Dispute over a design consultancy contract for an apartment building project.

I. Case Summary

In 2019, FG Company and BK Company signed design consulting contract number 2019. According to Article 1 of the contract, BK Company awarded FG the contract to design the construction drawings and prepare the cost estimate for the mechanical and electrical systems of a condominium project in South Saigon, Ho Chi Minh City. The scope of work is as attached in the contract appendix. The contract value is 4 billion VND, payable in 5 installments.

After signing the contract, FG fulfilled all obligations regarding the design of construction drawings, preparation of cost estimates for the electromechanical system, and author’s supervision as stipulated in the contract.

Subsequently, although the apartment project in South Saigon had been completed and put into use, BK Company still had not paid the 4th and 5th installments totaling 2 billion VND to FG Company. Specifically, the 4th installment was outstanding as of July 8, 2021, and the 5th as of February 17, 2022. According to the contract, the 4th and 5th installments must be paid within 15 working days of receiving all valid payment documents. The contract also stipulates that late payments will incur a penalty of 0.005% interest per day on the overdue amount, corresponding to the period of delay from the payment deadline, with the total penalty not exceeding 8% of the contract value.

FG Company has requested Inter Justice lawyers to protect its rights against BK Company’s non-payment.

The contract signed by the parties stipulates that they have the right to initiate legal proceedings to resolve disputes in the competent court in Dong Nai.

II. Legal provisions regarding the resolution of the case

• The court with jurisdiction is the court where the defendant is located.
• Construction law stipulates that the investor must make payments and settle accounts on time.
• For lump-sum contracts, payment is made as a percentage of the contract price or the price of the work, project item, or work volume corresponding to the payment period agreed upon by the parties in the contract.

Goodwill is key to reconciliation everywhere in the world.

• Any bonuses or penalties in a construction contract must be agreed upon by the parties and stipulated in the contract.
• If the party obligated to pay is late in making the payment, that party must pay interest on the overdue amount for the period of delay.

III. Lawyers participating in dispute resolution in court

• In 2023, the lawyer representing FG Company filed a lawsuit against BK Company in BC District Court, where BK Company has its headquarters.
• Based on regulations regarding late payment, the obligated party must pay interest on the overdue amount corresponding to the period of delay; for lump-sum contracts, payment is made according to a percentage of the contract price or the price of the project, project item, or work volume corresponding to the payment stage agreed upon by the parties in the contract. The lawyer requested the Court to compel BK Company:
• FG Company must be paid 2 billion VND, representing the outstanding payments for installments 4 and 5 under the design consulting contract.
• BK Company is obligated to pay FG Company a late payment penalty with an interest rate of 0.005% per day, and to pay interest on the overdue amounts for installments 4 and 5.
• On the part of BK Company, a representative participated in the case. Given the grounds and evidence supporting the lawsuit, the BK Company representative proposed an agreement to pay the debt in two installments. Accepting BK Company’s proposal, FG Company willingly agreed to allow BK Company to pay the debt in two installments.

IV. Court Judgment

• The BC District Court issued a decision recognizing the agreement between the parties. According to the agreement between FG Company and BK Company, the design consulting contract is no longer valid from the date of recognition of the agreement.