Weekly Case丨The courts of two instances determined that the use of borrowed qualifications exempted the payment responsibility of project funds

Wen Zuochao, Lawyer, Committee Member of the Law Firm, Director of the Construction Engineering Business Department.

During his practice, Lawyer Wen Zuochao's main areas of involvement were disputes and contract disputes in the field of construction engineering. He will continue to pursue professional development in the future. Lawyer Wen Zuochao has handled cases such as a dispute between a Zhejiang construction group company and Mr./Ms. Jin and others, a dispute between Mr./Ms. Lou and Zhejiang Modern Architectural Design Research Institute Co., Ltd., a construction engineering contract dispute between a Zhejiang ecological technology company and the ecological environment sub-bureau of a certain district in Suzhou City, and a dispute between Hangzhou branch of a certain bank and a Zhejiang real estate development company. Lawyer Wen Zuochao serves as the long-term legal counsel for many construction group companies and listed companies.

Contact Information:

Phone: 18768167134 Email: wenzuochao@htxls.com

The courts of two instances determined the borrowing of qualifications and exempted the payment responsibility for the project funds.

Case Details

Plaintiff A sued the court based on the "Supplementary Agreement" signed by Hangzhou A Company (the contracting party) and C Construction Company in 2007, the "Internal Contracting Agreement" signed by Plaintiff A and C Construction Company in 2010, and the "Agreement" signed by Plaintiff A and the legal representative of Hangzhou B Company in 2011. Plaintiff A claimed that B Company was the actual investor in the Phase II project contracted by A Company, and that he/she and Defendant C Construction Company had a subcontracting relationship; and provided a civil judgment in the case of a civil loan dispute between C Construction Company and A, to prove the clause in the "Internal Contracting Agreement" signed between Plaintiff A and C Construction Company: "C Construction Company assists A in undertaking contracted projects, and is responsible for signing the contracted project contract and the unified collection of project funds." This evidence collectively indicates that C Construction Company has the obligation to collect and settle the project funds in question. Now that the project has been completed and delivered, Plaintiff A is requesting that Defendant C Construction Company immediately pay the remaining project funds of 1.8 million yuan and overdue interest.

Agency Strategy

In this case, after the first and second trials, Lawyer Wen Zuochao, as the defendant's agent lawyer, submitted the following opinions:

1. The plaintiff's claim for project funds of 1.8 million yuan has no factual or legal basis.

First of all, starting from the "Internal Contracting Agreement," it cannot be proven that the project in question is the Phase II project contracted by A Company as claimed by the plaintiff. Even if it could be proven, because the project has not been completed and accepted for filing, the conditions have not been fulfilled, and the plaintiff cannot provide sufficient evidence to show that B Company has the subject qualification to confirm the project funds, and B Company has not confirmed it with its seal in this agreement, the claim that the agreement is invalid is asserted. Finally, from the perspective of the statute of limitations, even if the agreement is valid, the payment deadline stipulated in the agreement was September 30, 2011, which has already exceeded the statute of limitations.

2. The plaintiff A's claim against the defendant C Construction Company has no factual or legal basis.

It is asserted that C Construction Company is not a proper defendant in this case, and through the time, content, and performance of the agreement, and the fact that there is no labor relationship between A and C Construction Company, it is claimed that the plaintiff and the defendant only have a dependent relationship, and A borrowed the qualifications of C Construction Company to undertake the project in question. Defendant C Construction Company is not the legally obligated subject for payment.

3. Clarify multiple legal concepts and clarify the factual basis of the clauses.

The difference between the easily confused conditions of "already put into use" and "already accepted" in practice is presented, resulting in vastly different legal consequences; it clarifies that "land investor" and "land registration right holder" are completely different legal concepts in this case, thereby showing that B Company has no subject qualification to confirm the project funds, further proving the invalidity of the agreement in question.

Judgment Result

After the first and second instances, both trials determined that the relationship between the plaintiff/appellant A and the defendant C Construction Company was one of borrowed qualifications, and A had no right to claim payment of project funds and overdue interest from the defendant C Construction Company. The judgment dismissed all of the plaintiff's claims.

Analysis

The focus of the dispute in this case was whether the relationship between the plaintiff A and C Construction Company was one of borrowed qualifications or subcontracting, and whether the plaintiff had the right to claim 1.8 million yuan in project funds from the defendant C Construction Company. The agent keenly and accurately grasped these two focal points, starting from the legal basis, such as the third-party company's lack of subject qualification to determine the payment, the non-fulfillment of the payment conditions, and the ambiguity of the project involved, determining the invalidity of the agreement through multiple loopholes and doubtful points, and raising a statute of limitations defense; starting from factual basis, combined with the fact that the defendant C Construction Company only collected management fees, did not participate in the construction and management of the project, and did not bear the technical, quality and economic responsibilities of the project, it was claimed that the plaintiff's undertaking method was self-operated, thus determining that the relationship between the plaintiff and the defendant was one of borrowed qualifications, so the defendant did not need to bear the responsibility for the payment of the 1.8 million yuan project funds.

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