Eastern China Court Rules on Construction Subcontract Payment Dispute Worth 99,276 Yuan

Eastern China Court Rules on Construction Subcontract Payment Dispute Worth 99,276 Yuan

Case Overview

A court in Eastern China ruled that a construction company must pay a subcontractor 99,276 yuan for unpaid scaffolding and wall project work, plus interest. The case involved a dispute over a subcontract agreement between an individual builder and a construction firm for two factory projects.

Case Background and Facts

In 2008, the defendant, a construction company based in Eastern China, entered into an oral agreement with the plaintiff, Mr. He, to subcontract the interior and exterior wall scaffolding and wall projects for two new factory buildings. The projects were part of the first-phase construction for two technology companies. The parties agreed on unit prices, quality standards, and payment terms.

Mr. He performed the work as agreed, and both projects passed final inspection and were accepted. However, the defendant failed to pay the full amount owed. After a settlement of accounts, the defendant acknowledged owing 64,704 yuan for the scaffolding work and 26,000 yuan for the wall project, totaling 90,704 yuan. The defendant issued a written promise to pay the entire amount by October 30, 2009, but did not do so.

Despite repeated demands for payment, Mr. He received no funds. He then filed a lawsuit seeking the principal amount of 90,704 yuan plus interest for late payment calculated from November 1, 2009, to December 23, 2010, at a daily rate of 0.021 percent, which amounted to 7,942.95 yuan. The total claim was 98,646.95 yuan.

Court Proceedings and Evidence

The court accepted the case on December 29, 2010, and held a public hearing on January 24, 2011, using a simplified procedure. Both parties were represented by legal counsel.

Mr. He submitted five pieces of evidence to support his claim. These included his identification and the defendant’s company registration details, a settlement statement dated July 31, 2009, for the scaffolding work, a subcontractor account statement dated September 9, 2009, from the defendant’s project department, and two written promises from the defendant dated August 1, 2009, and July 22, 2009.

The defendant did not provide any evidence. In its defense, the defendant acknowledged the subcontract relationship but questioned whether the project manager had properly verified the outstanding amount. The defendant also raised a counterclaim, alleging that Mr. He had caused a work-related injury accident during the project and that the defendant had paid over 200,000 yuan in compensation. The defendant suggested that Mr. He should bear this cost but stated it would pursue a separate legal action if the parties could not settle.

The court reviewed all evidence and found it to be authentic, lawful, and relevant to the case. The evidence was admitted.

Court Findings and Judgment

The court found that the defendant had clearly failed to pay the subcontractor as promised. By not paying by the agreed deadline of October 30, 2009, the defendant was in breach of contract. The court held that the defendant was liable for both the outstanding principal and the resulting interest.

The court calculated the interest for late payment from November 1, 2009, to January 31, 2011, at a daily rate of 0.021 percent, arriving at an amount of 8,572 yuan. The total judgment was 99,276 yuan, comprising 90,704 yuan in principal and 8,572 yuan in interest.

The court ordered the defendant to pay the full amount within ten days of the judgment taking effect. If payment was delayed, the defendant would be subject to double the interest for the period of delay as stipulated by law. The court also ordered the defendant to bear the litigation costs of 1,133 yuan.

Key Legal Principles

The court applied the principle that a party who fails to perform its contractual obligations must bear liability for breach of contract. Under the Contract Law of the People’s Republic of China, when a party delays payment, the other party is entitled to demand full payment plus compensation for losses caused by the delay. The court also referenced the judicial interpretation on construction project contract disputes, which supports the recovery of interest on overdue payments.

Practical Insights

This case illustrates the importance of written agreements and clear payment terms in construction subcontracts. Even when no formal written contract exists, oral agreements supported by performance and documentation can be enforced. Subcontractors should keep detailed records of work performed, settlement statements, and any written promises from the other party. The case also shows that courts will award interest for late payment, calculated from the date the payment was due. Parties should be aware that delaying payment can result in additional financial liability.

Legal References

Contract Law of the People’s Republic of China, Article 107 (liability for breach of contract) and Article 109 (liability for non-payment of money).

Supreme People’s Court Interpretation on Issues Concerning the Application of Law in Trials of Construction Project Contract Disputes, Article 17.

Civil Procedure Law of the People’s Republic of China, Article 229 (double interest for delayed payment).

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for specific legal matters.