DECREE

ON CONTRACTS IN CONSTRUCTION ACTIVITIES

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the June 14, 2005 Civil Code;
Pursuant to the November 26, 2003 Construction Law;
Pursuant to the November 29, 2005 Bidding Law;
Pursuant to the June 19. 2009 Law Amending and Supplementing a Number of Articles of the Laws Concerning Capital Construction Investment;
At the proposal of the Minister of Construction,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Decree provides for contracts in construction activities (below referred to as construction contracts) under construction investment projects with 30% or more state capital.

2. This Decree applies to organizations and individuals involved in construction contracts under projects with 30% or more state capital in the Vietnamese territory. Organizations and individuals involved in construction contracts under projects with less than 30% state capital are encouraged to apply the provisions of this Decree.

3. Construction contracts under projects funded with official development assistance (ODA) may comply with relevant treaties to which the Socialist Republic of Vietnam is a contracting party and which contain provisions different from those of this Decree.

Article 2. Interpretation of terms

In this Decree, the terms below are construed as follows:

1. Construction contract means a civil contract established in the form of a written agreement between a principal and a contractor on the establishment, change or termination of the rights, responsibilities and obligations of the contracting parties for the performance of one some or all of jobs in construction activities.

2. Principal means an investor or a general contractor or a principal contractor.

3. Contractor means a general contractor or principal contractor in case the principal is an investor; a sub-contractor in case the principal is a general contractor or principal contractor. A contractor may be a partnership of contractors.

4. General conditions of a construction contract means a document enclosed with the contract defining basic rights and obligations of and relationships between parties to the contract.

5. Particular conditions of a construction contract means a document enclosed with the contract specifying or supplementing a number of general conditions applicable to the contract.

6. Construction contract annex means a document enclosed with a construction contract detailing, clarifying, amending or supplementing some clauses of the construction contract

7. Working day referred to herein means calendar day. except Sundays and public holidays prescribed by law.

8. Project standards means technical regulations, economic-technical norms, job performance processes, technical specifications and natural condition indicators elaborated or compiled by investors or their consultants for application to specific construction investment projects. Project standards must conform to regulations and standards promulgated or accredited by the State.

9. FEED design means a design made by a foreign consultant according to international practices after a work construction investment project is approved to serve as a basis for realizing detailed designs for works.

10. Main contract means a construction contract signed between an investor and a principal contractor or general contractor.

11. Sub-contract means a construction contract signed between a principal contractor or general contractor and a sub-contractor.

12. Lump-sum contract, fixed unit-price contract, adjustable unit-price contract, time-based contract and percentage contract referred to herein means the forms of lump-sum contract, unit-price (contract unit price or adjustable unit price) contract, time-based contract and percentage contract specified in the Government's Decree No. 85/2009/ND-CP of October 15, 2009 guiding the implementation of the Bidding Law and selection of contractors under the Construction Law.

Article 3. Types of construction contract

1. By characteristics of work, construction contracts are divided into the following types:

a) Construction consultancy contract (below referred to as consultancy contract) means a contract for the performance of one. some or all of consultancy jobs in construction activities;

b) Work construction contract (below referred to as construction contract) means a contract for the construction of works, work items or construction jobs according to work construction designs: work construction general contract means a construction contract for the construction of all works of an investment project.

c) Technological equipment provision contract (below referred to as equipment provision contract) means a contract for the provision of equipment for installation in construction works according to technological designs: technological equipment provision general contract means a contract for the provision of equipment for all works of an investment project.

d) Work engineering and construction (EC) contract means a contract for the performance of work or work item engineering and construction jobs; work engineering and construction general contract means a contract for engineering and construction of all works of an investment project.

e) Engineering and technological equipment provision (EP) contract means a contract for the performance of engineering jobs and provision of equipment for installation in construction works according to technological designs; engineering and technological equipment provision general contract means a contract for engineering and provision of technological equipment for all works of an investment project.

f) Technological equipment provision and construction (PC) contract means a contract for the provision of technological equipment for and construction of works or work items: technological equipment provision and construction general contract means a contract for the provision of technological equipment for and construction of all works of an investment project.

g) Engineering-technological equipment provision-construction (EPC) contract means a contract for the performance of all jobs from engineering, provision of technological equipment to construction of works and work items: EPC general contract means a contract for the engineering of, provision of technological equipment to and construction of all works of an investment project.

h) Turnkey general contract means a construction contract for the performance of all jobs of project formulation, engineering, provision of technological equipment and construction of works of a work construction investment project.

2. By contract prices, construction contracts are divided into the following types:

a) Lump-sum contract:

b) Fixed unit-price contract;

c) Adjustable unit-price contract;

d) Time-based contract:

e) Percentage contract.

Article 4. Principles of signing construction contracts

1. A construction contract shall be signed on the principles of free will, equality, good will, cooperation, lawfulness and in accordance with social ethics.

2. A construction contract shall be signed after the principal completes the selection of contractor(s) under regulations and involved parties finish contract negotiations.

3. The contract signing price must not exceed the bid-winning price (in case of bidding) or the approved bid package cost estimate (in case of contractor appointment). In case of addition of a work volume or an equipment quantity outside the volume or quantity indicated in the bidding dossier (dossier of requirements) which results in a contract signing price higher than the bid-winning price (proposed price) but neither changes investment objectives nor cause an excess of the approved total investment capital, the investor may decide on the contract signing price. In case such an addition results in a change in investment objectives or an excess of the approved total investment capital, the investor shall report such to the person with investment-deciding competence for decision.

4. For contracts for the performance of simple and small jobs or bid packages, all contractual contents may be written in a single contract document. For contracts for the performance of complex and large jobs or bid packages, contractual contents may be divided into general conditions and particular conditions of the contract.

5. In case a project investor signs contracts with multiple contractors for the performance of different bid packages, these contracts must be consistent and uniform in terms of schedule and quality, ensuring overall investment efficiency of the project.

6. In case the contractor is a partnership of contractors, partners shall reach a partnership agreement and the contract must contain signatures of all partners.

7. The principal and contractor shall appoint their representatives to negotiate and sign a construction contract. The parties" representatives have full power to decide on contract-related matters and shall take responsibility for their decisions.

Article 5. Principles of performing construction contracts

1. Parties to a construction contract shall strictly comply with the contract's provisions on scope of jobs, requirements on quality, quantity, category, deadline and mode, and other agreements in the contract.

2. A construction contract shall be performed in an honest and lawful manner, ensuring cooperation and mutual trust.

3. Parties to a construction contract may not infringe upon state and public interests and lawful rights and interests of other persons.

Article 6. Validity and legality of construction contracts

1. A construction contract is valid when fully meeting the following conditions:

a) The contracting parties have the full civil act capacity:

b) The contract signing principles specified in Clauses 1. 2. 3.6 and 7 Article 4 of this Decree are adhered to;

c) The contract is made in writing and signed by authorized representatives at law of the contracting parties. In case a contracting party is an institution, this party shall give a signature and append a seal;

d) The contractor has adequate operation and practice capability as required by law.

2. The date when a construction contract becomes valid is the date of its signing (with a seal, if any) and after the principal receives a contract performance security from the contractor (for contracts requiring contract performance security) or another date agreed upon by the parties in the contract.

3. Legality of construction contracts:

a) A valid construction contract is a legal ground binding on the principal, contractor and involved parties;

b) A valid construction contract serves as a ground for settling disputes between parties. Disputes arising outside a construction contract shall be settled in accordance with relevant provisions of law:

c) State administrations, agencies controlling, allocating or lending capital and inspecting, examining or auditing loans, and other relevant agencies shall base themselves on valid construction contracts to perform their respective functions and tasks under regulations and may not infringe upon lawful rights and interests of contracting parties.

Article 7. Management of performance of construction contracts

1. Within the ambit of their rights and obligations, contracting parties shall work out contract performance plans and measures in accordance with the signed contract in order to realize their agreements in the contract.

2. Depending on each type of construction contract, the management of performance of a construction contract may cover:

a) Management of contract performance progress;

b) Management of quality:

c) Management of work volume and contract price;

d) Management of labor safety, environmental protection and fire and explosion prevention and fighting:

e) Management of contract adjustments and other contents of the contract.

Chapter II

SPECIFIC PROVISIONS

Section 1

 INFORMATION ON CONSTR UCTION CONTRACTS

Article 8. Information on construction contracts

Information on a construction contract must be written in the contract, including:

1. Type of contract, contract number, name of bid package, name of project, construction location, and grounds for contract signing.

2. Transaction names of contracting parties and their representatives, their business registration addresses or transaction addresses, tax identification numbers, business registration certificates, account numbers, telephone and fax numbers, e-mail addresses, time and place of contract signing, and other relevant information.

In case the contractor is a partnership of contractors, sufficient information on partners must be written under Clause 2 of this Article, indicating the head of the partnership.

Article 9. Grounds for signing construction contracts

1. Grounds for signing a construction contract include requirements on jobs to be performed agreed upon by contracting parties, results of contractor selection, results of contract negotiation and finalization. and relevant provisions of law.

2. For EPC contracts, in addition to the grounds mentioned in Clause I of this Article, contract signing grounds include also approved work construct ion investment projects and FEED designs (in case designs are made by foreign consultants).

Article 10. Construction contract dossiers

1. A construction contract dossier comprises a written construction contract and its accompanying documents.

2. A contract must contain the following principal details: jobs and work volumes to be performed: quality and technical requirements: performance duration and schedule: takeover and handover conditions: contract price, advance, payment and settlement and payment method: warranty duration (for construction contracts involving works for which warranty is required): rights and obligations of contracting parties: liability for contract breaches: language used in the contract: and other agreements depending on each type of contract.

3. Documents accompanying a construction contract constitute an integral part of the contract. Depending on the scale, nature and scope of jobs and specific type of construction contract, documents accompanying a construction contract may include:

a) Notice of contract winning or contractor appointment document or written approval of contractor appointment:

b) Particular conditions and terms of reference:

c) General conditions:

d) Bidding dossier or dossier of requirements of the principal:

e) Design drawings and technical instructions;

f) Bid dossier or dossier of proposal of the contractor:

g) Contract negotiation minutes, and written amendments and supplements thereto;

h) Contract annexes;

i) Other relevant documents.

4. The contracting parties shall reach agreement on priority order for the application of documents accompanying the contract to settling contradictory issues (if any).

Article 11. Applicable law and language used in construction contracts

1. Construction contracts are regulated by the legal system of the Socialist Republic of Vietnam.

2. Language used in construction contracts is Vietnamese, except the cases specified in Clause 3 of this Article.

3. Languages to be used in a construction contract involving a foreign party are Vietnamese and English. For a bilingual construction contract, the contracting parties shall agree on a language to be used in the course of contract transaction and the priority order for the use of the languages in settling disputes over the contract (if any).

Section 2

 JOBS AND WORK VOLUMES, QUALITY REQUIREMENTS AND PERFORMANCE SCHEDULE

Article 12. Jobs and work volumes of construction contracts

1. Jobs and work volumes of a construction contract are those clearly agreed upon by the principal and contractor in the contract upon its signing. Jobs and work volumes shall be determined based on the bidding dossier or dossier of requirements, bid dossier or dossier of proposal, negotiation minutes and relevant legal documents. Depending on each type of construction contract, jobs to be performed shall be determined as follows:

a) For construction consultancy contracts, these jobs include planning; formulation of a work construction investment project: engineering; survey; construction supervision; verification of designs and cost estimates; and other consultancy jobs:

b) For construction contracts, these jobs include provision of construction materials, manpower, construction machinery and equipment and work construction activities:

c) For equipment provision contracts, these jobs include provision of equipment; provision of instructions for installation, use. test operation, operation, training and technology transfer (if any):

d) For EPC contracts, these jobs include engineering, provision of materials and equipment and construction of works:

e) For turnkey contracts, main jobs include formulation of an investment project; engineering; provision of equipment and construction of works: operation training and instruction, maintenance and repair; technology transfer; and test operation.

2. Adjustment of the work volume of a contract must comply with Article 35 of this Decree.

Article 13. Requirements on quality, takeover test and handover of products of construction contracts

1. Requirements on quality of products of a construction contract:

a) Quality of products of a construction contract must comply with and satisfy the quality requirements set out by the law. Regulations and standards or project standards (international. Vietnamese or branch) applied to products of works shall be agreed upon by the parties in the contract:

b) Imported equipment and goods not mentioned at Point a of this Clause are also subject to regulations on origin.

2. Takeover test and handover of products of completed jobs:

a) Agreements on procedures for takeover test and handover between contracting parties must comply with regulations on quality management of construction works:

b) Jobs subject to takeover test and handover: bases for takeover test and handover: the process and time of takeover test and handover of products of completed works: persons to participate in takeover test and handover: forms of takeover test and handover; regulations on signatories, minutes and documents on takeover test and handover shall be agreed by the parties in the contract;

c) Contracting parties may only conduct takeover test and handover of products satisfying quality requirements referred to in Clause 1 of this Article:

d) For works requested to be tested for takeover before construction of other works, the contractor shall notify them in advance to the principal for takeover test:

e) Faulty products (which fail to satisfy the contract's requirements) must be repaired. Those which arc irreparable must be discarded. The party at fault shall bear all expenses for repair, re-inspection and other expenses related to the correction of defects as well as assurance of the contract performance schedule.

Article 14. Duration and schedule of performance of construction contracts

1. The duration of performance of a contract is counted from the effective date of the contract to the date when the contracting parties fulfill contractual obligations and must conform to the project implementation schedule.

2. The contractor shall work out a detailed schedule of contract performance, then propose it to the principal for approval for use as a basis for contract performance.

3. The contract performance schedule must indicate dates of completion and handover of major jobs and products.

4. For big construction contracts with a long duration of performance, the construction schedule shall be worked out for each stage.

5. For equipment provision contracts, the equipment provision schedule must indicate dates of equipment handover, stating equipment quantities and categories for each handover.

6. For EPC contracts and turnkey contracts, in addition to the construction schedule for each stage, a schedule for each type of work (project formulation, engineering, equipment provision and construction) shall also be made.

7. Acceleration of the contract performance progress is encouraged provided the quality of the contract's products is assured. In case the progress acceleration brings about higher efficiency for the project, the contractor will be rewarded as agreed upon in the contract.

8. Adjustment of the contract performance schedule must comply with Article 38 of this Decree.

Section 3

 CONTRACT PRICES, ADVANCE, PAYMENT SETTLEMENT AND LIQUIDATION OF CONSTRUCTION CONTRACTS

Article 15. Prices of construction contracts

1. The price of a construction contract means a sum of money which the principal pledges to pay to the contractor for the performance of job(s) according to requirements on volume, quality, schedule and payment conditions and other requirements as agreed upon in the contract.

2. A contract price must clearly indicate expenses, taxes and charges (if any); an adjusted contract price must conform to the type of contract, contract price and be agreed upon by the parties in the contract.

3. There are following kinds of contract prices:

a) The lump-sum contract price, which is kept unchanged throughout the course of contract performance, for the volume of jobs within the scope of the signed contract, except the case of additional volume provided at Point a. Clause 1. Article 35 of this Decree;

b) Fixed unit-price contract price, which is determined on the basis of a fixed unit price for contractual jobs multiplied by the corresponding work volume. A fixed unit price means a price which is kept unchanged throughout the course of contract performance;

c) Adjustable unit-price contract price, which is determined on the basis of a fixed unit price for contractual jobs which has been adjusted based on market price fluctuation, multiplied by the corresponding work volume. Price adjustment based on market price fluctuation shall be made by the method prescribed in Clauses 3 and 4. Article 36 of this Decree;

d) Time-based contract price, which is determined on the basis of remuneration for experts and expenses other than remuneration for experts and the working duration (volume) calculated in month, week, day or hour.

- Remuneration for experts includes expert expenses determined on the basis of salaries of experts and related expenses as agreed upon by the contracting parties in the contract multiplied by the actual working duration (calculated in month, week, day or hour).

- Expenses other than remuneration for experts include travel and survey expenses, working office rent and other reasonable expenses.

e) Percentage contract price, which is calculated in a percentage of the value of a work or work volume. When the contractor completes all contractual obligations, the principal shall pay to the contractor a sum of money equal to a certain percentage indicated in the contract multiplied by the value of work or work volume.

4. For a construction contract covering many jobs subject lo different types of contract price, a combination of contract prices specified in Clause 3 of this Article may be applied.

5. Contract prices shall be determined as follows:

a) In case of bidding, the contract price shall be based on the bid-winning price and results of contract negotiation between the parties;

b) In case of contractor appointment, the contract price shall be based on the approved cost estimate and bid package price, proposed price and results of contract negotiation between the parties.

Article 16. Security for construction contract performance and guarantee for contract advance payment

1. Contract performance security means the application of any of the measures of deposit payment, collateral and submission of a letter of guarantee by the contractor to secure the performance of its obligations in the course of contract performance.

2. Contract performance security must be paid to the principal before the contract takes effect, accepted by the principal and exist until the warranty obligation is performed, except construction consultancy contracts and self-performed construction contracts.

3. In case the contractor is a partnership of contractors, each partner shall pay its contract performance security to the principal at a level equal to the contract value portion performed by that partner. If the partners agree that the head contractor of the partnership pays the contract performance security to the principal, the head contractor of the partnership shall do so and each partner shall pay its contract performance security to the head contractor in proportion to the contract value portion it performs, unless otherwise agreed by the contracting parties.

4. The contract performance security value shall be indicated in bidding dossiers or dossiers of requirements and must not exceed 10% of the contract price. When necessary to prevent a high risk, the contract performance security value may be higher but must not exceed 30% of the contract price and shall be approved by the investment decider.

5. The contractor may not receive back the contract performance security if it refuses to perform the contract after the contract takes effect and in a case of breach as specified in the contract.

6. The principal shall refund the contract performance security to the contractor as soon as the latter shifts to perform the warranty obligation and the principal receives the warranty security.

7. Guarantee for contract payment advance (in case the contracting parties agree on such guarantee):

a) Before the principal makes a contract advance payment to the contractor, the contractor shall pay to the principal a guarantee for the contract advance payment of a value equal to the advance amount. In case the contractor is a partnership of contractors, each partner shall pay to the principal a guarantee for contract advance payment of a value equal to the advance amount paid to it;

b) The value of the guarantee for contract payment advance shall be subtracted equal to the value of reduced advance amount upon each payment as agreed upon by the contracting parties.

Article 17. Construction contract advance payment

1. Construction contract advance payment means a sum of money advanced by the principal to the contractor for the performance of jobs under the contract.

2. Contract advance payment shall be made immediately after a construction contract takes effect and the principal receives the advance payment guarantee (if any).

3. The advance level, time of advance payment and retrieval of advances must be agreed upon by the parties in the contract.

4. The minimum advance level is prescribed
as follows:

a) For consultancy contracts, it is 25% of the contract price;

b) For work construction contracts, it is:

- 10% of the contract price, for contracts valued at over VND 50 billion:

- 15% of the contract price, for contracts valued at between VND 10 billion and 50 billion:

- 20%; of the contract price, for contracts valued at below VND 10 billion.

c) For equipment provision contracts, EPC contracts, turnkey contracts and other types of construction contracts, it is 10% of the contract price.

5. The maximum advance level is 50% of the contract price. In special cases, the maximum advance level shall be permitted by the investment decider.

6. Advance amounts shall be retrieved right at the first contract payment. The advance amount to be retrieved upon each payment shall be agreed upon by the contracting parties and indicated in the contract. The retrieval shall be completed when the paid value reaches 80% of the contract price.

The investor shall coordinate with the contractor in calculating an appropriate advance level and managing the use of advanced capital for proper purposes and objects and with efficiency. It is prohibited to leave advanced capital unused or use advanced capital for improper purposes. The investor shall retrieve advanced capital left unused or used for improper purposes.

7. In case of manufacturing components and
semi-finished products of large value for which
some materials must be seasonally stored, the principal and contractor shall agree on a plan on advance payment and advance level to assure contract performance progress.

Article 18. Payment for construction contracts

1. Payment for a construction contract must accord with the type of the contract, contract price and contractual terms.

2. Contracting parties shall agree in the contract on payment installments, periods, points of time, time limit, dossier and conditions.

3. The principal shall pay fully (100%) the value of each payment installment to the contractor after deducting the advance and work warranty amount as agreed upon in the contract, unless otherwise agreed by the parties.

4. For lump-sum contracts: Payment shall be made in a percentage of the contract price or prices of works, work items or job volumes corresponding to payment periods agreed upon by the parties in the contract and requires no detailed certification of completed volumes.

5. For fixed unit-price and adjustable unit-price contracts: Payment shall be made on the basis of actually completed volumes (including also increased or reduced volume, if any) which have been tested for takeover and unit prices in the contract or unit prices adjusted based on market price fluctuation as agreed upon in the contract.

6. For time-based contracts, payment is prescribed as follows:

a) Expenses for experts shall be determined on the basis of salaries of experts and related expenses as agreed upon by the parties in the contract multiplied by the verified actual working period (calculated in month, week, day or hour).

b) Expenses other than remunerations for experts shall be paid by the method specified in the contract.

7. For percentage contracts, payment shall be made according to a percentage of the contract price. Percentages of payment installments shall be agreed upon by the parties in the contract. When the contractor fulfills all contractual obligations, the principal shall pay to that contractor a sum of money equal to the percentage of the value of the completed work or job volume as indicated in the contract.

8. For contracts applying combined contract prices specified in Clause 4. Article 15 of this Decree, payment shall be made according to these contract prices.

9. Payment for additional volumes (outside the contract) without any unit prices indicated in the contract shall be made according to contract addenda agreed upon by the parties before the performance of these volumes and comply with relevant laws.

10. Payment time limit

The payment time limit shall be agreed upon by the parties but must not exceed 14 working days after the principal receives a complete and valid payment dossier as agreed upon in the contract and is specified as follows:

a) Within seven (7) working days after receiving a complete and valid payment request dossier of the contractor, the investor shall complete procedures and forward the payment request to the capital-allocating or -lending agency;

b) Within seven (7) working days after receiving a complete and valid payment dossier of the investor, the capital-allocating or -lending agency shall transfer the whole payment installment to the contractor.

Article 19. Construction contract payment dossiers

1. Construction contract payment dossiers shall be made by contractors in conformity with types of construction contract, construction prices and agreements in contracts. Payment dossiers (including also enclosed forms, if any) must be clearly indicated in construction contracts and certified by principals.

2. A contract payment dossier comprises the following major documents:

a) For lump-sum contracts:

- A written record of takeover test of volumes completed in the payment period with certification by representatives of the principal or the consultant (if any) and the contractor. This written record serves as written certification of the completion of works, work items or job volumes within the scope of works or jobs to be performed under the contract (within the scope of works or jobs to be performed according to designs, for work construction contracts: within the scope of consultancy tasks to be performed, for consultancy contracts) requiring no certification of detailed completed volumes:

- A calculation table of the values of additional volumes (if any) outside the signed contract, certified by representatives of the principal or consultant (if any) and the contractor:

- The contractor's payment request which must have the following details: value of the volume completed under the contract, value of the additional job volume (if any), deduction of advances and the value requested to be paid in the period following the clearing of these amounts, certified by representatives of the principal and the contractor.

b) For fixed unit-price contracts:

- A written record of takeover test of the actually completed volume (larger or smaller than the contractual volume) in the payment period certified by representatives of the principal or consultant (if any) and the contractor:

- A calculation table of the values of jobs without any unit prices indicated in the contract (if any), showing both volumes and unit prices of these jobs, certified by representatives of the principal or consultant (if any) and the contractor:

- The contractor's payment request which must have the following details: value of the volume completed under the contract, value of the additional job volume (if any), deduction of advances and the value requested to be paid in the period following the clearing of these amounts, certified by representatives of the principal and the contractor.

c) For adjustable unit-price contracts:

- A written record of takeover test of the actually completed volume (larger or smaller than the contractual volume) in the payment period, certified by representatives of the principal or the consultant (if any) and the contractor;

- A calculation table of unit prices adjusted based on market price fluctuation (also referred to as payment unit prices) according to agreements in the contract, certified by representatives of the principal or consultant (if any) and the contractor:

- A calculation table of the values of jobs without any unit prices indicated in the contract (if any), showing both volumes and unit prices of these jobs, certified by representatives of the principal or consultant (if any) and the contractor:

- The contractor's payment request which must have the following details: value of the volume completed under the contract, value of the additional job volume (if any), deduction of advances and the value requested to be paid in the period following the clearing of these amounts, certified by representatives of the principal and contractor.

d) For time-based contracts:

- A written record of verification of the actual working period or worksheet (work time calculated in month, week, day or hour) corresponding to jobs completed in the payment period, certified by representatives of the principal or consultant (if any) and the contractor. In case there arise additional jobs in the course of contract performance which require additional experts for whom the contract specifies no remuneration level, the parties shall agree on such remuneration level before payment. In this case, the payment dossier must include a calculation table of the values of additional jobs (if any) other than jobs to be performed under the contract, certified by representatives of the principal or consultant (if any) and the contractor:

- The contractor's payment request which must have the following details: value of the volume completed under the contract, value of the additional job volumes (if any), deduction of advances and the value requested to be paid in the period following the clearing of these amounts, certified by representatives of the principal and the contractor.

e) For percentage contracts:

- A written record of takeover test of the volume completed in the payment period, certified by representatives of the principal or consultant (if any) and contractor. This written record shall be made based on dossiers, documents or products completed by the contractor and certified by the principal corresponding to payment periods (installments) as agreed upon by the parties in the contract:

- A calculation table of the values of additional jobs (if any) other than jobs to be performed under the contract, certified by representatives of the principal or consultant (if any) and the contractor:

- The contractor's payment request which must have the following details: value of the volume completed under the contract, value of the additional job volume (if any), deduction of advances and the value requested to be paid in the period following the clearing of these amounts, certified by representatives of the principal and the contractor.

f) For construction contracts involving the job of equipment provision, completed job volumes shall be determined based on invoices of the contractor or bills of lading; written record of takeover test and handover of equipment, certificates of origin and other relevant documents.

3. For construction contracts applying combined contract prices, the payment dossier for each type of contract shall be compiled under relevant provisions of Clause 2 of this Article.

Article 20. Currencies and methods of payment for construction contracts

1. The currency used in payment for construction contracts is Vietnam dong. Contracting parties may agree to use a foreign currency in payment for their construction contracts not in contravention of law.

2. If a construction contract involves jobs requiring payment in different currencies, the parties shall include a clear agreement thereon in the contract on the principle that the payment currencies conform to requirements of the bidding dossier or the dossier of requirements (in case of contractor appointment).

3. Payment may be made in cash or by account transfer or other methods as agreed upon by the parties under law and indicated in the contract.

Article 21. Settlement of construction contracts

1. Settlement of a construction contract means the determination of the final total value of the contract payable by the principal to the contractor after the latter completes all jobs as agreed upon in the contract.

2. Contract settlement dossiers shall be made by contractors in conformity with types of contract and contract prices. Contents of a construction contract settlement dossier must conform to agreements in the contract and such a dossier comprises the following documents:

a) A written record of takeover test oi completion of all jobs under the contract:

b) A written certification of the value o\' additional job volumes (if any) outside the contract;

c) A calculation table of the construction contract settlement value (referred to as A-B settlement), clearly indicating the paid value and remaining value to be paid by the principal to the contractor;

d) A dossier of work completion and a work construction diary, for contracts involving construction jobs:

e) Other documents as agreed upon in the contract.

3. The time limit for submission of the contract settlement dossier shall be agreed upon by the parties but must not exceed sixty (60) days from the date of takeover test of all jobs performed under the contract, including also additional jobs (if any). For big contracts, that time limit may be extended but must not exceed one hundred and twenty (120) days.

Article 22. Liquidation of construction contracts

1. A construction contract shall be liquidated in the following cases:

a) The parties fulfill their obligations under the signed contract;

b) It is terminated (cancelled) under law.

2. The liquidation of a contract shall be completed within forty five (45) days after the contracting parties fulfill their contractual obligations or the contract is terminated (cancelled) under Point b. Clause 1 of this Article. For big contracts, the contract liquidation shall be made within ninety (90) days.

Section 4

 RIGHTS AND OBLIGATIONS OF PARTIES TO CONSTRUCTION CONTRACTS

Article 23. Common rights and obligations of the principal and the contractor

1. Rights and obligations of the panics to a construction contract shall be agreed upon by the parties in the contract and comply with law.

2. The principal or the contractor shall notify in writing the other party of the rights and responsibilities of its representative for contract performance management. When a part} changes its representative for contract performance management, it shall notify in writing the other party of the change. Particularly in case the contractor changes its representative for contract performance management or key staff members. the principal's approval is required.

3. Depending on each type of contract, the rights and obligations of the principal and the contractor are also provided in .Articles 24 thru 33 of this Decree.

Article 24. Rights and obligations of the consultancy principal

1. Rights of the consultancy principal:

a)To own and use consultancy products under the contract:

b) To refuse to conduct the takeover test of poor-quality consultancy products under the contract;

c) To inspect the quality of work performed by the contractor without obstructing the normal operation of the contractor:

d) Other rights provided by law.

2. Obligations of the consultancy principal:

a) To provide the contractor with information on requirements of jobs, documents and necessary equipment for job performance (if so agreed in the contract);

b) To guarantee the copyright to copyrightable consultancy products under the contract;

c) To settle proposals of the contractor according to its competence in the course of contract performance within seven (7) working days after receiving these proposals. Past that time limit, if the principal fails to settle proposals without any plausible reason, causing damage to the contractor, the principal shall take total responsibility and pay compensations (if any);

d) To pay to the contractor according to the payment schedule as agreed upon in the contract;

c) Other obligations provided by law.

Article 25. Rights and obligations of the consultancy contractor

1. Rights of the consultancy contractor: a) To request the principal to provide information and documents related to the consultancy task and working equipment (if so agreed upon in the contract):

b) To propose a change in conditions for the provision of consultancy services in the interest of the principal or upon detection of factors affecting the quality of consultancy products:

c) To refuse to perform unreasonable jobs outside the contract and unlawful requests of the principal;

d) To have its copyright protected under law (for copyrightable consultancy products):

e) Other rights provided by law.

2. Obligations of the consultancy contractor:

a) To complete contracted jobs according to the set schedule and quality as agreed upon in the contract:

b) For engineering contracts: To take part in the takeover test of the construction work together with the investor under regulations on quality management of construction works, author supervision and answering of the investor's inquiries about engineering dossiers:

c) To preserve and return to the principal documents and working equipment (if any) provided by the principal under the contract after completing the contracted jobs:

d) To promptly notify in writing the principal of insufficient information and documents and poor-quality working equipment with which the consultancy contractor cannot complete contracted jobs:

e) To keep confidential information relating to consultancy services as required by the contract or law:

f) Other obligations provided by law.

Article 26. Rights and obligations of the work construction principal

1. Rights of the work construction principal:

a) To cease the construction of a work and request the remedying of consequences caused by the contractor's violation of regulations on work quality, labor safety, environmental protection and fire and explosion prevention and fighting;

b) To inspect the quality of performed jobs and products processed or manufactured by the contractor's establishments without impeding the contractor's normal operation;

c) Other rights provided by law.

2. Obligations of the work construction principal:

a) In case the principal is the investor, a construction license is required under regulations;

b)To hand over the construction site in whole or part by part to the contractor for management and use according to the set schedule and agreements ol the contract:

c) To assign its persons to participate in managing and performing the contract and notify in writing the contractor of these persons;

d) To promptly provide the engineering dossier and relevant documents and supplies (if any) as agreed upon in the contract and prescribed by relevant laws:

e) To pay to the contractor according to the payment schedule in the contract;

f) To supervise the work construction;

g) To inspect measures taken by the construction contractor to assure labor safety, environmental protection, fire and explosion prevention and fighting;

h )To conduct takeover test and make payment and settlement of the contract within the set time limit;

i) To clearly define tasks and powers of consultants in case of hiring organizations or individuals to provide consultancy services:

j) To promptly consider and approve in writing the contractor's proposals related to engineering and construction in the course of work construction:

k) Other obligations provided by law.

Article 27. Rights and obligations of the work construction contractor

1. Rights of the work construction contractor:

a) To propose to the principal a work volume arising outside the contract: to refuse to perform jobs outside the contract not yet agreed upon by the two parties and unlawful requests of the principal:

b) To change construction measures after obtaining the principal's approval in order to accelerate the construction progress and assure quality, safety and efficiency of the work on the basis of the price of the signed contract:

c) To request the principal to pay loan interests due to late payment under agreements in the contract; to claim compensations for damage caused by the late handover of the construction site and other damage caused by the principal;

d) Other rights provided by relevant laws.

2. Obligations of the work construction contractor:

a)To supply construction workers, materials, machines and equipment and other related physical conditions in sufficient quantities and proper categories under the contract; to make construction blueprints (in case the contractor undertakes to do so) for performing jobs under the signed contract;

b) To receive and manage the construction site, and preserve the middle line, ground level and boundary landmarks of the work:

c) To conduct construction according to the design, project standards, construction regulations and standards, and to assure quality, construction progress, safety, environmental protection and fire and explosion prevention and fighting;

d) To keep a work construction diary;

e) To experiment materials and test construction equipment and products under the State's regulations on quality management of construction works, project standards, technical regulations and standards;

f) To manage its employees working in the construction site, and assure safety, security and order and no bad impacts on surrounding residential areas:

g) To work out measures to organize construction, make a construction completion dossier and take part in the takeover test of the work:

h) To take responsibility for the quality of the work it constructs. To correct defects in work construction jobs it performs:

i) To coordinate with other contractors in activities carried out in the same construction site;

j) To periodically report to the principal on the construction progress, workers and main equipment for work construction;

k) To move its supplies, machines, equipment and other assets out of the construction site after the work is tested for takeover and handed over, unless otherwise agreed upon in the contract:

1) To return the ground to its original state as agreed upon in the contract;

m) To keep confidential information on the contract or as prescribed by law:

n) Other obligations provided by law.

Article 28. Rights and obligations of the equipment provision principal

1. To provide necessary information and documents and ground areas for equipment installation to the contractor.

2. To coordinate with the contractor in training, transferring technologies and providing instructions on installation, use and operation.

3. To refuse to conduct takeover test and receive technological equipment handed over not according to the agreements on quantity, quality, category and origin.

4. To take full responsibility for the quality of and intellectual property rights to technological designs it provides to the contractor.

5. Other rights and obligations provided by law.

Article 29. Rights and obligations of the equipment provision contractor

1. To hand over technological equipment to the principal according to the agreements on quantity, quality, place and time of delivery, packaging and preservation methods and origin, and other agreements in the contract.

2. To provide to the principal sufficient necessary information on technological equipment; to guide the installation, use. operation, preservation and maintenance of technological equipment: to train managerial staff and workers to operate and use the work (if so agreed upon in the contract).

3. To conduct test operation of technological equipment.

4. Intellectual property over technological equipment:

a) Technological equipment provided by the contractor must assure to intellectual property rights. The contractor may not provide technological equipment infringing upon intellectual property rights. The contractor shall take full responsibility for any dispute over intellectual property rights to technological equipment provided;

b) In case technological equipment is manufactured according to designs or data provided by the principal, the contractor will not be responsible for complaints about intellectual property infringements stemming from such technological equipment:

c) One contracting party shall take responsibility for failure to promptly notify the other party of a third party's complaints about intellectual property rights to technological equipment upon knowing or by the time it should have known such complaints.

5. Other rights and obligations provided by law.

Article 30. Rights and obligations of the EPC principal

1. Rights of the EPC principal:

a) To refuse to take over products not up to the quality standard agreed upon in the contract and technological equipment not according to the agreement on quantity, quality, category and origin and products infringing upon intellectual property rights:

b) To inspect the performance of jobs by the contractor according to the signed contract without impeding the contractor's normal operation:

c) To cease the performance of jobs under the contract and request the remedying of consequences upon detecting that the contractor performs these jobs in violation of the agreements in the signed contract or the State's regulations:

d) To request the contractor to hand over dossiers and documents related to products of the contract according to the signed contract:

e) To consider and approve the list of sub­contractors that are fully qualified but not yet named in the EPC contract at the request of the contractor:

f) Other rights provided by law.

2. Obligations of the EPC principal:

a) To pay to the contractor according to the payment schedule agreed upon in the contract:

b) To assign its persons to participate in managing and performing the contract and notify in writing the contractor of these persons:

c) To provide to the contractor information, documents and facilities necessary for job performance (if so agreed upon in the contract):

d) To promptly conduct takeover test, appraise and approve technical designs and construction drawing designs of works and work items under regulations;

e) To apply for a construction license under regulations, and hand over clear grounds to the contractor according to the contract performance schedule:

f) To supervise the performance of jobs according to the signed contract: to inspect measures to assure labor safety, environmental protection, fire and explosion prevention and combat under regulations;

g) To reach agreement with the contractor on the bidding dossier for procurement of technological equipment (if so agreed upon in the contract):

h) To conduct takeover test and make payment and settlement of the contract according to the set schedule:

i) To guarantee the copyright to consultancy products under the contract:

j) To organize the training of managerial staff and workers to operate and use the work;

k) Other obligations provided by law.

Article 31. Rights and obligations of the EPC contractor

1. Rights of the EPC contractor:

a) To request the principal to provide information, documents and working equipment (if so agreed upon in the contract) for the performance of jobs of the contract according to the signed contract:

b) To propose to the principal jobs arising outside the signed contract: to refuse to perform jobs outside the signed contract not yet agreed upon by the two parties or unlawful requests of the principal:

c) To organize and manage the performance of jobs under the signed contract:

d) Other rights provided by law.

2. Obligations of the EPC contractor:

a) To provide sufficient workforce, materials, machines, equipment and other necessary facilities for the performance of jobs under the contract;

b) To receive, manage, preserve and return documents and facilities provided by the principal (if so agreed upon in the contract);

c) To notify the principal of insufficient information and documents or poor-quality working facilities which affect the performance of jobs under the signed contract;

d) To keep confidential information related to the contract as agreed upon in the contract or provided by law:

e) To perform jobs under the contract, assuring safety and quality, according to the set schedule and other agreements in the contract:

f) To make designs (technical designs and construction drawing designs) of work items and major works of the bid package and project in conformity with approved basic designs or FEED designs and submit them to the investor for appraisal and approval:

g) To organize the procurement, manufacture and provision of technological equipment to meet requirements and performance progress of the contract; to select sub-contractors (if any) through bidding or appointment, then propose them to the investor for approval: to reach agreement with the investor on contents of the bidding dossier for procurement of technological equipment (if so agreed upon in the contract):

h) To train managerial staff and workers to operate and use the work, and transfer technologies and accompanying technical services (if so agreed upon in the contract):

i) To perform jobs of testing, adjustment and test operation of the whole work and hand over the completed work to the principal as agreed upon in the contract and provided by current law;

j) To guarantee that products it provides do not infringe upon intellectual property rights under law;

k) To hand over dossiers and documents related to products of the contract to the principal under the signed contract:

l) Other obligations provided by law.

Article 32. Rights and obligations of the turnkey contract principal

In addition to the rights and obligations provided in Article 30 of this Decree, the turnkey contract principal also has the obligation to conduct the takeover test of the construction investment project before submitting it to the investment decider for appraisal and approval or appraise and approve the project according to its competence.

Article 33. Rights and obligations of the turnkey contract contractor

In addition to the rights and obligations provided in Article 31 of this Decree, the turnkey contract contractor also has the obligation to formulate the construction investment project and take part in defending the project together with the principal before the investment decider and finalizing the project at the request of the principal as agreed upon in the contract.

Section 5

 ADJUSTMENT OF PRICES AND CONSTRUCTION CONTRACTS

Article 34. Principles of adjusting prices and construction contracts

1. Adjustment of prices and construction contracts max be effected during the period of contract performance under signed contracts. In case the adjustment of prices and construction contracts (post-adjustment prices) will not result in an excess of the approved total investment capital, investors may decide on the adjustment. In case it will result in an excess of the approved total investment capital, the adjustment shall be reported to persons with investment-deciding competence for permission.

2. For lump-sum contracts, contract adjustment may only be made for additional job volumes outside the signed contracts (for work construction contracts or consultancy contracts, the adjustment may only be made for jobs other than those which must be performed according to designs or consultancy tasks which must be performed, respectively).

Article 35. Adjustment of work volumes in construction contracts

1. Work volumes in a construction contract may be adjusted only in the following cases:

a) For lump-sum contracts and percentage contracts: In case there arise reasonable jobs outside the signed contract (jobs other than those which must be performed according to designs or consultancy tasks which must be performed for work construction contracts or consultancy contracts, respectively). In this case, if the adjustment of work volumes will not result in a change in investment objectives or an excess of the approved total investment, the investor and the contractor shall calculate, reach agreement and sign an annex to the contract. Any excess of the approved total investment shall be considered and decided by the person with investment-deciding competence. If no agreement is reached, those additional work volumes will form a new bid package and the selection of a contractor to perform this bid package shall be made under current regulations:

b) For fixed unit-price contracts and adjustable unit-price contracts: In case work volumes which are actually completed and tested for takeover are smaller or larger than those indicated in the signed contract, payment shall be made according to actually completed volumes;

c) For time-based contracts: In case the actual period of time for work volume completion by the contractor is shorter or longer than that indicated in the signed contract, the payment shall be made according to the actual period of time.

2. For work volumes arising outside the signed contract and having no unit prices indicated in the contract, the contracting parties shall reach prior agreement on unit prices for performance of these work volumes.

Article 36. Adjustment of prices of construction contracts

1. Adjustment of contract prices may apply only to fixed unit-price contracts, adjustable unit-price contracts and time-based contracts. In a construction contract, contracting parties shall agree on specific cases in which contract price adjustment is permitted, and the order, scope. method of and ground for contract price adjustment. The method of contract price adjustment must be suitable to the type of contract price and characteristics of jobs in the contract.

2. Contract price adjustment may be made through adjusting unit prices and work volumes and is prescribed as follows:

a) In case the additional work volume is larger than 20% of the corresponding work volume indicated in the contract or has no unit price indicated in the contract, the contracting parties shall agree to determine a new unit price on the principle agreed upon in the contract on unit prices for additional volumes;

b) In case the additional work volume is equal to or smaller than 20% of the corresponding work volume indicated in the contract, the unit price indicated in the contract, including also the one adjusted under the agreement in the contract (if any), may be used for payment;

c) For fixed unit-price contracts and time-based contracts, when prices of fuels, supplies and equipment subject to valorization measures applied by the State under the Ordinance on Prices abnormally fluctuate or when the State revises tax and salary policies, directly affecting the contract price, unit price adjustment may be made when it is permitted by the investment decider and agreed upon in the contract:

d) For adjustable unit-price contracts, the unit price in the contract may be adjusted by the method guided in Clause 3 or 4 of this Article for work volumes for which the unit price shall be adjusted based on market price fluctuation after a given period of time from the effective date of the contract as committed by the principal and the contractor at the time of contract signing.

3. Methods of construction contract price adjustment:

a) The application of price adjustment methods must be suitable to characteristics of work, type of contract price and agreed upon by the parties in the contract;

b) Input data for price calculation and adjustment must be suitable to jobs indicated in the contract. The contract must indicate the use of competent state agencies' sources of information on prices or price indexes for price adjustment according to the following formula:

G_TT = GHD x Pn

In which:

- GTT is the payment price corresponding to the work volume completed and tested for takeover.

- GHD is the price in the contract corresponding to the work volume completed and tested for takeover.

- Pn is the coefficient for adjustment (increase or decrease) applicable to the contract payment for the work volume completed and tested for takeover during the period of time "n".

4. The Ministry of Construction shall specifically guide methods of construction contract price adjustment.

Article 37. Adjustment of construction contracts

1. The adjustment of a contract covers adjustment of work volume, adjustment of contract price, adjustment of contract performance schedule and other contents (if any) agreed upon by the parties in the contract.

2. In case the adjustment of a construction contract will not result in a change in investment objectives or an excess of the approved total investment, the investor may decide on the adjustment. In case the adjustment will result in a change in investment objectives or an excess of the approved total investment, it must be permitted by the person with investment- deciding competence.

Article 38. Adjustment of construction contract performance schedule

1. In a construction contract the parties shall agree on cases eligible for contract performance schedule adjustment. In case the date of contract performance completion is behind the set contract performance schedule, the contracting parties shall clearly identify the responsibility of each party for damage caused by the delay.

2. The contract performance schedule may be adjusted in the following cases:

a) An earthquake, storm, flood, tsunami, fire, enemy sabotage or another force majeure event occurs;

b) The scope of jobs, designs or construction measures change at the request of the principal, affecting the contract performance progress;

c) The construction ground is handed over not in accordance with agreements in the contract or related procedures slows down the construction contract performance but the contractor is not at fault.

3. In case the adjustment of the contract performance schedule will not extend the deadline for project completion, the investor and the contractor may agree on the adjustment. In case the adjustment will extend the project completion deadline, the investor shall report such to the investment decider for consideration and decision.

Section 6

 SUSPENSION OR TERMINATION OF CONSTRUCTION CONTRACTS. BONUSES, AND FINES FOR BREACHES OF CONSTRUCTION CONTRACTS

Article 39. Suspension of performance of jobs in construction contracts

1. Circumstances in which the performance of jobs in a construction contract may be suspended and the right to suspension; order and procedures for suspension, and level of compensation for damage caused by suspension must be agreed upon by the principal and contractor in the contract.

2. A construction contract may be suspended in the following cases:

a) The principal decides to suspend the performance of jobs in the contract when the contractor fails to satisfy requirements on quality, labor safety and progress under the signed contract:

b) The contractor exercises the right to suspend the performance of jobs in the contract when the principal fails to pay to the contractor 28 days after the payment deadline specified in Clause 10. Article 18 of this Decree, unless otherwise agreed upon by the parties.

3. Before any party suspends the performance of jobs in the contract, it shall notify such in writing to the other party, clearly stating the reason for suspension. The principal and contractor shall negotiate on and settle the case for continued performance of the signed contract's agreements, except force majeure cases.

Article 40. Termination of construction contracts

1. Circumstances in which a construction contract may be terminated, the right to termination of contract, order and procedures for termination, and level of compensation for damage caused by termination must be agreed upon by the parties in the contract.

2. Each party has the right to terminate the contract without having to pay compensation for damage in the cases specified in Clauses 7 and 8 of this Article.

3. In case the performance of a contract has been already suspended but the breaching part still fails to remedy its fault during the period of time agreed upon by the parties without any plausible reason, the suspending party may terminate the contract.

4 In case any party unilaterally terminates the contract for a reason for which the odier party is not at fault, the contract-terminating party shall pay compensation for damage caused to the other party.

5. Before any party terminates the contract, it shall notify such in writing to the other party within a certain time limit which is agreed upon in the contract but must be at least twenty one (21) days, clearly stating the reason for termination. If the contract-terminating party fails to do so. causing damage to the other party, it shall pay compensation for damage caused to the latter.

6. A construction contract becomes invalid from the time of termination and the parties shall

complete contract liquidation procedures within a time limit which is agreed upon in the contract but must not exceed 45 days from the date of contract termination. Past that time limit, if any party fails to carry out contract liquidation procedures, the other party has the full right lo decide on the contract termination.

7. The principal may terminate the contract in the following cases:

a) The contractor goes bankrupt or transfers its contractual benefits to its creditor without the principal's consent.

b) The contractor refuses to perform jobs under the contract or fails lo perform jobs under the contract for 45 consecutive days, unless it is so permitted by the principal.

8. The contractor may terminate the contract in the following cases:

a) The principal goes bankrupt or is dissolved.

b) Jobs are suspended for 45 consecutive days due to the principal's fault, unless otherwise agreed upon by the parties.

c) The principal fails to pay to the contractor 45 days after the principal receives a complete and valid payment dossier, unless otherwise agreed upon by the parties.

9. Two (2) days after the date of termination of a construction contract, the contractor shall remove all supplies, workforce, machine, equipment and other assets under its ownership from the construction site. Past that time limit, if the contractor still fails to do so, the principal has the right to dispose of these assets.

Article 41. Contract bonuses, fines for contract breaches

1. Contract bonuses and fines for contract breaches must be specifically indicated in the contract. Bonus and fine levels shall be agreed upon by the contracting parties but must comply with Clause 2 of this Article.

2. The bonus level must not exceed 12% of the saved contract value and the fine level must not exceed 12% of the breached contract value. The source for bonus payment comes from profits brought about by the early commissioning of the work of required quality or the reasonable saving of contract performance expenses.

Article 42. Responsibilities for construction contract breaches

In addition to responsibilities for contract breaches specified in this Decree and relevant laws, the principal and contractor shall take responsibility for the following specific contract breaches:

1. The contractor shall pay compensation to the principal in the following cases:

a) The quality of jobs is not up to that agreed upon in the contract or the performance of jobs is prolonged due to the contractor's fault;

b) Damage is caused to humans and assets during the warranty period due to the contractor's fault.

2. The principal shall pay compensation to the contractor in the following cases:

a) Jobs of the contract are left uncompleted, delayed or stopped, risks occur or unusable machines, equipment, materials and construction components are transferred to the contractor due to the principal's fault;

b) The principal provides documents and conditions necessary for jobs not in accordance with agreements in the contract, causing work re-construction, suspension or adjustment of jobs by the contractor:

c) The construction contract requires the principal to provide raw materials, materials and equipment or contains other requirements which the principal fails to satisfy on schedule or improperly satisfies:

d) The principal that delays payment shall pay compensation to the contractor at the overdue interest rate announced by the commercial bank at which the principal has an account from the first day of late payment to the date of full payment to the contractor.

3. In case any party fails to fulfill its contractual obligations or improperly fulfills its contractual obligations, it shall, after fulfilling its obligations or applying remedial measures, also pay compensations for other damage caused lo the other party. The compensation level must be equal to the extent of the damage.

In case any party breaches the contract due to a third party's fault, the breaching party shall bear the responsibility for contract breach before the other party. Any dispute between the breaching party and a third party shall be settled under law.

In case a contract breach committed by any party infringes upon the body, rights or assets of the other party, the suffering party may request the other party to bear the responsibility for the contract breach as agreed upon in the contract and provided by relevant laws.

Section 7

 COMPLAINTS AND SETTLEMENT OF CONSTRUCTION CONTRACT DISPUTES

Article 43. Complaints in the course of performance of construction contracts

1. Complaint in the course of performance of a construction contract mentioned in this Decree means that any party detecting the other party's improper performance of or failure to perform its contractual obligations may request the other party to comply with contents of the signed contract. The detecting party may lodge a complaint against the other party regarding such matter.

2. Any party lodging a complaint against the other party shall show specific grounds and evidence to clarify the complained contents.

3. Within 30 days after detecting matters incompatible with the signed contract, the detecting party shall promptly notify the other party of such contents and complain about these matters. Past that time limit, if no party lodges a complaint, the parties shall comply with signed agreements.

4. Within 30 days after receiving a complaint, the complained party shall show grounds and evidence to prove that the matters complained about by the other party are incompatible with the signed contract. In case the :complained party's grounds and evidence are neither convincing nor reasonable, it shall accept the other party's complaint. Past that time limit, if the complained party gives no opinion, it shall be regarded as having accepted matters complained about by the other party.

Complaints of each party shall be sent to the correct address for transaction or information exchange as agreed upon by the parties in the contract.

Article 44. Settlement of disputes over construction contracts

1. The contracting parties shall negotiate and settle any dispute on the basis of the signed contract. In case no agreement is reached by the parties, the settlement of disputes shall be made through conciliation or arbitration or at court under law.

2. In case the contracting parties have reached an agreement on settlement of contractual disputes through conciliation, the conciliatory agency or organization may be named in the contract or identified by the parties upon the occurrence of a dispute.

3. In case any party disagrees with the conciliation conclusion, it may request an arbitration or a court to settle the dispute. Procedures for dispute settlement by arbitration or at court comply with law.

4. The time limit for requesting an arbitration or initiate a lawsuit at a court for settling a dispute over a construction contract is two years after the parties' lawful rights and interests are infringed upon.

5. Invalidity or termination of contracts does not affect the validity of contractual terms on dispute settlement.

Section 8

 OTHER CONTENTS OE CONSTRUCTION CONTRACTS

Article 45. Insurance and warranty under construction contracts

1. Insurance

a) Insurance for construction works shall be purchased by investors. In case insurance cost has been included in the contract price, the contractor shall purchase work insurance under regulations;

b) The contractor shall purchase necessary types of insurance (insurance for equipment and insurance for a third party) to assure its operation under law.

2. Warranty

a) The contractor shall provide warranty for the work and equipment according to relevant agreements in the contract. The warranty for works is provided as follows:

- For special-grade and grade-I works: The warranty duration is at least 24 months from the dale the investor signs the written record of takeover test for commissioning the work and the warranty level is 3% of the contract value.

- For other works: The warranty duration is at least 12 months and the warranty level is 5% of the contract value.

b) Warranty security may be provided in the form of guarantee or another form as agreed upon by the parties.

c) The contractor may only refund the work warranty security upon the expiration of the warranty duration and after obtaining the investor's certification of warranty completion.

d) In the warranty duration, the contractor shall conduct repair under warranty within twenty one (21) days after receiving the principal's request for repair. Within that time limit, if the contractor fails to conduct repair under warranty, the principal may use the warranty sum lo hire another organization or individuals to conduct the repair.

Article 46. .Sub-contracts

1. A main contract or general contract may include many sub-contracts. Upon entering into a sub-contract, the principal contractor or general contractor shall comply with the following regulations:

a) Sub-contractors not on the list of sub­contractors enclosed with the contract must be approved by the investor, unless otherwise agreed upon by the parties;

b) The principal contractor or general contractor must be answerable to the investor for the progress, quality. labor safety, environmental protection and its defects and jobs performed by sub-contractors;

c) The principal contractor or general contractor may not transfer all jobs under the contract to sub-contractors for performance.

2. Sub-contractors appointed by the investor (if any)

a) A sub-contractor appointed by the investor means a contractor appointed by the investor for the principal contractor or general contractor to hire as a sub-contractor to perform some specialized jobs with hi-tech requirements or when the principal contractor or general contractor fails to keep up with the contract performance schedule as required by the investor.

The contracting parties shall reach specific agreements on circumstances in which the investor may appoint a sub-contractor;

b) The principal contractor or general contractor may deny the sub-contractor appointed by the investor if jobs currently performed by the principal contractor or general contractor or sub-contractor still comply with agreements in the contract or it has sufficient grounds lo believe that the sub-contractor appointed by the investor is not up to the contract's requirements.

3. The investor may pay directly to the sub contractor based on the payment proposal of the principal contractor or general contractor. In this case, the parties shall reach agreement in the main contract.

Article 47. Labor safety, environmental protection and fire and explosion prevention and fighting

1. Responsibilities of the contracting parties for labor safety must be agreed upon in the contract and are prescribed as follows:

a) The construction contractor shall work out safety measures for humans and works on the construction site, including adjacent works. In case safety measures involve many parties, these parties' agreement is required;

b) Safety measures and labor safety rules must be publicly displayed on the construction site for workers' information and compliance. Persons to provide instructions or warnings for accident prevention in dangerous positions on the construction site shall be arranged;

c) The construction contractor, the investor and related parties shall regularly inspect and supervise labor safety on the construction site. Upon detecting breaches of labor safety rules. they shall stop construction activities. Persons who let breaches of labor safety rules occur within the scope of their management shall be held responsible before law;

d) The construction contractor shall train their employees in and guide and disseminate labor safety regulations among their employees. For some jobs with stringent labor safety requirements, workers must possess certificates of training in labor safety;

e) The construction contractor shall supply sufficient labor protection and safety devices to its workers working on the construction site under regulations;

f) Upon occurrence of a labor incident, the construction contractor and related parties shall handle it and report it to the state management agency in charge of labor safety under law and concurrently remedy consequences and pay compensation for damage caused by the contractor that fails to assure labor safety.

2. The responsibility of each party for protecting the construction environment must be agreed upon in the contract and is prescribed as follows:

a) The construction contractor shall take measures lo assure a clean environment for workers on the construction site and to protect the surrounding environment, including anti-dust, anti-noise and site-cleaning measures. Wastewater, solid waste and other kinds of waste must be collected and treated up to environmental standards and technical regulations. For construction works in urban centers, measures to cover the construction site and collect and transport waste to designated places must be taken;

b) In the course of transportation of construction materials and waste, measures must be taken to cover vehicles and assure safety and environmental sanitation:

c) The construction contractor and the investor shall inspect and supervise the protection of the construction environment, and concurrently submit to the inspection and supervision by the state management agency in charge of environment. In case the construction contractor fails to comply with environmental protection regulations, the investor and the state management agency in charge of environment may suspend the construction and request the contractor to properly take environmental protection measures:

d) Persons who let polluting acts occur in the course of work construction shall be held responsible before law and pay compensation for damage caused by their fault.

3. Construction contract parties shall comply with current regulations on fire and explosion prevention and fighting.

Article 48. Construction site electricity, water and security

The parties shall agree in the contract on their rights and obligations to supply and pay charges for construction site electricity, water and security.

Article 49. Transportation of technological equipment

1. The contractor shall notify the principal of the date of equipment delivery at least 21 days in advance.

2. The contractor shall take responsibility for the packaging, loading, unloading, transportation, storage and preservation of equipment, unless otherwise agreed upon by the parties.

3. The contractor shall pay compensation to the principal for any damage and loss and expenses for the transportation of equipment by the contractor.

Article 50. Risks and force majeure circumstances

1. Risk means a danger likely to adversely affect the performance of a construction contract. A contract must indicate the responsibility of the parties to handle a risk upon its occurrence to each party and the responsibility of each party upon occurrence of a risk.

2. Force majeure circumstance means a risky event which is irresistible once it occurs and unforeseeable upon the signing of a construction contract, such as earthquake, storm, whirlwind. flood, tsunami, landslide, volcano eruption, war or epidemic outbreak.

3. When a party finds itself in a force majeure circumstance, it shall notify such in writing to the other party as soon as possible.

4. The parties shall agree in the contract on actions taken in response to force majeure circumstances, including notification of force majeure circumstances, identification of responsibilities of the parties for force majeure circumstances, termination of and payment for the construction contract in force majeure circumstances (if any).

Chapter III

IMPLEMENTATION PROVISIONS

Article 51. Effect

This Decree takes effect on July I. 2010. From the effective date of this Decree, the provisions of the Government's Decree No. 99/2007/ND-CP of June 13, 2007 on contracts in construction activities, cease to be effective.

Article 52. Organization of implementation

1. Construction contracts performed before the effective date of this Decree are not required to comply with this Decree. For contracts in the process of negotiation and not yet concluded, investment deciders shall decide on the application of this Decree.

2. The Ministry of Construction shall guide and inspect the implementation of regulations on construction contracts; guide methods of adjusting construction contract prices and other relevant provisions of this Decree to meet the requirement of the state management of construction contracts, and promulgate model construction contracts.

3. Organizations and individuals are encouraged to apply the set of conditions of contract of the International Federation of Consulting Engineers (FIDIC) and model construction contracts to the establishment and performance of construction contracts.

4. Ministers, heads of ministerial-level agencies and government-attached agencies, chairpersons of provincial-level People's Committees, heads of political organizations, socio-political organizations and socio-politico-professional organizations, chairmen of boards of directors of state economic groups and corporations, and concerned organizations and individuals shall implement this Decree.