SPC: Due to the problem of the contractor's funds, the contractor has notified the subcontractor to stop work, should the subcontractor prevent the loss from expanding? Can the subcontractor be partially compensated for the loss of nest workers?

SPC: Due to the problem of the contractor's funds, the contractor has notified the subcontractor to stop work, should the subcontractor prevent the loss from expanding? Can the subcontractor be partially compensated for the loss of nest workers?

Lihe Company applied for a retrial, stating:

1. After receiving the notice of suspension, Lihe Company actively negotiated the matter of exit, but could not afford the repatriation fee, lease fee, exit fee, breach of contract compensation and other expenses caused by the suspension and exit, and repeatedly informed Xinjiang Construction Engineering Group of the above problems, but Xinjiang Construction Engineering Group refused to negotiate with Lihe Company to confirm and pay the relevant costs.

Lihe Company was not at fault for the expansion of losses.

Xinjiang Construction Engineering Group, as the breaching party, has not proposed any plan for changing the contract, taking reasonable measures, and confirming and bearing the costs, and the fault lies entirely with Xinjiang Construction Engineering Group.

2. The original judgment did not give force and the company's reasonable withdrawal period, nor did it determine the relevant expenses according to the appraisal opinion, and the facts and applicable law were wrong.

3. The criterion for judging the reasonableness of the injured party's behavior should be based on the subjective aspect of the injured party and should not be limited to the objective results of the act. Lihe Company, as a party to the contract, is not obliged to do anything other than the course of business and has taken necessary measures for the suspension of work, and should not measure whether Lihe and the company's previous actions are reasonable by the length of the actual suspension of work afterwards.

4. The original judgment did not support the error of loss of nest workers. Due to problems in the capital chain of Greenland Yinchuan Company, the work stoppage should be borne by Xinjiang Construction Engineering Group. Xinjiang Construction Engineering Group did not consult with Lihe Company, Lihe Company was unable to resume work, and the payment methods such as the cap agreed in the contract between the two parties could no longer be applied. Xinjiang Construction Engineering Group has defaulted on labor fees, and the suspension of the project involved in the case is also caused by the breach of contract by Xinjiang Construction Engineering Group, and Xinjiang Construction Engineering Group shall pay off the project payment for the completed project.

The original judgment did not determine the amount payable in accordance with the rules for handling the termination of the contract, but still determined that Xinjiang Construction Engineering Group did not have the error of arrears in labor fees according to the assumption of normal performance of the contract.

The Supreme Court's retrial held that:

On the issue of whether Xinjiang Construction Engineering Group and Xinjiang Construction Engineering Ningxia Branch (contractor) should compensate for the losses of the company (subcontractor).

1, the "Labor Subcontracting Contract" stipulates that there is no advance payment for the project involved in the case, the contractor pays the project progress payment according to the node, and the main structure is capped to pay 70% of the completed project quantity within 30 working days after the general contractor receives the corresponding project payment from the owner.

In this case, Lihe Company only completed part of the main structure of the project, and all the main projects have not yet been capped. After the appraisal entrusted by the court of first instance in accordance with the law, the completed project cost was 12323455 yuan, and Xinjiang Construction Engineering Group and Xinjiang Construction Engineering Ningxia Branch had paid 10683807 yuan for the project before the suspension of work, and they did not owe the project payment according to the agreement.

2, the "Labor Subcontract" also stipulates that "the unit price of the contract has fully considered the risk of natural phenomena, power outages and yinchuan market price, the contract unit price of the work content within the scope of the contract shall not be adjusted for any reason, except for the design changes caused by xinjiang construction engineering group leading to the delay of the project, other circumstances are deemed to not affect the project duration, nor does it involve any increase in costs." ”

Although Xinjiang Construction Engineering Ningxia Branch issued a work contact letter to Lihe Company saying that it could not resume work on schedule due to the lack of funds of Greenland Yinchuan Company, it has notified Lihe Company in advance, and Lihe Company has the obligation to prevent the expansion of losses. [Breeze]

3. On August 6, 2016, Xinjiang Construction Engineering Group requested Lihe Company to resume work, and Lihe Company did not continue to negotiate with Xinjiang Construction Engineering Group on the grounds that the losses had not been compensated and the progress of payment of the project payment was not clear. Lihe Company shall be solely responsible for its losses.

Until May 2017, Xinjiang Construction Engineering Ningxia Branch issued a letter to Lihe Company to start the project resumption as soon as possible, and said that the disputed issues between the two sides could be resolved through consultation after the resumption of work, and if Lihe Company did not resume work after the deadline, it would separately entrust a third party to carry out construction. Lihe Company has not yet arrived to resume work. A letter was sent to Xinjiang Construction Engineering Ningxia Branch requesting the termination of the contract and requesting Lihe Company to remove the turnover materials left at the construction site.

Combined with the above facts, although the suspension of the project involved in the case was caused by xinjiang construction engineering ningxia branch, the liability for the termination of the contract involved in the case was not Xinjiang Construction Engineering Group and Xinjiang Construction Engineering Ningxia Branch, and the original judgment did not support the losses claimed by Xinjiang Construction Engineering Group and Xinjiang Construction Engineering Ningxia Branch, and had comprehensively considered the contractual agreement involved in the case and the fault factors of both parties in the suspension and resumption of work, and there was no impropriety.

The evidence submitted by Lihe Company in the retrial of the materials related to construction measures can only prove Lihe Company's obligation to pay to outsiders, and cannot prove that this part of the loss is related to Xinjiang Construction Engineering Group and Xinjiang Construction Engineering Ningxia Branch, which is not enough to overturn the original judgment and does not belong to the new evidence provided for in Article 200, Paragraph 1 of the Civil Procedure Law of the People's Republic of China.

Lihe Company's reconsideration of the compensation losses that Xinjiang Construction Engineering Group and Xinjiang Construction Engineering Ningxia Branch should compensate and the specific amount of losses are incorrect, cannot be established according to law.

As mentioned above, the termination of the contract involved in the case was caused by Lihe and the company's reasons, and the original judgment was that Lihe Company was obliged to take measures to prevent the expansion of losses after receiving the notice of suspension of work, and the losses claimed by Lihe Company were not determined, and there was no situation in which the facts were determined and the application of law was wrong.

(2021) SPC Minshen No. 6646 · 2021-12-10

#Law Enforcement ##建设工程法律实务 #