Construction Contractor Priority Claim Study

Provision 286 of the Contract Law in China establishes a brand new system of the priority right to be repaid related with construction. It aims at protect the construction cost of the contractor. It is of great importance to lay more emphasis on the study of the priority right to be repaid. This article dwells on the general survey of the system of the priority right to be repaid, the nature of the priority right to be repaid ,the formation of the priority right to be repaid, the legal effect of the priority right to be repaid and the realization of the priority right to be repaid. This article falls into five parts:The First Part: The Legal Nature of the Priority Right to be Repaid Related with Construction. As for the nature of the priority right, there are three different viewpoints. The author holds that the nature of the priority right to be repaid is one kinds of priority rights of contractors, that is, priority right of special debts. The main characteristics of the priority right are mandatory, securing, preferentially valid and non-public summons.The Second Part: The Formation of the Priority Right. The subject of the priority right is limited to the contractors of construction contracts. The object of pledge of this priority right is the construction project which was constructed by the contractor. The construction contract must be legal and valid. The jus in personam with the priority right guarantees to liquidate is the working recompense of the contractor.The Third Part: The Priority Effect of the Priority Right. The construction cost of contractor is not an ordinary credit right. If the issuing party does not pay the cost, he could not acquire the complete ownership of the construction project. Right to mortgage is based on the existence of the construction project, so the priority right related with construction should take precedence over the priority right of compensation for the credit rights. Compared the contractor's interests with the consumer's interests, the consumers interests have priority since they are existence interests while the contractor's interests belong to operation interests.The Forth Part: The Realization of the Priority Right . The period oflimitation of the priority right is six months. The ways to realize this priority right are summon procedure, converting into money by agreement and applying to auction. The exceptions for exercising the priority right are: the contractor's credit rights are not definite and cause disputes, the construction is not suitable for converting into money or auction due to its nature ,the parties agree in the contract to forbid the contractor's exercise of the priority right, the contractor does not exercise the priority right within the legal or agreed period of time.The Fifth Part: Perfect Chinese Statues on Priority Right Related with Construction. The contractor's priority right of the construction costs are provided by Provision 286 of the contract law, but it does not provide necessary restraint and limitation for the exercise of the contractor's priority right. Therefore, it is necessary to perfect the provision in future statutes or corresponding judicial explanation, to establish the registration and public summon system for the contractor's priority right, to determine the exercising way of priority right and to provide the operation sequence of the contractor's application to the courts for legal auction of the construction.