Research On The Priority System Of Payment To The Construction Project Contractor

The priority of payment of the construction project cost is determined in Article 286 of the Contract Law of the People's Republic of China and the Reply on the Priority of Payment of the Construction Project Cost of the Supreme People's Court so as to resolve the social problem of serious default of project cost in reality and assure the contractor's lawful rights and interests; however, there are many disputes over the nature, range of authority, conditions of existence and procedure of realization, etc. of the priority of payment of the construction project cost in the academic circle and it is easy to cause confusion in practice. The priority of payment of the project cost is discussed from the two aspects of theory of law and practice in this paper.The paper is divided into four chapters.Chapter 1 is the"legal nature of the priority of payment of the construction project cost". First, the disputes over the legal nature of the priority of payment of the construction project cost in the theoretical circle are concluded. It is pointed out that there are mainly three viewpoints on the legal nature of the priority of payment of the construction project cost in the theoretical circle at present, that is, lien theory, legal mortgage theory and legal priority theory. And then, the author gives the detailed analysis of the theoretical defects of the lien theory and legal mortgage theory and affirms the legal priority, determining that the legal nature of the priority of payment is the legal priority. There are mainly four theoretical criteria for the priority. First, the priority of payment is defined as the priority theory because the priority system has been accepted by most of the countries in the world. Second, the priority system is reflected in the relevant laws and judicial interpretations of our country. Third, the legislative purpose of the priority of payment is consistent with the priority system. Fourth, the priority of payment conforms to the concept and legal characteristics of the priority.Chapter 2 is the"elements constituting the priority of payment of the construction project cost". Whether a right is established or not must have the legal elements and the priority of payment of the project cost is not exceptional. Focused on the three constituting elements, that is, subject, object and range of payment of the project cost, the legal constitutes of the priority of payment of the construction project cost are analyzed and their legal defects are pointed out. The Contract Law stipulates that the contractor can exercise the priority of payment of the project cost, but it does not eliminate who of the contractors cannot exercise it, so viewed from the understanding of rules, the investigator, designer and constructor can become the subjects of the priority of payment of the project cost in law. However, viewed from the original intention of legislation, the priority of payment of the project cost is mainly to protect the builder. Viewed from the object to which the right is exercised, it is mainly the project cost and viewed from the possibility that the right is exercised, it is only the construction contractor. Whether the subject of the priority of payment of the project cost only refers to the construction contractor or not shall be described when the legislation is perfected in the future. According to the regulations of the Construction Law, the legal subject of the construction project shall have not only the common elements of the legal subject in the general principles of civil law but also the special elements, that is, the qualification class certificate promulgated by the administrative department in charge of construction shall be available. According to the regulations of Article 286 of the Contract Law, the object of the priority of payment of the project cost is the construction project. For various reasons, there are some expressions of the"project"in the judicial interpretations such as"construction project"and"architectural project"and it is thought to be the"construction project"in the paper because the"construction project"is used in Article 286 of the Contract Law. In the meanwhile, the author discusses whether the right of using the State-owned leased land, right of using the State-owned transferred land and right of using the collective land can become the object of the priority of payment of the project cost. For the range of payment in the priority of payment of the project cost, according to Article 286 of the Contract Law and the judicial interpretations, the prerequisite for the contractor to exercise the priority of payment of the project cost is the actual completion of the project or completion in the form of the project, so the project cost discussed in the paper refers to the final cost of completion. For the incomplete project, assessment shall be made on the basis of construction budget cost to determine the project cost. However, whether the project maintenance cost belongs to the range of priority of payment may be neglected by legislators. How to make the project maintenance cost have the effect of priority of payment is a problem that shall be resolved in the judicial interpretations in the future.Chapter 3 is the"exercise of the priority of payment of the construction project cost". The two problems of the priority of payment in practice are mainly discussed in the chapter. The first are the modes of realization of the project cost. According to the regulations of Article 286 of the Contract Law, there are two modes for the contractor to realize the priority of payment of the project cost. One is the private relief means, that is, discount and the other is the public relief means, that is, auction. Because the previous mode of realization belongs to the self-autonomy of the client's intention, the law does generally not interfere it. For the public relief means in the disputes at present, combined with the typical cases and according to the Law of Civil Procedure and the relevant judicial interpretations, it is thought that the mode of realization of the priority as one of the legal rights does not necessarily pass the preset procedure. In practice, the creditor can directly present the application for exercising the priority of payment of the project cost to the executive department of the court and the construction project can be auctioned by the court according the Auction Law so as to realize the client's priority of payment. The second is the priority of the construction project contractor's priority and the relevant rights. The first is the priority to the general mortgage right and it is thought that the construction project contractor's right of payment is superior to the general mortgage right and the other common creditor's rights. The second is the priority to the consumer's rights. The following conclusion is made from the regulations of the law and judicial interpretations. First, the construction project contractor enjoys the priority of payment of the construction project cost and such a right is legal and superior to the mortgage right of the bank and the other rights. Second, the consumer, after paying most of the money for purchasing the commodity house, enjoys the effect of priority against the contractor's priority of payment of the construction project cost. Third, the subject enjoying the right against the contractor's legal priority of payment is only limited to the house purchaser and such purchasers are mostly limited to those stipulated in the Law for Protection of Consumers'Interests. Fourth, there exists the determined standard for enjoying such a right, that is, the payment of the house purchaser for the house is more than 50% of the total money of the house; therefore, the contractor's priority to payment of the construction project cost is not absolute and it is inferior to the consumer's right when the construction project is the residential building. However, the house purchaser, who shall conform to the two conditions, can have the effect of priority. First, the purpose for purchase is residence but not business. Second, the payment for the house to the land agent must be more than 50% of the total money for the house; otherwise, it is impossible to exercise such a right. And then, analyzed from the two aspects of the basis for the theory of law and actual basis of the effect syn-position, it is concluded that the consumer'right shall be superior to the priority of payment of the construction project cost.Chapter 4 is the"perfection of the priority system of payment of the construction project cost". According to the understanding of Article 286 of the Contract Law and the Reply and some problems met in the judicial practice, the author discusses how to perfect the priority of payment of the construction project cost and presents some opinions on improvement of legislation. First, the contractor's priority of payment and protection of consumers'rights and interests shall be rational and balanced. Second, the priority of payment of the construction project cost shall be registered and noticed in public.