[Case Summary]This case involves a dispute over a construction cooperation contract. The plaintiff, Hebei * Construction Engineering Co., Ltd., and the defendant, Beijing * Technology Co., Ltd., signed the "Construction Cooperation Agreement". The defendant failed to pay the construction fee of 693,327.60 yuan and refused to return the performance bond of 400,000 yuan. The plaintiff entrusted the professional lawyer team of Beijing Henglu Law Firm to represent them. The court supported some of the plaintiff's claims and ruled that the defendant should pay the construction fee of 673,327.6 yuan. Applicable laws: Article 8 and Article 109 of the former "Contract Law of the People's Republic of China", and Paragraph 1 of Article 64 of the "Civil Procedure Law of the People's Republic of China".

I. Review of the Case

"What should I do if the construction project cooperation payment is delayed?" "Is it legal to not refund the performance bond?" "Can the payment be refused if the project hasn't been audited?" These are common disputes in construction cooperation. On March 20, 2018, the plaintiff and the defendant signed the "Engineering Construction Cooperation Agreement" for a certain project, with the defendant providing materials and the plaintiff responsible for the construction. The total project cost was 15,592,953.37 yuan, and the plaintiff's construction fee was 3,621,281.37 yuan. The payment schedule was as follows: within 14 days of entering the site, a 30% payment would be made; upon reaching half of the progress, 50% would be paid; upon completion, 80% would be paid; and after the audit upon completion and acceptance, 95% (5% as a quality deposit) would be paid, with the remaining balance to be paid two years later. The defendant charged an 11% management fee on the construction portion. The project period was from March 20, 2018 to August 2, 2018.

The plaintiff paid a performance bond of 400,000 yuan (paid in two installments) equivalent to 10% of the contract amount. After the construction was completed and delivered, the defendant only paid a total of 2,493,400 yuan for the construction fees, leaving an unpaid balance of 693,276.60 yuan, and the performance bond of 400,000 yuan was not returned. The plaintiff repeatedly demanded payment but to no avail, so they entrusted the professional lawyer team of Henglue Law Firm to initiate legal action. The defendant argued that they only needed to pay 80% of the total amount, and that the remaining 20% would not be paid until the employer conducted an audit.

II. The focus of the case

  • Focus 1: How to determine the amount of the project payment owed by the defendant.The calculation is made after deducting an 11% management fee and a 50% design fee.
  • Focus II: Can the employer's failure to conduct an audit serve as a reason for refusing to make payments?The project has been completed and passed the acceptance inspection, and the audit was recently completed. The defendant's arguments are unfounded.
  • Focus Three: Should the performance bond be refunded?Due to the fact that the final settlement has not been completed, the claim for the deposit was not supported.

III. The professional intervention of Hengluo Law Firm

The contractor (the plaintiff) alleged that:The plaintiff claims that the defendant should pay the outstanding project payment of 673,327.6 yuan and return the performance bond of 400,000 yuan.

The position of the employer (the defendant):The defendant claimed that according to the contract, they only need to pay 80% now, and since the employer has not conducted an audit, the remaining 20% does not need to be paid for the time being.

Legal opinion of Hengluo Law Firm:The lawyer believes that the agreement represents a true expression of intent and does not violate the mandatory provisions on effectiveness, so it should be considered valid. The project was completed and passed the acceptance inspection on August 5, 2018, and the audit was recently completed. The plaintiff's claim is legally justified. The defendant had already paid 80% of the total amount before the litigation, so his reason for refusing to pay due to the unfinished audit is unfounded.

IV. Outcome of the case

The court supported some of the plaintiff's claims, holding that the final settlement of the project in question had not been completed, and therefore the claim for the deposit was not supported. The defendant still owed the project payment, which should be paid after deducting 11% of the management fee and 50% of the design fee. The plaintiff's claim for interest loss lacked factual basis and was not supported. In accordance with Article 8 and Article 109 of the former Contract Law of the People's Republic of China, and Article 64 Paragraph 1 of the Civil Procedure Law of the People's Republic of China, the court ruled: First, the defendant shall pay the plaintiff the project payment of 673,327.6 yuan within 10 days after the judgment takes effect; Second, the plaintiff's other claims are dismissed. The case acceptance fee is 15,083 yuan, of which the plaintiff shall bear 5,793 yuan and the defendant shall bear 9,290 yuan.

5. Hengluo Law Firm's Reminder

This case is handled by the professional lawyer team of Beijing Henglu Law Firm. All lawyers in the team hold valid practicing certificates (the practicing certificate number shall be based on the document issued by the judicial administrative organ). Construction cooperation must clarify payment milestones and audit clauses to avoid "unaudited" being misused as a reason for refusing to pay. The corporate and commercial team of Beijing Henglu Law Firm uses the contract as the basis to break through the defense of refusing to pay.

VI. Common Problems and FAQs Regarding Project Payment Delays

  1. Q: What should I do if the construction project payment is delayed due to cooperation issues?
    A:In accordance with the provisions of the cooperation agreement, the contractor shall, upon presenting the evidence of acceptance and settlement, file a lawsuit to claim the outstanding project payment.
  2. Q: Is it legal not to refund the performance bond?
    A:For those who meet the conditions for refund, the funds shall be refunded; if the final settlement has not been completed, the court may temporarily not support the refund request.
  3. Q: Can the payment be denied if the project hasn't been audited?
    A:No. For projects that have passed the completion and acceptance inspection and have actually completed the audit, it is not allowed to refuse to pay the due amount on the grounds of not having completed the audit.
  4. Q: Can the management fees and design fees be deducted from the project payment?
    A:Where there is a contractual agreement, the court may calculate the arrears after deducting the corresponding management fees and apportioned expenses in accordance with the actual situation.
  5. Q: Can I demand interest if the project payment is in arrears?
    A:The defendant has generally made payments according to the agreement, and there is no clear default. Therefore, the interest claim may not be supported.