309.59 yuan and grant priority repayment rights. The core disputes include: the actual constructor's identity, the entity responsible for payment, the amount of the project payment, and priority repayment rights. The court ruled that Liu *'s borrowing of qualifications was invalid, but the entity was qualified. It ordered Company A to pay 1,551,309.59 yuan, but did not support the priority repayment rights due to exceeding the time limit. Applicable legal provisions: Articles 52 and 58 of the Contract Law, and relevant provisions of the Interpretation of the Construction Contracts.

I. Review of the case

"What should I do if the decoration project payment is delayed?" and "Can the actual contractors directly sue the employer?" are common questions in engineering disputes. On March 28, 2019, Liu * signed a "Company Internal Project Contracting and Construction Agreement" with ** Hotel Management Company (Company A) to undertake the fine decoration project of ** Hotel in ** Village, China. The contract stipulated a fixed unit price and progress payment, with a 3% penalty for late payment.

Due to the funding problems of Company A, the project could not continue, and on December 9, 2020, the two parties conducted a financial settlement and confirmed the amount, but the payment was not made. Liu * entrusted someone to handle the matter.Wang FangliThe lawyer argued that Company B (** Construction Beijing) is a joint employer, and Company C (** Industry) is the owner/undisclosed employer/actual beneficiary. Therefore, they should jointly make the payment and claim the right of priority compensation for the project funds.

II. The focus of the case

  • Focus 1: Whether Liu * is a qualified plaintiff.The agreement signed by borrowing the qualifications is invalid. Can the actual constructor assert his rights?
  • Focus II: Identification of the subject of payment responsibility.B and C companies should jointly bear the responsibility for payment, shouldn't they?
  • Focus Three: The amount of the project price.Refer to the settlement statement to determine the outstanding amount after deducting 2,703,784.50 yuan.
  • Focus 4: Priority right of compensation.Liu * claimed whether the time limit exceeded six months.

III. The professional intervention of Hengluo Law Firm

The plaintiff originally claimed that:Liu * requested that A, B, and C pay the outstanding project debt of 1,551,309.59 yuan, confirm their priority right to compensation, and bear the litigation costs.

The defense argued that:A and B did not appear in court; C argued that Liu * was not a qualified party, had doubts about the authenticity of the settlement statement, that non-contractual parties cannot breach the principle of relative contractual rights, that Liu * was not a concealed employer, and that Liu * lost his priority right to compensation after leaving the construction site.

Legal Opinion by Hengluo Law Firm:Wang FangliThe lawyer carefully examined the facts and evidence and argued that Liu * was the actual constructor and the subject was qualified; B Company, which stamped the settlement review report and settlement invoice, should share joint responsibility; C Company, which was the owner, the undisclosed employer, and the actual beneficiary, should make joint payments. The project payment was determined to be 2,703,784.50 yuan according to the settlement invoice dated December 9, 2020, deducting the 300,000 yuan paid by A and the 852,475 yuan paid by C to the workers, leaving a balance of 1,551,309.59 yuan to be paid.

IV. Outcome of the case

The court held that: The "Liu * Project Department" specified in the "Internal Project Construction Agreement" should be the B Company's project department. Liu * borrowed B's name to sign the agreement with A, and the agreement was invalid, but Liu * was qualified as the actual constructor; the project payment was determined according to the settlement invoice as 2,703,784.50 yuan. A has already paid 300,000 yuan, and C has paid 852,475 yuan to the workers. A still needs to pay 1,551,309.59 yuan; regarding the priority right of compensation, Liu * failed to prove that A is the owner of the building, and Liu * himself stated that he withdrew from the project in September 2019 and settled the account on December 9, 2020, which exceeded the six-month time limit for exercising the priority right of compensation for construction projects, so the court did not support it. The court ruled that A Company shall pay Liu * 1,551,309.59 yuan within ten days; if overdue, it shall pay double interest; and the case acceptance fee of 18,762 yuan shall be borne by A Company.

5. Henglu Law Firm's Advice

The decoration project should clarify the contractual parties and payment responsibilities, and the actual contractors can claim their rights according to the law. The right to priority compensation for project funds has strict time limits and must be exercised in a timely manner. This case is handled by Beijing Henglu Law Firm [Wang FangliThe lawyer (practice license number: 11101201911086939, subject to the document issued by the judicial administrative organ) acts as an agent. In this case, the lawyer, in his capacity as the actual constructor, provided settlement evidence to assist the construction party in recovering millions of yuan in project funds.

VI. Common Questions and Answers about Construction Project (Decoration) Cases

  1. Q: What should I do if the payment for the renovation project is delayed?
    A: You can sue based on the construction agreement, settlement note, acceptance record, etc. The actual constructor has the right to claim the unpaid project funds.
  2. Q: Is the decoration contract signed with borrowed qualifications valid?
    A: Construction agreements signed by individuals who lack qualifications using the name of the enterprise are generally invalid, but the actual construction workers can assert their rights to claim the unpaid project funds.
  3. Q: If there are more than one contractors, how can we hold them accountable?
    A: The affiliated company that stamps and confirms the settlement statement or actually benefits from it may claim to share the payment responsibility jointly, but this needs to be supported by evidence.
  4. Q: How long is the period of priority compensation for project payments?
    A: The time limit for the employer to pay the contract price shall be calculated from the date on which the employer should pay the contract price. The original provision was six months, and the claim must be raised in a timely manner. If the claim is not raised within the time limit, it will not be supported.
  5. Q: Can a verdict be handed down even if the defendant doesn't appear in court?
    A: If a person who has been legally summoned fails to appear in court without a valid reason, the court may conduct the trial in absentia and make a judgment based on the evidence.