Practical Summary | Key Points to Note in Contract Review

In the practice of bidding and tendering, the signing of contracts must not deviate from the substantive content contained in the bidding documents or subsequently sign other agreements that deviate from the substantive content of the contract. Substantive content refers to The basic content determined by the bidding documents and the bidding documents includes clarifications, modifications, supplements, and other content by the tenderer to the bidding documents, mainly referring to project price, bidding plan, project duration, quality standards, etc., Substantive clauses must not be deviated from, otherwise legal liability will be borne.

So, what are the key points for contract review of bidding documents? This issue summarizes and analyzes the key points of the review. If there are any omissions or deficiencies, please supplement them in the comment area below.

1. Agreements on the rights and obligations of the employer and the contractor to create conditions and environment for construction.

In China, it is generally agreed in the contract that the contractor bears the responsibility, and the cost is borne by the employer; the main work of the contractor is to protect underground pipelines, adjacent objects, structures, cultural relics, and ancient trees around the construction site, but the cost is borne by the construction party, etc.

2. Agreement on contract price

There are three types of contract pricing: fixed price, adjustable price, and cost plus fee price. The pricing method is determined by mutual agreement. If a fixed price is adopted, the risk scope included in the contract price should be specified.

3. Agreement on contract duration

Mainly stipulates specific situations where the construction period can be extended except for reasons caused by the employer, supervising engineer, design reasons, power outage, water outage, gas outage, and force majeure. For example, human obstruction of construction, sudden damage to equipment or machinery not caused by the constructor, etc., can be grounds for extension.

4. Concealed works and intermediate acceptance

During construction, inspection and acceptance are carried out for sub-projects and sub-items that will be sealed by the next process. Generally includes water supply and drainage works, electrical pipeline works, waterproof works, etc. Since concealed works, once covered, if quality problems occur, re-covering and re-concealing will cause significant rework losses, so acceptance of concealed works must be done well. The specific parts of intermediate acceptance, methods, procedures, and requirements should be agreed upon.

5. Agreement on supply of materials and equipment

Responsibilities should be detailed, such as when the employer is responsible for materials and equipment or when the contractor is responsible for supply. Generally, the employer's responsibility is heavier when supplying, but the employer benefits by saving project costs and thus has the right to choose.

6. Agreement on subcontracting works

Both parties should agree on the specific names of the subcontracted works and the specific construction units undertaking the subcontracted works. It is best to agree on a separate contract signed by three parties for the subcontracted works.

7. Agreement on liability for breach of contract

The agreement on liquidated damages must comply with legal provisions and not be excessively higher or lower than the loss caused by one party's breach to the other; in addition, the scope of breach losses should be agreed upon, especially the scope of loss of expected benefits.

8. Agreement on dispute resolution methods

Negotiation, arbitration, and litigation can be agreed upon. If negotiation fails, arbitration or litigation can be submitted, but the contract cannot stipulate both arbitration and litigation simultaneously; only one of the two can be agreed upon.

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Source: China Bidding and Tendering Public Service Platform