Study On The Practical Problems Of Priority Of Compensation For Construction Contractors

As far as the Chinese construction industry, the pillar industry in China’s national economy, is concerned, with the continuous speed development of construction market recently, particularly, during the international financial crisis in2008, it played the vital role in execution of the RMB4,000bn fiscal stimulus plan, to some extent, regarded as massive infrastructure spending programme, mapped out by China central government and aimed at boosting national economy and expanding domestic demand; however, in the respect of China’s construction market, the prosperousness is unable to harmonize the immature circumstance, such as credit imperfection and fraud business; additionally, the low-profit atmosphere of typical seller’s market leaves the rivals willing to compete by any means available and fierce and keen competitions have distorted the standards of practitioners in the business; furthermore, the author, as a construction company legal adviser, personally experiences the construction payments in arrears and unusual expansion of Receivables, which have done serious harm to the development of the construction company.Pursuant to the Article286of PRC Contract Law, the priority of compensation targets the contractor, namely construction company in weak position of construction projects, who enjoys the preemption in practice with relevant judicial interpretations promulgated by PRC Supreme People’s Court, but the weak operability through the legal channels, for instance, the vagueness definition of the legal relation object and subject, performance methods, purview of guarantee and the beginning time of performance, attributes to the wielding failure.As for the problems in practice, the thesis is composed of four major parts to extend the discussion on the priority of compensation as below in order to promote judicial practice and protect the contractor.The first chapter discusses the theoretical basis as far as the priority claim of construction contractor. The thesis talks about the right of history, briefs the national legislation mode, expresses the concept and nature, explores the legislative basis and value, also analyzes the nature of priority claim of the construction contractor and define its security interest. Our country what is a legal hypothec or real estate priority, constrained by the type design our statutory security interest and the whole system construction, as far as I concerned, are the choice of the legislation. However, In order to build improved legal system, it should establish a unified priority system, and the priority of the contractor to be included.The second chapter explores the establishment of construction contractor priority claim from a practical point of view, focusing on the controversial issues concerning subject of rights, the right to object, warranty coverage, and the time of establishment. From my opinion, in terms of the subject of rights, legitimate subcontractors,in principle, are not entitled to, invalided parties to the contract are not entitled to, a breach of the plot contractors still enjoy; land use right of construction projects is not a right of object, the subject matter must not be already completion of the project; contractor profits should be included in the scope of the secured creditor, Loaning priority claim for engineering construction; the rights are established with the establishment of the construction contract.The third chapter explores the effectiveness of the construction contractor priority claim from a practical point of view. The judicial interpretation expressly provides that the priority claim effect takes precedence over the mortgage, I analyzes the institutional irrationality; discuss their chase effect and material subrogation effect, it is recommended to expanse the scope of the material subrogation. Damages as works is damaged, insurance, compensation, price of gold when works for sale, etc., can be used as the object of subrogation to ensure the construction contractor priority claim getting the maximum meets; recognizes the contractor abandoned effect, but except the damage to the interests of a third person or untrue meaning expressed; if several priority claim co-exist as a construction project, the repayment works according to the debt ratio.The fourth chapter explores the exercise of construction contractor priority from a practical point of view. There are three conditions:1. Employer fails to pay the contract price as require, the prerequisite is that there is a clear project price.2. Contractor summons yet to pay within a reasonable period of time (preferably1-6months).3. it does not exceed the statutory six-month period; Under the circumstances of the rescission of the contract or the termination of fulfilling the contract, the date of termination of the contract or the date of termination of the performance is recognized as the commences point of the statutory six-month exercise period. It is recommended to regard the date of creditor exercising,called date of completion of the project settlement, as deadline; the priority claim rights is not required to go through a trial program to confirm; exercises procedures applicable to the second amendment of the Civil procedure law "to achieve a security interest in the case" program.