The contract with contractor is an important type of contracts in bidding activities in Vietnam. Let’s find out this issue with Lawyer X thourgh the following situation: “Dear Lawyer! I want to ask what types of contract with contractor are there in Vietnam? What are conditions for signing contract with contractor? Thanks for answering my questions!”
Legal grounds
- 2013 Vietnam Law on Bidding
Types of contract with contractor
– Lump-sum contract:
+ Lump-sum contract means contract with fixed price during performance for all work contents in contract. Payment for lump-sum contract shall be performed many times during implementation or once upon finishing contract. Total amounts paid to contractor until finishing obligations under contract shall be equal to the price stated in contract;
+ When applying the lump-sum contract, prices of packages as the basis for consideration for recommendation as the winning bidder must include expenses associated with risk elements which may happen during the course of implementation of contract, reserve expenses associated with slippage in price. Bid Price must include all expenses associated with risk elements and expenses associated with slippage in price which may happen during the course of implementation of contract;
+ Lump-sum contract is type of basic contract. When deciding on application of contract types defined at Clause 2 and Clause 3 of this Article, the person approving the plan on bidder selection must ensure that such contract types are more appropriate than lump-sum contract. For packages of simple consulting service provision, and non-consulting service provision; packages for goods procurement, works, mixed packages with small scale must apply form of lump-sum contract;
+ For packages of works, during the course of negotiating and finalizing contract, the relevant parties need review the table of work volume under the approved design; if the bidder or the Procuring Entity detects that the tables of work quantity and volume are not exact in comparison with design, the Procuring Entity shall report to the investor for consideration to decide on adjustment of the work volume in order to ensure the conformity with design;
+ When applying the lump-sum contract, the investor for project, the Procuring Entity for recurrent procurement, the centralized procurement units or units with need of procurement for the centralized procurement shall be responsible for the accuracy of work quantity and volume. In case of using consulting bidder to make dossier of design, Bid, Request for Proposals, in contract between investor, Procuring Entity, centralized procurement unit or unit which has need of procurement with the consulting bidder must have provisions on responsibilities of parties in handling or compensation in case of calculating wrongly the work quantity and volume.
– Unit price contract:
Unit price contract means contract with unit price not changeable during performance of all work contents in contract. The contractor will be paid according to the practical work quantity and volume which are tested for acceptance as prescribed on the basis of the fixed unit price in contract.
– Adjustable unit rate contract:
Adjustable unit rate contract means contract with changeable unit price based on agreements in contract for all work contents in contract. The contractor will be paid according to the practical work quantity and volume which are tested for acceptance as prescribed on the basis of the unit price in contract or the modified unit price.
– Time-based contract:
Time-based contract means contract which is applied to packages providing consulting service. The Contract Price is calculated on the basis of working time according to month, week, day, hour and costs other than remuneration. The contractor will be paid according to the practical working time on the basis of remuneration corresponding to the title and work stated in contract.
Regulations on Contract Documents
– Contract Documents include:
+ Contract Agreement;
+ Contract Addenda, including the detailed list of work scope, price table, and time for performance (if any);
+ Decision on approving the result of bidder selection.
– Apart from documents specified at Clause 1 of this Article, depend on scale, nature of package, Contract Documents include one or a number of the following documents:
+ The contract finalization record;
+ The written agreement of parties about contractual conditions, including general conditions and particular conditions;
+ Bid, Proposal and documents to clarify these dossiers of the selected bidder;
+ Bid, Request for Proposals and documents amending and supplementing these dossiers.
+ Relevant documents.
– When having changes of contents within contract, parties must sign Contract Addenda.
Conditions for signing contract
– At time of signing, the Bid or Proposal of the selected bidder is still valid.
– At time of signing, the selected bidder must ensure to meet requirements on technical and financial capability for implementation of the package. In necessary case, the investor for a project, the Procuring Entity for recurrent procurement, the centralized procurement unit or unit with need of procurement for the centralized procurement may conduct verification of information on capability of bidder, if the bidder still satisfies requirements for performance of package, parties will sign contract.
– The investor for a project, the Procuring Entity for recurrent procurement, the centralized procurement unit or unit with need of procurement for the centralized procurement must ensure conditions on funding for advance payment, payment funding, ground for implementation and other necessary conditions for carrying out the package on the schedule.
Regulations on Contract with the selected bidder
– After selecting contractor, the investor for a project, the Procuring Entity for recurrent procurement, the centralized procurement unit or unit with need of procurement for the centralized procurement and the selected bidder must sign contract to perform the package. For JV contractor, all JV’s Parties must directly sign and affix their seal (if any) on the written contract. The contract signed between parties must comply with provisions of 2013 Vietnam Law on Biddingand other provisions of relevant legislation.
– A package may be performed according to one or many contract; in a contract may apply one or many contract kinds specified at Article 62 of 2013 Vietnam Law on Bidding. In case of applying many contract kinds, it must clarify the contract kind respectively with each content of specific work.
– Contract signed between parties must conform to content in Bid, Request for Proposals, Bid, Proposals, result of contractual negotiation, and decision on approving result of bidder selection.
– Contract Price does not exceed the successful bid. In case of supplementing the work volume apart from Bid, Request for Proposals, leading to the excess of Contract Price in comparison with the successful bid, the Contract Price must be ensured to not exceed the approved price of package or estimate; if project, estimate on package include many procurement, total Contract Price must ensure to not exceed total the invested capital and estimated budget already been approved.
– The Government shall provide for content of contract involving bidding.
Regulations on Performance Security
– Performance Security shall be applied to the selected bidders, except for contractors which provide the consulting services, the selected bidders according to form of Force Account and participation in implementation of community.
– The selected bidder must provide a Performance Security prior to the date on which the contract takes effect.
– Based on scale, nature of package, the value of a Performance Security shall be stipulated in the Bid Documents, Requests for Proposals at a definite level of between 2% and 10% of the successful bid.
– The validity period of a Performance Security shall be calculated from the effective day of contract until the date parties finish contractual obligations or until the day of transfer of warranty obligations in case of having provisions on warranty. In case of extending the contract performance period, it must require the bidder to extend respectively validity period of Performance Security.
– The contractor shall not be entitled to the return of the Performance Security in the following cases:
+ The contractor refuses to perform the contract after the date the contract takes effect;
+ The contractor violates agreements in contract;
+ The contractor performs contract later than the progress due to the contractor’s fault but refuse to extend the validity of Performance Security.
Principles of adjustment to contract
– Adjustment to contracts must be specified specifically in the written contract, written agreement on contractual conditions (if any).
– Adjustment to contracts shall only apply within validity period of contract.
– Adjustment to contract price shall only apply unit price contract, adjustable unit rate contract and time-based contract.
– The adjusted contract sum shall not exceed package price or estimated budget already been approved. In case of projects, estimates on procurement including many packages, the adjusted contract sum shall not exceed the total investment, the estimated budget for procurement already been approved.
– For contracts based on modifiable unit price, the adjustment of unit price shall be performed as from time of arising the elements causing changes of price and only be applied for the performed volume in accordance with the progress stated in contract or the adjusted progress as prescribed in Clause 6 and Clause 7 of this Article.
– The contract time for performance shall be only adjusted in the following case:
+ In case of force majeure, not relating to any violation or mistake of parties in contract;
+ Changes of the work scope, design, measures for construction due to objective requirements affect to the contract time for performance;
+ Handing over of ground inconsistently with agreements in contract affect to the contract time for performance but cause is not fault of contractor.
– In case of adjustment to the contract time for performance which do not prolong the progress of finishing project, contractual parties may agree and unify such adjustments. In case of adjustment to the contract time for performance which prolong the progress of finishing project, it must report to the competent person for consideration and decision.
Please see more:
- Instructions for exclusive registration of company logos in Vietnam
- Service of changing the legal representative of Vietnamese enterprises
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Frequently asked questions
Lump-sum contract means contract with fixed price during performance for all work contents in contract. Payment for lump-sum contract shall be performed many times during implementation or once upon finishing contract. Total amounts paid to contractor until finishing obligations under contract shall be equal to the price stated in contract;
Unit price contract means contract with unit price not changeable during performance of all work contents in contract. The contractor will be paid according to the practical work quantity and volume which are tested for acceptance as prescribed on the basis of the fixed unit price in contract.
Contract Documents include:
+ Contract Agreement;
+ Contract Addenda, including the detailed list of work scope, price table, and time for performance (if any);
Conclusion: So the above is Regulations on contract with contractor in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
