New Circular Regulates Construction Contracts
Earlier this month, the Ministry of Construction (“MOC”) published Circular No. 02/2023/TT-BXD (“Circular 02”). Taking effect from 20 April 2023, Circular 02 guides a number of contents of construction contracts and announces the templates of particular agreements.
In short, Circular 02 removes almost all of the provisions introduced under previous regulations. Now, therefore, the execution of construction contracts in applicable projects – such as payment, interim payment, workload adjustment, unit price, contract price, and progress of contract implementation – will now only be subject to Circular 02 and Decree No. 37/2015/ND-CP, as amended by Decree No. 50/2021/ND-CP.
Circular 02 applies to both organisations and individuals connected with implementing construction contracts in (i) construction investment projects with public investment funds; (ii) those with state funds other than public investment funds, and; (iii) packages of public-private partnership (“PPP”) projects.
Meanwhile, those involved in projects with other kinds of funding can also refer to Circular 02 for the execution and management of their own construction contracts.
Circular 02 replaces four separate regulations:
- Circular No. 07/2016/TT-BXD on guidelines for price adjustments in construction contracts (“Circular 07”);
- Circular No. 08/2016/TT-BXD on guidelines for some contents of construction consultancy contracts (“Circular 08”);
- Circular No. 09/2016/TT-BXD on guidelines for construction contracts (“Circular 09”), and;
- Circular No. 30/2016/TT-BXD on engineering, procurement, and construction (“EPC”) guidelines (“Circular 30”).
Circular 02 also introduces three kinds of contracts between investors and contractors:
- A construction advisory contract (previously provided in Circular 08)
- A construction execution contract (previously provided in Circular 09)
- An EPC contract (previously provided in Circular 30).
These templates depart from the templates promulgated under the replaced circulars quoted above, including on certain important provisions, such reinforcing the conditions for payment requests to be accepted by the client or conditions for payment of work done upon early termination of the contract.
For more information about Circular 02, or about investing in a construction project in Vietnam, just contact our office on: contact@apflpartners.com
