How to Protect Your Rights in Case of Construction Subcontract Disputes
In the construction industry, subcontract agreements are widely used, especially in infrastructure and transportation projects. However, disputes arising from these contracts are quite common, particularly when the parties fail to clearly define obligations, payment procedures, and dispute resolution mechanisms. This article offers practical insights for businesses to effectively handle subcontract disputes.
Why Businesses Are Vulnerable When Signing Subcontract Agreements
Many businesses tend to focus only on contract value and timelines, neglecting important clauses related to acceptance, payments, and breach handling. Common causes of disputes include:
1. Lack of Clear Payment Procedures
Some businesses merely confirm work volume for acceptance but fail to prepare necessary documents such as acceptance minutes, legal representative signatures, or proper payment requests per Decree 37/2015/NĐ-CP.
2. Ambiguities in Equipment and Material Usage
During construction, both parties may share equipment without proper delivery-receipt records, leading to disagreements over cost offsets.
3. Undefined Dispute Resolution Authority
Contracts often lack clear provisions on dispute resolution or include vague terms, prolonging the dispute process and complicating jurisdiction determination.
Legal Solutions for Effective Subcontract Dispute Resolution
When a dispute occurs, companies should stay calm and take strategic steps to both protect their rights and maintain possible future cooperation.
1. Review the Contract and Gather Evidence
Review the main contract, appendices, acceptance records, and communications (emails, texts, official letters) to prove performance of obligations.
2. Verify the Dispute Resolution Clause
If the contract designates a specific dispute resolution authority (Court or Arbitration), comply with the agreed process.
3. Prove Work Acceptance and Completion
According to Article 20.1(a) of Decree 37/2015/NĐ-CP, the payment dossier includes: acceptance records, work value statements, and signatures of the parties involved.
4. Claim Interest for Late Payments
The Commercial Law stipulates that the defaulting party must pay interest on overdue amounts, either at the basic interest rate or the contractually agreed rate.
5. Issue Invoices When Conditions Are Met
In complex disputes, consider issuing invoices only after receiving payment resolutions or written confirmations.
Dispute resolution in subcontract construction agreements requires thorough documentation, legal understanding, and support from a trusted legal partner. Businesses should prioritize protecting cash flow and their reputation during this process.
DEDICA Law Firm is ready to support your business in construction contract disputes – from strategic advice to full legal representation.
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