The Judicial Logic Of Interests Measurement In Chinese Construction Contract Cases

For a long time, there are two contracts between employerand contractor in Chinese construction contract cases,especially in the compulsory bidding project cases. This "twocontracts" phenomenon is often known as "black and whitecontract". It is an illegal trading phenomenon in the field ofconstruction. The employer and the contractor choose a kind ofadministrative avoidance behaviors to maximize their owninterests, based on the law and the objective economic policies.They signed two contracts for one same project, which aredifferent on project price, quality, span and other substantivecontents. One is concluded in accordance with the law andpolicies, and submitted to the administrative departments forthe record, however, It is used to deal with the administrativesupervision but not to actual fulfill. The other is used forthe actual fulfillment after serious negotiation by bothparties. Because construction contract is administrative in nature, that need to be supervised and controlled. Constructionmarket entities choose to pursue more interests and avoid risksaccording to its character of self-interest maximization. Theydon’t want to be interfered by the administration, what’smore—there is a big gap between state supervision andconstruction industry situation. So a large number of “blackand white contracts” exist in the construction market andcause disputes.The laws (as well as judicial interpretation) regulated thistype of construction contract disputes in China are The PRCContract Law, Construction Law of The PRC, The Tendering andBidding Law of The PRC, and Interpretation of the SupremePeople’s Court on The Law Applicable to Construction ContractCases. But these laws have great difficulty in solving theproblem of "two kinds of contracts", because there is no clearlegal words directly determine the effect of two kinds ofcontracts, and these laws can’t provide the base for thesettlement of construction payment (There may exist the law as the base to deal with these problem, however, it remainscontroversial); Or these laws may include general clauses,principle or other uncertain legal concepts; Or the objectiveapplication of the law would lead to an unreasonable and unfairresult. Thus, we need to introduce a new legal method to settlethe dispute and to resolve both parties’ conflicts--it isinterest measurement. This method can solve the common interestconflicts in construction field and can complement the shortageof other legal methods. Interest measuring is more fitful toChinese current situation. It can indirectly promoteconstruction industry legislation as well. Therefore, Interestmeasurement is widely used in construction contract cases byour judicial office.Based on positivism, this paper choose three typical caseswhich have lots of similarities in “black and white contract”facts and try to explore and analyze these different interestmeasurements in each judgment. I consider that there areconsistent views here: First, they believed that construction project is social. Secondly, they recognized Interest Rank.Thirdly, they abide the restraint and conservative judicialcharacter. On the other side, this process of measuring existthe arbitrariness of the judge. It is reflected in unclear factidentified, inflexible understanding about Interests Rank, andpursuing interests balancing regardless of logic.In order to not only take advantage of interests measurement,but also restrict the arbitrariness of the judge, I think thejudicial office in handling construction disputes, especiallyin “black and white contract”, should take the internal logicof interests measuring. This internal logic is a thinkingparadigm, which provides a typed thinking way and effectivemethod for interest measuring. It is also a Material Reasoning(or Dialectical Reasoning), which using interest measurementas a general method and principle for establishing the missingmajor premise. After replacing the major premise, we concludein accordance with the formal logic reasoning. I put thisinternal logic forward—we should accurately identify the interest of employer, contractor, and other bidders, includingcontracting freedom, good market economic order and othersystem’s interests and public interests based on case facts,then we compare and choose the suitable scheme for interestprotecting over and over according to Interest Rank, socialeffect, public policy, and weak protection priority. Finally,we reach a verdict after comparing and revising with currentlaw system. With this judicial logic, referee’s prudentialand normative can be guaranteed. At the same time this logiccan enhance the predictability. I think this may solve thedisputes of the construction contract parties and provide amore practical path.