Things to note when making payments for the latest construction contract payment

Article overview

Construction contract payment is an important step to help ensure project progress and quality. Implementing the correct process and full payment terms not only protects the interests of the investor but also ensures transparency between the parties. Through the following article, Long Phan will introduce some notes when making construction contract payments according to 2024 regulations.

Some notes when making construction contract payments
Some notes when making construction contract payments

Regulations on payment of construction contracts in 2024

Regulations on payment of construction contracts in 2024 are recorded in Clause 1, Article 3 of Circular 02/2023/TT-BXD effective April 20, 2023, stipulating that payment of construction contracts shall be carried out according to Article 19 of Decree 37/2015/ND-CP.

Construction contract payment term

Pursuant to Clause 10, Article 19 of Decree 37/2015/ND-CP, the payment term is agreed upon by the parties in the contract in accordance with the scale and nature of each contract. The payment deadline must not exceed 14 working days from the date the contractor receives complete and valid payment documents as agreed in the contract and is specifically specified as follows:

  • Within seven (07) working days from the date of receiving complete and valid payment request documents from the contractor, the contractor must complete the procedures and transfer the payment request to the bank or State Treasury payment service country.
  • Within seven (07) working days from the date of receipt of complete and valid payment documents from the contractor, the bank or State Treasury serving the payment must transfer the full value of that payment to the recipient contractor.
  • For construction contracts belonging to construction investment projects using ODA capital or loans from foreign credit institutions, the payment term shall comply with the provisions of international treaties. When agreeing on the payment term, the parties must base on the provisions of the International Treaty and the investment capital payment process according to the provisions of law to agree on the contract accordingly.
How long does it take to pay for a construction contract?
How long does it take to pay for a construction contract?

Form and currency of construction contract payment

Pursuant to Clause 3, Article 21 of Decree 37/2015/ND-CP, the form of construction contract payment can be in cash, bank transfer and other forms agreed upon by the parties in accordance with the provisions of law and must be stated in the contract.

Pursuant to Clauses 1 and 2, Article 21 of Decree 37/2015/ND-CP, the currency used in payment for construction contracts is Vietnam Dong; The case of using foreign currency for payment is agreed upon by the contracting parties but does not contravene the provisions of law on foreign exchange. In a construction contract, there are jobs that require payment in many different currencies, the parties must clearly agree in the contract but must ensure the principle of payment currency matches the requirements of the document’s invitation for bids or request documents.

Some notes when making payments for the latest construction contract

When making payments for construction contracts, you need to pay attention to the following issues:

First, construction contract payment principles: Specified in Clauses 1 and 9, Article 19 of Decree 37/2015/ND-CP:

  1. Payment for construction contracts must be consistent with the type of contract, contract price, and conditions in the contract that the parties have signed. When making payments according to contractual agreements, the parties do not have to sign a contract appendix, except in cases of additional work not included in the contract.
  2. Payment for rising volumes (outside the contract) that do not have a unit price in the contract shall be carried out according to the contractual agreements or additional contract agreements that the parties have agreed upon before implementation and must be in accordance with the contract’s relevant legal provisions.

Second, the responsibilities of the parties in paying for construction contracts: Clause 2 to Clause 4 Article 19 of Decree 37/2015/ND-CP:

  1. The parties agree in the contract on the number of payments, payment period, payment time, payment term, payment documents, and payment conditions.
  2. The principal must pay in full (100%) the value of each payment to the contractor after deducting the advance payment and project warranty money as agreed in the contract, unless the parties have other agreements.
  3. In case during the payment period the parties are not eligible to pay in accordance with the provisions of the contract (there is no data to adjust the price, not enough time to determine product quality,…), then there is provisional payment possible. Once the conditions are met to determine the payment value, the principal must pay the contractor in accordance with the provisions of Clause 3, Article 19 of Decree 37/2015/ND-CP.

Third, payment for all types of construction contracts: Clauses 5 to 8, Article 19 of Decree 37/2015/ND-CP

  1. For package contracts: Payment according to a percentage of the contract price or the price of the project, work item, and work volume corresponding to the payment stages agreed upon by the parties in the contract, when Payment does not require detailed completion confirmation.
  2. For contracts with fixed unit prices and adjustable unit prices: Payment is based on the actual completed volume (including increased or decreased volume, if any) that is accepted for each payment and the unit price in contract or the unit price has been adjusted in accordance with the agreements in the contract.
  3. For time-based contracts, payment is regulated as follows: Expenses for experts are determined on the basis of the expert’s salary and related costs agreed upon by the parties in the contract multiplied by the time. Actual work is accepted (by month, week, day, hour). Expenses other than the expert’s remuneration are paid according to the payment method specified in the contract.
  4. For combined price contracts, payment: Must be made in accordance with the regulations on construction contract payments specified in Clauses 5, 6, 7, Article 19 of Decree 37/2015/ND-CP.

Fourth, construction contract payment terms and currency, construction contract payment method.

It is necessary to pay attention to the form of payment for construction contracts
It is necessary to pay attention to the form of payment for construction contracts

Consulting services on construction contract payment issues according to the latest regulations

In the construction field, paying contracts according to regulations not only helps protect your rights but also ensures transparency and progress of the project. Understanding that, Long Phan provides consulting services on construction contract payment issues according to the latest regulations to support your maximum in this process.

We provide consulting services as follows:

  • Consulting and drafting construction contracts: Ensure construction contracts have full terms on payment, progress, and related legal issues.
  • Consulting on payment methods: Guidance on contract payment methods such as payment according to progress, full payment, or payment based on work results.
  • Monitor and check the reasonableness of construction costs: Ensure that the costs incurred are reasonable and transparent, helping you avoid unexpected expenses.
  • Ensuring payment and construction progress: Helps you monitor payment progress and ensure on-time payments, avoiding delays affecting construction progress.
  • Consulting to protect your rights when construction contracts encounter problems: When problems arise with the quality of work or unexpected incidents, we provide consulting to help you protect your legal rights.

With a team of experienced legal experts in the construction field, Long Phan is committed to providing professional, dedicated, and effective consulting services. Please contact us immediately via the hotline: 0906735386 to receive the free and most effective consultation.