Adjudication rules for disputes over black and white contracts for construction projects

Adjudication rules for disputes over black and white contracts for construction projects

01. Determination of the basis for the settlement of the project payment after the black and white contract of the construction project is invalid.

[Summary of the trial]:

If both parties are found to be invalid when they sign a black and white contract for the same construction project, in principle, the project price shall be settled based on the contract expressed by both parties and actually performed; If it is not possible to determine which contract the two parties actually perform, the contract that must be tendered or has been tendered and has been tendered and won the bid for the record shall be used as the basis for the settlement of the project price.

02. If the construction contract separately concluded by the parties for the same construction project is inconsistent with the substantive content of the recorded bid-winning contract, the recorded bid-winning contract shall be used as the basis for settling the project price - Zhejiang Baoye Construction Group Co., Ltd. and Tianjin Baoniang Aquatic Food Logistics Co., Ltd. and Zhejiang Baoniang Food Group Co., Ltd. Construction project construction contract dispute case.

[Summary of the trial]:

Normal contract changes are protected by law. For some acts of signing a "black and white contract" in the name of changing the contract, the "black contract" shall be found to be invalid. The major changes of the project price by the parties are inconsistent in the substantive content of the contract. In accordance with the provisions of Article 21 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts (Note: Article 2 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts (I)), if the parties separately conclude a construction contract for the same construction project and the substantive content of the recorded bid-winning contract, the recorded bid-winning contract shall be used as the basis for settling the project price.

03. Normal changes in the performance of the contract and the identification of black and white contracts - Tangshan Fenghui Real Estate Development Co., Ltd. and Chifeng Construction (Group) Co., Ltd. Construction Project Construction Contract Dispute Case.

[Summary of the trial]:

In the course of the performance of the bid-winning contract, the two parties change the agreement on the settlement method of the project price in order to compensate one party for the loss of work stoppage, which is in essence an agreement on compensation for losses, which is a normal change in the performance of the contract, and does not belong to the "black and white contract" stipulated in Article 21 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts (Note: Article 23 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts (I)). Its validity shall be determined and may be used as the basis for settlement between the parties.

Article 23 of the Interpretation (I) of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts provides that if the employer deviates from the substantive content of the bid-winning contract after bidding for a construction project that is not required to be tendered in accordance with the law, and the party requests that the bid-winning contract be used as the basis for settling the price of the construction project, the people's court shall support it. However, the employer and the contractor shall separately conclude a construction contract due to changes that are difficult to foresee at the time of bidding and bidding due to objective circumstances.

04. The winning contract signed through the bidding procedure is invalid, how to settle it? - The winning contract is invalid, and the actual performance of the contract shall be used as the basis for settlement.

[Summary of the trial]:

If the substantive content of the construction contract separately concluded by the parties for the same construction project is inconsistent with the recorded bid-winning contract, the provision that the recorded bid-winning contract shall be used as the settlement of the project price is applicable to the validity of the record-winning contract, so this judicial interpretation does not apply in this case. In this case, the construction contract and supplementary agreement signed by the two parties that have been filed are invalid, and the project price should be determined with reference to the contract actually performed by both parties.

Case Number: :(2020) Su Min Shen No. 3956

05. Luoyang Accommodation Construction Group Co., Ltd. and Henan Province Luoyang Prison Construction Project Construction Contract Dispute

[Summary of the trial]:

If the bidding procedure is legal and valid, but the substantive content of the winning contract violates the bidding Chinese documents, the bidding Chinese documents shall be used as the basis for settling the project price.

[Case Number] :(2022) Yu 03 Min Zhong No. 2054

06. If the supplementary contract and settlement agreement signed by the employer and the contractor do not constitute a substantive change to the winning contract, the "black and white contract" relationship shall not be formed.

[Summary of the trial]:

After examination, the Supreme People's Court held that the supplementary agreement and supplementary contract involved in the case were "black and white contracts" with the Construction Contract. A "black and white contract" usually refers to two or more contracts signed by the employer and the contractor for the same construction project that are inconsistent in substance, one of which is the winning contract, i.e., the "white contract", and the other or more contracts are inconsistent with the substantive content of the winning contract, i.e., the "black contract". Bidding and bidding activities should follow the principles of openness, justice, fairness and good faith, in accordance with the above principles of the signing of the contract, for the tenderer, the winning bidder and other participants in the bidding activities, are fair results. Therefore, the employer and the contractor should use the winning contract as the basis for determining the rights and obligations of both parties. After the signing of the bid-winning contract, due to the high complexity of the project, the long performance period and the large changes, with the deepening of the construction progress, it is normal and common for the employer and the contractor to sign a supplementary or change agreement on the specific problems arising in the project, but such supplementary or modified agreement shall not constitute a violation or deviation from the substantive content of the bid-winning contract.

The following two aspects should be considered in determining whether to change the substantive content of the winning contract:

First, whether it is sufficient to influence other bidders to win the bid or under what conditions. Where the content of the supplementary or modified agreement between the employer and the contractor excludes the possibility of other bidders winning the bid or the conditions for other bidders to win the bid, it constitutes a modification of the substantive content of the winning contract.

Second, whether it has a greater impact on the rights and obligations of the tenderer and the winning bidder. If the supplementary or modification agreement entered into by the employer and the contractor significantly changes the rights and obligations of the two parties, resulting in a serious imbalance between the interests of both parties, it deviates from the substantive content of the bid-winning contract.

Case No.: :(2022) Supreme Law Min Shen No. 262

07. There are two versions of the construction contract, the record contract and the archived contract, and the parties shall use the record winning contract as the basis for settling the project price in the event of a dispute - Xi'an Lintong District Construction Engineering Company and Shaanxi Hengsheng Real Estate Development Co., Ltd. Construction Project Construction Contract Dispute Appeal Case

[Summary of the trial]:

Article 21 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts stipulates that "if the substantive content of a construction contract separately concluded by the parties for the same construction project is inconsistent with the recorded bid-winning contract, the recorded bid-winning contract shall be used as the basis for settling the project price", which means that the parties have signed two different versions of the contract for the same construction project, and the recorded bid-winning contract shall be used as the basis for settling the project price in the event of a dispute. It does not refer to the filing of the contract text as the basis for settling the project price.

Case No.: :(2007) Min Yi Zhong Zi No. 74

Source: Gazette of the Supreme People's Court, No. 8, 2008 (No. 142)

08. The winning contract fabricated by the parties who have not carried out bidding activities or bidding activities in the substantive sense of the word clearly stated that it is only used for filing to handle the construction project procedures cannot be used as the basis for settling the project payment - Qingdao Fudong Forging Machinery Co., Ltd. and Qingdao Jiaocheng Construction Group Co., Ltd. Construction Project Contract Dispute Appeal Case

[Summary of the trial]:

The record of the winning contract shall be strictly interpreted, and shall be limited to the contract that must be tendered in accordance with the relevant provisions and the bidding activities have indeed been carried out and signed according to the bidding results; A bid-winning contract that is fabricated by the parties without conducting bidding activities or without bidding activities in the substantive sense of the word clearly states that it is only used for filing to handle the formalities of the construction project does not belong to the record of the bid-winning contract as stipulated in the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts, and cannot be used as the basis for settling the project payment.

Case No.: :(2008) Qingmin Yi Zhong Zi No. 602

09. When the black and white contract is invalid, the actual performance of the supplementary agreement and other documents shall be used as the basis for settlement-Tongzhou Construction Group Co., Ltd. v. Nanjing Huaguang Real Estate Development Co., Ltd. Construction Project Construction Contract Case

[Summary of the trial]:

The construction contract signed by the tenderer and the bidder in collusion is invalid due to violation of the provisions of the law, and it is still invalid after filing. After the contract is invalid, because the project settlement agreed by the two parties in the contract is not the true intention of the two parties, the record contract should not be used as the basis for settlement. The supplementary agreement signed by the two parties after the filing is privately signed, and its content constitutes a modification of the substantive content of the filing contract, which shall be a black contract and shall be found to be invalid. In this case, the settlement shall be based on documents such as supplementary agreements that have actually been performed.

Case Number: :(2011) Ning Min Zhong Zi No. 643

10. When the construction contract involved in the construction project is invalid, the project price shall be settled with comprehensive consideration and reference to the contract reached by both parties and actually performed - Shantou Company and Qinlangyu Company Construction Project Construction Contract Dispute Appeal Case

[Summary of the trial]:

If several construction contracts signed by the two parties for the same construction project are found to be invalid, the project price shall be settled with reference to the contract agreed upon and actually performed by the parties based on factors such as the construction market at the time of the conclusion of the contract, the acceptance of the parties, and the litigation economy.

Case No.: :(2011) Min Yi Zhong Zi No. 62

11. Dispute over construction contract between Hongshun Company and Sentai Company.

[Summary of the trial]:

The project price is a substantive content that affects the basic rights and obligations of the parties, and the two parties have made a concession of 12% of the project price in the supplementary agreement, which shall be deemed to be a major change to the substantive content of the record contract, rather than a general change in the content of the contract or a modification of other terms, and according to the provisions of Article 21 of the Judicial Interpretation on Construction Projects, the construction contract separately entered into by the parties for the same construction project is inconsistent with the substantive content of the record winning contract. The record winning contract should be used as the basis for settling the project price, so the construction contract dated December 30, 2009 should be used as the basis for settling the project price.

The black and white contract applies to both mandatory and non-compulsory bidding projects, but the parties have fulfilled the bidding procedures. As long as the parties have signed a construction contract through bidding in accordance with the provisions of the Tendering and Bidding Law, the employer and the winning bidder shall sign the construction contract in accordance with the notice of winning the bid, and shall not sign another contract that is inconsistent with the substantive content of the winning contract, i.e., a "black and white contract".

12. Dispute over construction contract between Wanxia Company and Wangxiang Company.

[Summary of the trial]:

As far as the filing of the contract is concerned, the government stipulates that the bidding contract of the construction project needs to be recorded, which is related to the public interest and public safety of the contract project, therefore, effective regulatory measures should be taken for this type of contract in accordance with the law, so as to protect the public interest and safety, and maintain the transaction rules and transaction order of the engineering construction market. However, unless otherwise expressly provided by law, whether the winning contract has been filed or not is usually not a sign that the contract has taken effect.

13. Dispute over the construction contract between Peony Garden Company and Zhongyuan Company.

[Summary of the trial]:

The two types of contracts involved in this case are typical "black and white contracts". The parties enter into a separate contract in addition to the bid-winning contract, and stipulate in the supplementary agreement that the contract shall be performed according to the unfiled contract, but the agreement between the parties is invalid because the act violates the mandatory provisions of the law. On the other hand, there are special circumstances in the case of the recorded contract and the unfiled contract, that is, the filing contract lacks many specific contents, while the unfiled contract is more specific and enforceable. The unfiled contract is also a supplement and refinement of the filed contract, so the validity of other clauses in the unfiled contract that do not conflict with the substantive content of the filed contract should be determined. Substantive differences should be based on the filing contract.

14. Dispute over construction contract between Laigang Company and Puyunfeng Company.

[Summary of the trial]:

The bidding procedures performed by the two parties belong to the false bidding behavior of first determining and then bidding, which violates the mandatory provisions of the Tendering and Bidding Law, and the project contracting framework agreement signed before the conclusion of the winning contract is invalid, and the construction contract concluded by the two parties after performing the bidding and bidding procedures is also invalid. Although the project contracting framework agreement is also invalid, it is an expression of the true intention of both parties and is a contract actually performed by both parties, and shall be used as the basis for the settlement of the project price according to Article 2 of the Judicial Interpretation on Construction Projects.

15. In the case that the "white contract" is valid, the settlement based on the "black contract" generally cannot be used as the basis for determining the project price. However, the contractor voluntarily waives the price difference between the "black and white contracts".

16. The "black and white contract" rule does not apply to voluntary bidding projects.

17. The "black and white contract" rule does not apply to the record contract without bidding.

18. Whether the bid-winning contract is filed or not does not affect the application of the "black and white contract" rule.

19. If there is a fundamental change in the objective situation after the signing of the bid-winning contract, the "black and white contract" rule shall not apply.

20. "The substantive content of the bid-winning contract" mainly includes the quality of the project, the term of the project, the price of the project, the scope of the project and the nature of the project.

21. Minor changes to the substantive content of the winning contract do not constitute a "black and white contract".

22. If the project price agreed in the winning contract is reasonably changed due to the increase or decrease of the project quantity, it does not constitute a "black and white contract".

23. Changing the payment term agreed in the bid-winning contract may constitute a "black and white contract".

24. If the matters not agreed in the bid-winning contract are supplemented, it does not constitute a "black and white contract".

25. In addition to the bid-winning contract, it is agreed that there is no reasonable basis for "concession" and "repurchase", which constitutes a "black and white contract".

26. Changing the liability for breach of contract stipulated in the bid-winning contract may constitute a "black and white contract".

27. Changing the dispute resolution method agreed in the bid-winning contract does not constitute a "black and white contract".

28. The different order of signing black and white contracts does not affect the characterization of "black and white contracts".

29. The validity of the "white contract" is different if the order in which the black and white contracts are signed is different.

30. The "white contract" is only the basis for settling the price, and cannot bind other matters of the construction contract.

31. If the "white contract" is invalid, it cannot be used as the "basis for settlement".

32. The price terms of the "black contract" can also be the basis for settlement under certain conditions.

33. The price difference between "black and white contracts" cannot be collected.

34. The yin and yang contracts are invalid, and the project settlement shall be carried out according to the actual performance of the contract.

[Summary of the trial]:

In the field of construction engineering, there are a large number of "yin and yang contracts", also known as "black and white contracts", which refer to two or more contracts signed by the parties on the same subject matter with different substantive contents. "Yin contract" refers to the construction contract signed privately by the contractor and the employer in order to circumvent government management, and the contract has not performed the prescribed bidding procedures, and the contract has not been filed with the administrative department of the construction project.

In this case, B Construction Engineering Company argued that the winning contract had been filed with the relevant authorities and should be used as the basis for settlement. According to Article 21 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts, "if the substantive content of the construction contract separately concluded by the parties for the same construction project is inconsistent with the recorded bid-winning contract, the recorded bid-winning contract shall be used as the basis for settling the project price." However, the premise for the application of the provisions of this article is that the winning contract filed for the record is a valid contract. In this case, Real Estate Development Company A and Construction Engineering Company B had reached an agreement on the substantive content of the bidding project before bidding, which constituted malicious collusion and signed a pre-bid contract (negative contract), and then illegally conducted bidding and entered into a separate bid-winning contract (positive contract), which violated the mandatory provisions of Articles 43 and 55 of the Bidding Law of the People's Republic of China, so the winning bid was invalid, which inevitably led to the invalidity of both the pre-bid contract and the winning contract. Therefore, the provisions of Article 21 of the Interpretation on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts do not apply to this case. Therefore, if both the pre-bid contract (Yin contract) and the record winning contract (Yang contract) are found to be invalid due to violation of the mandatory provisions of laws and administrative regulations, the project price shall be settled according to the construction project contract actually performed by the parties.

35. Case of construction contract dispute between Anle Town Health Center, Luolong District, Luoyang City, and Linzhou No.2 Construction Group Construction Co., Ltd

[Summary of the trial]:

The construction contract signed through the legal bidding procedure is valid, and the three-storey building is changed to four floors during the performance of the contract, which violates the relevant provisions of the "Urban and Rural Planning Law" and the "Bidding and Bidding Law". The supplementary agreement signed by the two parties shall be invalid due to intentional violation of the mandatory provisions of the law.

Case No.: :(2021) Yu 03 Min Zhong No. 834

36. Henan Jinda Real Estate Co., Ltd. and Luoyang Yinlei Construction and Installation Engineering Co., Ltd. Construction contract dispute case

[Summary of the trial]:

For the affordable housing project (2015), the court held that the record contract was used as the basis for settling the project price.

Case No.: :(2021) Yu 03 Min Zhong No. 1519

37. Luoyang Construction Engineering Group Co., Ltd. and Luoyang Hongwei Real Estate Co., Ltd. Construction contract dispute case

[Summary of the trial]:

The two parties signed four contracts and all of them were invalid, and the two parties also had disputes over the actual performance of the contract, and it was difficult to determine, and the court used the final contract signed by the two parties as the basis for settlement. Moreover, when the Supplementary Contract was signed in 2014, the project involved in the case had been basically completed, and it should be considered that the signing of the Supplementary Contract by the two parties was an agreement on the valuation of the project, and it should also be determined that the Supplementary Contract was an expression of the true intention of both parties, and the project price should be determined accordingly.

[Case number] :(2021) Yu 03 Min Zhong No. 1154

38. In the process of bidding and bidding for the project involved in the case, there was a "clear and covert decision" and it was determined that the contracts and supplementary agreements signed before and after winning the bid were invalid -- Xinjiang Huacheng Anju Real Estate Development Co., Ltd. and China Railway Construction Bridge Engineering Bureau Group Co., Ltd. were involved in a construction contract dispute

[Summary of the trial]:

This court is of the view that the contract should be strictly observed, and the concept of good faith should be strengthened. Huacheng Real Estate Company, as the tenderer and Party A of the construction project involved in the case, led the signing of the Construction Contract involved in the case, and after the other party to the contract, the Railway Construction Bridge Engineering Bureau, performed the contract according to the contract and it did not pay the project price as agreed, and the first instance ruled that Huacheng Real Estate Company assumed the corresponding liability, Huacheng Real Estate Company claimed that the contract was invalid on the grounds that its own bidding behavior violated laws and regulations, and its behavior not only violated the basic principle of good faith, but also was not conducive to the stability of civil legal relations, which was a lack of integrity. Malicious defense at the expense of the interests of others in pursuit of the maximization of one's own interests. The important purpose of the establishment of the contract invalidity system is to prevent losses to the interests of the state, society and third parties due to the performance of invalid contracts, and to maintain the legal order and public morality of the society. Therefore, Huacheng Real Estate Company's claim that its conduct in negotiating with the Railway Construction Bridge Engineering Bureau on the substantive content of the contract before bidding violated the provisions of the Bidding and Bidding Law and resulted in the invalidity of the Construction Contract involved in the case lacked factual and legal basis, and was rejected by this court.

Case Number: :(2019) Supreme Law Min Zhong No. 347

39. If the employer fails to obtain the planning permit for the construction project and other planning approval procedures, the construction contract signed by the employer shall be invalid.

[Summary of the trial]:

On September 17, 2012 and June 26, 2013, Henghe Company and Zhongtian Company respectively signed two construction contracts to carry out construction of the project involved in the case, but as of the time of the trial of the first instance of this case, Henghe Company had not obtained the construction project planning permit, construction permit and other construction procedures for the project involved in the case, and the project involved in the case violated the mandatory provisions of the Urban and Rural Planning Law of the People's Republic of China, the Construction Law of the People's Republic of China and other relevant laws, and circumvented the state's control of the planning system, In accordance with the provisions of Article 52 of the Contract Law of the People's Republic of China, the two construction contracts signed by the two parties shall be invalid.

Case Number: :(2019) Supreme Law Min Zhong No. 255

40. The yin and yang contracts are invalid, and the project settlement shall be carried out according to the actual performance of the contract.

[Summary of the trial]:

In the field of construction engineering, there are a large number of "yin and yang contracts", also known as "black and white contracts", which refer to two or more contracts signed by the parties on the same subject matter with different substantive contents. "Yin contract" refers to the construction contract signed privately by the contractor and the employer in order to circumvent government management, and the contract has not performed the prescribed bidding procedures, and the contract has not been filed with the administrative department of the construction project.

In this case, B Construction Engineering Company argued that the winning contract had been filed with the relevant authorities and should be used as the basis for settlement. According to Article 21 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts, "if the substantive content of the construction contract separately concluded by the parties for the same construction project is inconsistent with the recorded bid-winning contract, the recorded bid-winning contract shall be used as the basis for settling the project price." However, the premise for the application of the provisions of this article is that the winning contract filed for the record is a valid contract. In this case, Real Estate Development Company A and Construction Engineering Company B had reached an agreement on the substantive content of the bidding project before bidding, which constituted malicious collusion and signed a pre-bid contract (negative contract), and then illegally conducted bidding and entered into a separate bid-winning contract (positive contract), which violated the mandatory provisions of Articles 43 and 55 of the Bidding Law of the People's Republic of China, so the winning bid was invalid, which inevitably led to the invalidity of both the pre-bid contract and the winning contract. Therefore, the provisions of Article 21 of the Interpretation on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts do not apply to this case. Therefore, if both the pre-bid contract (Yin contract) and the record winning contract (Yang contract) are found to be invalid due to violation of the mandatory provisions of laws and administrative regulations, the project price shall be settled according to the construction project contract actually performed by the parties.

Transferred from the same judgment rule for similar cases