[Case Summary]This case involves a dispute over unpaid debts in a construction contract (for scaffolding subcontracting). The plaintiff, on the basis of the "Steel Pipe Scaffolding Contract Agreement", sued the general contractor XX Construction Company and the subcontractor Jiangsu XX Construction Labor CompanyThe total amount of project payment to be paid jointly and severally is 4,608,631.16 yuan.and litigation fees, preservation fees, and attorney's fees. The labor service company and the third party, Tang * jointly entrusted the Beijing Henglu Law Firm to handle the case.Wang DongAttorney representation. The lawyer strictly adheres to the law.The relativity of contractsAnd\n Subcontracting relationshipThe two core points are: the signing and performance of the steel plate lease contract occurred between the plaintiff and the third party, and had nothing to do with the labor company; the project involved in the case was actually contracted out by the general contractor to the third party, and the relationship between the third party and the labor company was a subcontracting arrangement. Therefore, the subject of the lease payment should be the third party. The court ultimately adopted our viewpoint, dismissed all the plaintiff's claims against the two defendants, and rejected the third party's counterclaim. The parties successfully avoided assuming the payment liability of over 4.6 million yuan. Core disputes: Whether the parties outside the contract should bear the payment obligation; Applicable legal provisions: Articles 465, 502, and 509 of the Civil Code of the People's Republic of China, and Article 90 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China.

I. Review of the Case Facts

The most common consultations that construction enterprises encounter are "what to do if the project funds are sued for joint and several liability", "how to handle disputes over subcontracting scaffolding contracts", and "who bears the payment responsibility under the subcontracting relationship". On May 1, 2020, the plaintiff signed the "Steel Pipe Scaffolding Contracting Agreement" with the third party Tang * to contract the underground basement and main building steel pipe and scaffolding projects of Blocks 5 and 7 of the Xiazhuang Project in Hexian Ecological City on a lump-sum basis. The plaintiff was responsible for the construction of all external scaffolding erection and dismantling and safety protection facilities in the project. It is known that the defendant XX Construction Engineering Company is the general contractor of the project, and the defendant Jiangsu XX Construction Labor Engineering Co., Ltd. (hereinafter referred to as the Labor Company) is the subcontractor of the project. During the project execution, the defendant XX Construction Engineering Company and the defendant Labor Company paid part of the project funds to the plaintiff and its staff through the third party, but the remaining project funds have not been paid to date. Therefore, the plaintiff sued the court, requesting: First, order the defendant XX Construction Engineering Company and the defendant Labor Company to jointly pay the plaintiff the project funds of 4,608,63.16 yuan; Second, request that the litigation fees, preservation fees, and attorney fees in this case be borne by the two defendants. 建筑施工企业最常遇到的咨询就是“工程款被起诉连带责任怎么办”、“脚手架分包合同纠纷怎么打”、“挂靠关系下谁承担付款责任”。2020年5月1日，原告与第三人汤某签订《钢管脚手架承包协议书》，以总价包干方式承包“和XX生态城夏庄项目”5#、7#地块地下室及主楼钢管与脚手架工程，对该项目内所有外脚手架搭拆及安全围护设施搭拆工程进行承建。已知被告XX建工为工程总包方，被告江苏XX建筑劳务工程有限公司（以下简称劳务公司）为工程分包方。工程承揽过程中，被告XX建工、被告劳务公司通过第三人向原告及其工作人员支付过部分工程款，但剩余工程款至今未付。故原告诉至法院，请求：一、判令被告XX建工、被告劳务公司连带支付原告工程款4600863.16元；二、请求本案诉讼费、保全费、律师费等由二被告承担。

Facing the sudden huge joint claims, the labor company and the third party, Tang *, realized the seriousness of the situation. After comparing various options, they jointly entrusted Beijing Henglu Law Firm to handle the caseWang DongThe lawyer is representing the client in the lawsuit, hoping to clarify the responsibilities and prevent improper joint liability in the complex engineering general contracting and subcontracting chains.

II. The focus of the case

  • Focus 1: Is the labor service company the subject of the obligation to pay the lease fees involved in the case?The plaintiff signed a steel plate lease contract with the third party. The performance of the contract took place between the plaintiff and the third party. The labor service company was not a party to the contract. Whether it is possible to break through the contractual relativity and require it to make joint and several payments is the primary issue in this case.
  • Focus 2: What is the legal relationship between the third party and the labor service company?The project involved in the case was contracted out by XX Construction to a third party. The third party and the labor service company had a subcontracting relationship. Whether the subject of the lease payment should be the third party or the labor service company directly determines the attribution of responsibility.
  • Focus Three: Whether the amount of the lease fee claimed by the plaintiff is reasonable and whether it can offset the breach of contract penalty.The third party has already paid 978,900 yuan, and the plaintiff has breached the contract multiple times. According to the contract, the plaintiff should pay a breach of contract penalty of 166,000 yuan and directly offset it from the lease fee. Whether the amount claimed by the plaintiff is far exceeding the amount payable is also a key issue.

III. Professional intervention by Hengluo Lawyers

The plaintiff (the party bringing the lawsuit) alleges that:The plaintiff alleges that the two defendants have paid part of the project funds to him through a third party, but the remaining 4,600,863.16 yuan has not been paid so far. Therefore, he demands that the general contractor XX Construction and the labor service company jointly assume the payment responsibility and bear the litigation fees, preservation fees, and attorney's fees.

The position of the defendant (our side and the third party):The labor service company and the third party do not recognize the plaintiff's claim for joint and several payment, believing that the contract signed by the plaintiff is with the third party and has nothing to do with the labor service company; the third party also claims that the contract was signed between him and the plaintiff, and he has already paid 978,900 yuan. Moreover, the plaintiff should bear the breach of contract penalty of 166,000 yuan as a set-off.

Legal opinion of Hengluo Law Firm:After accepting the commission,Wang DongThe lawyer communicated with the client multiple times, carefully reviewed the signing process of the contract involved in the case, and conducted a detailed sorting and analysis of the performance of the contract involved in the case, forming a clear representation strategy. Contract disputes in the construction engineering sector often involve a large amount of evidence and complex cases. The attorney not only used the best methods to present evidence and explain views in court, but also communicated with the client and the judge after the trial to respond to the judge's various questions about the case in a timely manner. Before the trial, the lawyer conducted a "mock trial" for the case to refine the representation strategy on the spot.

  • The lawyer believes that we do not recognize the plaintiff's claim that the labor company should pay him the project payment. The plaintiff's steel plate lease contract was signed with a third party, and the performance of the contract also occurred between the plaintiff and the third party, which has nothing to do with the defendant labor company.
  • The project involved in the case was actually contracted by the defendant XX Construction to a third party. The third party and the defendant's labor company had an affiliation relationship. The subject of payment for the lease fee should be the third party, not the defendant's labor company.
  • Regarding the third party, the lawyer pointed out that the lease fee contract was signed between the third party and the plaintiff, and the third party has already paid 978,900 yuan to the plaintiff. Even if the payment has not been completed, the obligation to pay should still be fulfilled by the third party. The overall lease fee between the two parties has not been settled yet. The third party believes that the amount claimed by the plaintiff is far exceeding the amount payable, so they do not recognize it.
  • The plaintiff committed multiple breaches of contract during the performance of the lease contract, and according to the contract between the two parties, the plaintiff should bear the breach of contract liability of 166,000 yuan to the third party. According to the contract, the breach of contract penalty shall be directly offset against the lease fee.

IV. Outcome of the case

The court held that, according toThe principle of contractual relativityThe plaintiff should claim the arrears from the third party, as the agreement does not have legal effect on parties outside the contract. Regarding the plaintiff's claim that the defendants XX Construction and the labor company should jointly pay the project payment of 4,608,63.16 yuan plus attorney fees and preservation insurance fees, the two defendants do not meet the performance subjects stipulated in the agreement and do not agree to assume payment responsibilities. Therefore, the court does not support the plaintiff's litigation request, and the plaintiff may claim rights from the third party separately. In summary, in accordance with Articles 465, 502, and 509 of the Civil Code of the People's Republic of China and Article 90 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China, the judgment is as follows: First, the plaintiff's litigation request is rejected; Second, the counterclaim of the counter-plaintiff, Tang *, is rejected. The parties successfully avoided assuming payment responsibilities of over 4.6 million yuan.

5. Hengluo Law Firm's Reminder

In the field of construction projects, the phenomena of subcontracting, sub-subcontracting, and contractual fraud are widespread. Once the downstream contractors default on payments, the general contractors or subcontractors are often sued for joint and several payment. This case was handled by Beijing Henglu Law Firm.Wang DongThe attorney (practice license number: 11101201910090334, subject to the document issued by the judicial administrative organ) acts as the agent. Attorney's Tip: The principle of contractual privity is the cornerstone of the recovery of project payments. When the contracting parties and the actual performers are not consistent, the payment obligation generally only binds the contracting parties. The upstream and downstream enterprises involved in the lawsuit should promptly fix the evidence chain of "contracting—subcontracting—leasing" to block the improper joint liability for compensation. If you encounter similar confusion such as "what should you do if you are sued for project payments", you should entrust a professional lawyer as soon as possible to clarify the boundaries of responsibility.

VI. Common Questions and Answers about Construction Project Payment Cases

  1. Q: If we are sued to jointly pay the project funds, do we still need to bear responsibility even though we haven't signed a contract?
    A:Generally, there is no need to bear responsibility. Under the principle of contractual relativity, the obligation to pay only binds the parties to the contract. Unless there are circumstances of joint and several liability stipulated by law, non-signatories to the contract usually do not bear the responsibility to pay. They can claim that the plaintiff should assert the claim against the actual contractual counterparty separately.
  2. Q: Who should pay the project funds under the subcontracting relationship?
    A:The signing and performance of the actual construction or leasing relationship in the subcontracting arrangement are crucial. If the contract is signed and performed by an actual party other than the subcontractee, the payment party should be that actual party, and the subcontractee shall not directly bear the obligation to make payments under the contract.
  3. Q: The amount of the project payment claimed by the other party is obviously higher than what should be paid. How can I defend myself against this?
    A:It can be defended from the perspectives of paid invoices, unresolved facts, and the offset of the breach of contract penalty by the other party, requiring the other party to provide evidence of the actual amount payable and using the contract and performance evidence to refute their excessive claims.
  4. Q: Is it valid to stipulate in the contract that the breach of contract penalty shall be directly offset against the project payment?
    A:The agreement on offsetting the breach of contract penalty, which is made based on the true intention of both parties and does not violate mandatory provisions, is generally valid. Accordingly, it can be directly deducted in the settlement to reduce the total amount payable.
  5. Q: How should one prepare evidence if they are involved in a lawsuit over project payments?
    A:It is necessary to collect the original contracts, payment records, subcontracting agreements, correspondence, meeting minutes, etc. in detail, and consult professional lawyers as soon as possible to develop an agency plan to "block the chain of liability".