Types of construction contracts: Detailed drafting instructions

Types of construction contracts help customers choose a construction contract suitable to the object and nature of the construction. Building a careful contract not only ensures the rights of the parties, but also contributes to the success of the entire project. Please follow this article by Long Phan immediately to help you pocket useful information about the necessary content when drafting construction contracts in the most detailed way.

Types of construction contracts today

Construction contract according to contract value

Pursuant to Clause 2, Article 3 of Decree 37/2015/ND-CP (supplementing Decree 50/2021/ND-CP) regulating types of construction contracts according to contract value include:

• Package contract;
• Fixed price contract;
• Contract based on adjusted unit price;
• Time-based contracts;
• Cost-plus-fee contracts;
• Other construction contracts;
• Contract based on combined price.

Construction contracts by work item

According to Clause 1, Article 3, Decree 37/2015/ND-CP (amended and supplemented by Decree 50/2021/ND-CP) stipulates types of construction contracts according to work categories including:

• Construction consulting contract;
• Construction contract;
• Contract for procurement of materials and equipment;
• Project design and construction contract;
• Contract for design and procurement of materials and equipment;
• Contracts for procurement of materials, equipment and construction works;
• Contract for design – procurement of materials and equipment – construction of works;
• Turnkey contract;
• Contract to provide human resources, construction machinery and equipment;
• Simple, small-scale construction contracts;
• Other types of construction contracts.

Note when drafting various types of construction contracts

When drafting a construction contract, you need to pay attention to each detailed clause to ensure the contract is clearly and strictly specified and protects the interests of the parties during the construction process and limits risks during implementation. Specifically, the contents that need to be noted in construction contracts are:

1. Legal basis applicable to construction contracts

Construction contracts in Vietnam must comply with specialized construction laws. Specifically, the law governing this contract will include:

• Law on Construction 2014 (amended and supplemented in 2020);
• Decree No. 37/2015/ND-CP provides detailed regulations on types of contracts in construction activities;
• Decrees, circulars and other detailed guidance documents in the field of construction.

2. Language used in construction contracts

• According to Clause 2 and Clause 3, Article 11 of Decree 37/2015/ND-CP, the language used in construction contracts in Vietnam must be Vietnamese;
• For construction contracts with foreign elements, the parties can agree to use bilingual, in which Vietnamese will be accompanied by another language (usually English). In case the parties cannot reach an agreement on the language used, English will be chosen as an additional language along with Vietnamese.

3. Clearly define the object and scope of work

• Job description: Clearly identify the work that the contractor will perform, including stages such as design, construction, installation, finishing and warranty. Detailed descriptions help avoid confusion about the work to be done;
• Scope of work: Specify the contractor’s scope of work, not only listing the work but also clearly stating what is not the contractor’s responsibility. This helps eliminate arguments about the parties’ obligations later.

4. Time and progress of implementation

• Start and completion times: Clearly state the start time of work and the deadline for completing each phase or the entire project. This helps parties manage progress and have a basis for assessing the level of completion;
• Late progress penalty clause: Provide regulations on penalties if the contractor does not meet the agreed schedule, except for force majeure cases.
• Exceptions: Clearly stipulate exceptional cases (for example: natural disasters, fires, market fluctuations affecting raw materials) to avoid fines for late progress when there is a reasonable reason.

5. Contract value and payment method

• Total contract value: Clearly state the contract value including taxes and other costs (if any). If the contract value can change due to external factors, a price adjustment mechanism needs to be stipulated;
• Payment method and schedule: Clearly identify payment installments (by stage or upon completion of each part of the project) and payment method (transfer, cash). This helps ensure cash flow throughout the construction process;
• Price adjustment: Regulates cases that allow price adjustment such as fluctuations in construction material prices or design changes. This helps avoid arguments about costs incurred during implementation.

6. Rights and obligations of the parties

• Contractor: Committed to complying with quality, progress and technical standards, ensuring labor safety and environmental protection throughout the construction process;
• Investor: Commitment to providing construction site, construction permit, on-time payment, and taking responsibility for objective conditions related to the project. Clearly defining rights and obligations helps both parties clearly understand their responsibilities.

7. Liability for breach of contract

• Penalty for breach of contract: Provide specific penalties for violations such as slow progress, poor quality or violating safety regulations. This creates incentives for parties to comply with contract terms;
• Compensation for damages: Regulations on compensation levels when damage occurs due to the fault of one of the parties. Compensation can be calculated according to the actual damage level or a pre-agreed level in the contract.

8. Dispute resolution method

• Negotiation and mediation: Provides priority for resolving disputes through negotiation and conciliation before bringing the case to arbitration or court;
• Arbitration or court: Specify the method of dispute resolution if conciliation is not possible, and identify the competent authority (commercial arbitrator or competent court).

9. Contract termination clause

• Conditions for terminating the contract: Regulates cases where a contract can be terminated if one of the parties seriously violates its obligations or due to a force majeure event;
• Liability upon termination: Determine the rights and obligations of each party when the contract is terminated, including payment obligations and property return (if any).

Some popular construction contract models today

For your convenience in consulting the content of the contract, Long Phan will provide a number of Construction Contract samples. most popular today. Specifically, there will be the following types of contracts:

• Factory construction contract

Refer to:  Sample Factory Construction Contract.doc.

• Housing construction contract

Refer to: Sample housing construction contract.doc.

• Housing repair contract

Refer to: Sample House Repair Contract.doc.

• Comprehensive construction contract

Refer to: Sample Package Construction Contract.doc.

• Rough construction contract

Refer to: Rough construction contract.doc.

Services for drafting, negotiating and signing construction contracts in Long Phan

With expertise and experience in the field of construction and contracts, Long Phan confidently advises and supports you with issues related to construction contracts. Our team is ready to accompany you in every stage from drafting to negotiating and concluding contracts, to ensure maximum benefits and minimize risks.

Our services include:

• Consulting on types of construction contracts suitable for each project;
• Provide standard construction contract templates;
• Consulting on indispensable terms for each type of construction contract;
• Consulting and guidance on how to draft contracts;
• Review, amend, supplement and draft construction contracts;
• Consulting on contract risks and remedies;
• Consulting, planning negotiations, and signing effective contracts;
• Representatives participating in negotiations;
• Consulting on other issues related to construction contracts.

To ensure that construction contracts achieve their objectives, compliance with regulations is extremely necessary. Long Phan hopes that with our support, you will successfully sign all types of construction contracts safely and effectively. If you need detailed support, please contact Long Phan via the hotline 0906735386 for timely advice and support during the implementation of your construction projects.