Can the actual constructor claim the project payment from the employer?

The defendant, Li Mou, borrowed the qualifications of Xin Mou Construction Company to undertake the practical base project of the project owner, a certain bureau. Later, Li Mou signed a "Construction Labor Contract" with the plaintiff using the project seal of Xin Mou Construction Company, stipulating that the plaintiff would undertake the construction of the project in the form of a large package. After the contract was signed, the plaintiff, in accordance with the contract, organized construction personnel to enter the construction site, purchased relevant equipment and materials, carried out safe and civilized construction and completed the project on schedule, delivering it to the employer for actual use. However, Li still owes the plaintiff 470,000 yuan.

As the agent of the plaintiff in this case, Tang Meili, a lawyer from Jinyan Law Firm, follows the following approach: As Li Mou personally borrowed the qualifications of Xin Mou Construction Company to contract the project in question, and the "Construction Labor Contract" signed by Li Mou and the plaintiff was stamped with the project seal of Xin Mou Construction Company, there is a construction contract relationship between Li Mou, Xin Mou Company and the plaintiff. Moreover, the project owner, a certain bureau, has actually used the project in question and there is still the remaining project payment that has not been paid to Xin Mou Construction Company. Therefore, Li Mou, Xin Mou Construction Company and a certain bureau should all be listed as defendants and the case should be brought to court. Although the court may not order the project owner to bear the payment obligation in this case, as it has outstanding project funds, the specific amount of the outstanding payment can be ascertained in this case. In the future enforcement procedure, an enforcement assistance notice can be issued to it, and the project funds owed to Xin Mou Construction Company can be directly paid to the plaintiff. As Li Mou is now a person subject to enforcement for breach of trust and has no property under his name, and he also owes personal debts to Xin Mou Construction Company for other reasons, if the plaintiff wants to obtain the project payment, he can only issue a notice of assistance in enforcement to a certain bureau through the court during the enforcement stage. During the court hearing, a certain bureau presented the proof of payment and calculated the amount of outstanding project funds in combination with the general contracting contract.

Court judgment

The "Construction Labor Contract" involved in the case should be regarded as an invalid contract because Li Mou borrowed the qualification for the contract and then illegally subcontracted it to the plaintiff who did not have the construction qualification. Although the contract was stamped with the project seal of the new construction company, the project department seal is usually only used within the project for internal review of drawings, application for payment, project visa, transfer of construction documents and other links, and cannot be used to sign contracts externally. Therefore, it cannot be determined that Xin Mou Construction Company is the counterparty of the "Construction Labor Contract" based on the fact that the seal of the new project department is affixed to the "Construction Labor Contract". The relevant civil liability shall be borne by Li Jianshe, the counterparty to the contract.

The liability of the project owner to the actual constructor for the outstanding payment of the project funds only applies to the simplest tripartite relationship and does not apply to multi-level subcontracting and assignment relationships or qualification borrowing relationships. In this case, Li Mou borrowed the qualifications of Xin Mou Construction Company to undertake the project involved in the case and then subcontracted part of the project to the plaintiff. As the actual constructor of the project involved in the case, the plaintiff can only assert his rights against his counterparty to the contract, that is, his superior Li Mou.

Case Analysis

This case, as a construction contract dispute involving the borrowing of qualification relationships and multiple layers of subcontracting, is only applicable to the simplest tripartite relationship as the employer is liable to the actual constructor for the outstanding project payment. It does not apply to multiple layers of subcontracting relationships or the borrowing of qualification relationships. Although the employer does not bear the payment obligation in this case, However, as the project owner had remaining project funds that had not been paid to Xin Mou Company, and Xin Mou Company, as the qualified lender, was merely the collector of the outstanding payment, the outstanding amount should ultimately be paid to Li Mou, who was obligated to pay the plaintiff. Therefore, after the case was concluded, when the plaintiff applied to the court for compulsory enforcement, the court issued a notice of assistance in enforcement to the project owner, a certain bureau. When the payment terms are fulfilled, the amount of 470,000 due will be directly paid to the plaintiff.

Link to the legal provisions

Civil Code of the People's Republic of China

Article 788 A construction project contract is a contract whereby the contractor undertakes the construction of the project and the employer pays the price. Construction project contracts include contracts for engineering investigation, design and construction.

Article 1 of the "Interpretation of the Supreme People's Court on the Application of Law in the Trial of Disputes over Construction Project Contracts (I)" stipulates that a construction project contract shall be deemed invalid in accordance with the provisions of Paragraph 1 of Article 153 of the Civil Code if it has any of the following circumstances:

(1) The contractor has not obtained the qualification of a construction enterprise or has exceeded its qualification grade;

(2) Where an actual constructor without qualifications borrows the name of a construction enterprise with qualifications;

(3) Where a construction project must be tendered but has not been tendered or the winning bid is invalid.

Where a contractor enters into a construction project contract with another party due to subcontracting or illegal subcontracting of the construction project, it shall be deemed invalid in accordance with the provisions of Article 153, Paragraph 1 and Article 791, Paragraphs 2 and 3 of the Civil Code.

Introduction to lawyers

Lawyer Tang Meili, a member of the Communist Party of China, is a practicing lawyer at Jinyan Law Firm. She graduated from North Minzu University and obtained her lawyer's practice certificate in 2015.

Proficient in commercial and economic cases such as disputes over private lending, house purchase and sale contracts, and construction contracts, as well as real estate and corporate affairs.

Contact Information

Telephone: 18039133311

Email: 1075433424@qq.com