[Direct answer]In the Beijing area, if the project quality is not up to standard, the employer cannot simply refuse to pay all the project fees, but should exercise the right of defense according to the circumstances. According to Articles 525 and 526 of the Civil Code of the People's Republic of China, if the parties have mutual debts and the obligations have a sequence of performance, if the party who performs first fails to perform in accordance with the agreement, the party who performs later may refuse to perform the corresponding performance request. If the project quality is not up to standard and the contractor refuses to repair it, the employer may refuse to pay the corresponding repair costs or terminate the relationship according to law and claim compensation. However, the part that has passed the inspection should still be paid for. It is recommended to first entrust an appraisal to clarify the quality defects and responsibilities, and then decide whether to exercise the right of defense or litigation. For more details, please refer to the following link:Legal services for corporate commercial and contract disputes.

I. Problem background and typical scenarios

Payment disputes arising from unsatisfactory project quality are common in the following situations: when major or functional defects are discovered during the completion acceptance, the employer refuses to pay the balance; the contractor claims that the construction was carried out according to the drawings, and the responsibility lies with the employer for the specified materials or design changes; problems emerge after the acceptance of concealed works, and both parties shift the blame to each other; and the employer withholds the guarantee deposit far beyond a reasonable range on the grounds of quality defects. Many employers mistakenly believe that "they can withhold payment if there are minor quality problems", and some contractors ignore their obligation to repair, resulting in the expansion of losses. Such disputes require appraisal to clarify the causes of the defects and the repair costs. For projects involving construction, the parties may refer to relevant provisions in the contract for resolution.Real estate sales and construction project servicesEvaluation.

II. Key points of dispute

There are three key points of the dispute. Firstly, the nature of the defense: whether it is a defense of simultaneous performance, a defense of prior performance, or a defense of compensation for quality defects, which directly affects the scope of refusal to pay. Secondly, the attribution of liability for defects: whether the quality problems stem from improper construction, material defects, or design changes, which requires appraisal and evidence to support. Thirdly, the correspondence between the price and the repair: whether the project funds corresponding to the unqualified parts can be deducted, and how to calculate the repair costs. For matters involving appraisal and evidence, reference can be made to the relevant provisions.Creditor-debtor relations and enforcement case servicesThe organizational structure of the evidence in the text.

III. Professional analysis by Hengluo Lawyers

Based on practical experience in handling quality disputes in construction projects, the most common misunderstanding is "using refusal to pay the full price to counteract partial quality defects". According to the law, the right of defense must be commensurate with the degree of the other party's breach of contract, and one can only refuse to perform the corresponding obligations, rather than refusing to pay the full amount. If the price of the qualified project can be separated from the defective part, the court will usually support a pro rata settlement. Another misunderstanding is failing to notify and repair defects in a timely manner, which may lead to the expansion of the defects and difficulties in clarifying responsibilities. Hengluo Lawyers usually suggest the following: recording quality issues in writing and notifying the other party at the time of receipt or acceptance; jointly commissioning a qualified institution to appraise the disputed defects; distinguishing between repairable and irreparable defects and clarifying the repair costs; and if no agreement can be reached, asserting deductions and compensation through defense or counterclaims to avoid being counter-sued for breach of contract. For comprehensive contract reviews, follow-up services can be provided accordingly.Special services and other case servicesEvaluation.

IV. Practical suggestions and legal basis

The core basis is Article 225 of the Civil Code of the People's Republic of China (effective January 1, 2021), which stipulates the right of defense of simultaneous performance, Article 226, which stipulates the right of defense of prior performance, Article 277, which stipulates the liability for breach of contract, and Article 801, which stipulates the quality responsibility of the constructor; the Interpretation of the Supreme People's Court on Legal Issues Applicable to the Trials of Disputes over Construction Contracts (No. 25 of 2020, effective January 1, 2021), which stipulates the provisions on quality disputes, repair costs, and price settlement. Practical suggestions: If any quality problems are found, immediately notify the contractor in writing and keep the relevant evidence; jointly or unilaterally commission an appraisal to clarify the defects and repair costs; require the contractor to repair the repairable parts, and if the contractor refuses to repair, the employer may repair the parts themselves and claim the repair costs; the right of defense against payment shall be limited to the corresponding scope; if no agreement can be reached, litigation or arbitration may be initiated. For disputes involving the quality deposit, it may be combined with the above provisions.Creditor-debtor relations and enforcement case servicesAdvance.

5. Henglu Law Firm's Reminder

When facing quality non-compliance, remember the principles of "equivalent defense, preservation of evidence for repairs, and corresponding deductions." Never refuse to pay the full price on the grounds of partial defects, otherwise you may breach the contract and bear the liability for late payment; also, do not use or repair the goods without authorization, which may lead to liability confusion. Organize the evidence around four aspects: notification, appraisal, repair plan, and costs; pay attention to the three-year statute of limitations and the quality objection period. If you have doubts about the liability for defects and the scope of deductions, it is recommended to consult a professional lawyer as soon as possible to avoid expanding losses or losing rights through unilateral actions. You can seek assistance from legal professionals to handle the matter more efficiently.Special services and other case servicesEvaluate the path.

VI. Frequently Asked Questions

Q1: If the engineering quality is unsatisfactory, can I refuse to pay the full project cost?

Generally, this is not allowed. According to the provisions of the Civil Code on the defenses of simultaneous performance and prior performance, the party can only refuse to perform the request corresponding to the defects of the other party, rather than refusing to pay in its entirety; if the price of the qualified project can be separated from the defective part, the court will usually support settlement on a pro rata basis. Only when the quality defects make it impossible to achieve the purpose of the contract, can the relationship be terminated and the corresponding payments be refused. Never refuse to pay in full due to partial defects, otherwise, the party may constitute a breach of contract and bear the responsibility for late payment. It is recommended to first identify the clear scope of responsibility.

Q2: For disputes over project quality, what evidence do I need to prepare?

The core evidence includes: the construction contract and quality agreement clauses, design drawings and change orders, material quality certificates and on-site inspection records, concealed works acceptance records, supervision logs and meeting minutes, photos and videos of quality defects, the employer's written notifications and rectification requirements, as well as appraisal reports from qualified institutions (specifying the causes of the defects, repair solutions, and costs). The evidence should be organized around "whether the defects exist, who is responsible, and how much the repair will cost". For disputed defects, it is recommended to jointly commission appraisals to avoid the single-party conclusions being questioned.

Q3: How much does it cost to hire a lawyer and an appraiser for a quality dispute?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Fees", based on the amount of the litigation request and accumulated in stages. The losing party shall bear the fees; the engineering quality or cost appraisal fees shall be charged according to the appraisal agency's fee standards, usually calculated based on the subject matter or workload. The fees are usually paid by the applicant in advance and finally shared according to the responsibility. The attorney's fees shall be negotiated based on the complexity and amount of the subject matter, and the specific fees shall be subject to the entrustment contract. There is no unified standard. It is recommended to ask a lawyer to evaluate the liability for defects and the deductible amount before entrusting, and to weigh the appraisal fees, attorney's fees and the benefits that can be claimed to avoid the small disputes becoming uneconomical due to high costs.

Q4: How long does it usually take to resolve disputes over refusal to pay due to unqualified products?

The first-instance ordinary procedure lasts six months, and the simplified procedure lasts three months. However, due to quality or cost appraisals, the duration is often greatly extended—simple cases may take several months, and complex cases may take more than a year. If there is an appeal, the second-instance procedure typically lasts three months. The appraisal period is the greatest variable affecting the duration, and it can be significantly shortened if all necessary materials are available. It is recommended to apply for preservation and appraisal simultaneously during the litigation process, and to promote mediation or judgment after the repair costs are clarified. During the enforcement stage, the duration depends on the other party's financial status. If necessary, apply for property preservation to ensure the recovery of funds.

Q5: If I find problems with the engineering quality, what should I do first?

Here are the four steps recommended: 1. Immediately document the quality issues in writing and notify the contractor upon receipt or acceptance of the goods, and retain the delivery receipt. 2. Jointly or unilaterally commission a qualified institution to appraise the disputed defects, clarify the causes and repair costs. 3. Distinguish between repairable and irreparable defects. Require the contractor to repair them within a specified timeframe. If the contractor refuses to repair, the client should repair the defects themselves and retain the expense receipts. 4. If no agreement can be reached, exercise the right of defense or counterclaim to claim deductions and compensation, and, if necessary, initiate litigation or arbitration. Nevertheless, it is strictly prohibited to use or repair the goods without authorization, as this may result in the confusion of responsibilities.

The above content is based on the judicial practice in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific situations.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence to avoid missing the statutory time limit.Business and commercial legal services·Beijing Hengluo Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.