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Highlighted Cases
   Highlighted Cases    Two construction contract cases

 

During the past 2 years, there were 2 interesting construction contract cases. We represented as an attorney to Sriwichai Construction Co.ltd. (the Plaintiff), the construction company in 2 projects. One is Warehouse in Samut Sakorn province and the latter is Mayonnaise and Boiler Building in Samut Songkram province. Both projects belong to J.D.Food Products Co.,ltd. (the Defendant).

Summary

On 24 May 2016 the Defendant hired the Plaintiff to construct the Warehouse in Samut Sakorn Province where the former constructor commenced the basis construction and abandoned work. This warehouse served an ordinary business and commercial purpose of the Defendant. The Construction costs were settled at 10 million baht (excluding VAT). The Plaintiff is responsible for providing equipment and materials for construction including the skillful workmen to perform the work according to the Bill of Quantity (BOQ) attached to the contract. After contract, the parties agree that the Defendant has a right to deduct the guarantee amount of 5% of construction payment and that it will return immediately after 1 year of the date that the Plaintiff submitted the last work according to the contract.

The Plaintiff delivered the work and received 4 payments from the Defendant.

Later, the Plaintiff placed an invoice to request a fifth payment of 390,658.68 baht for the last work. Upon receipt, the Defendant was to make payment within 15 days of 20 December 2016 but it ignored to do that.

After delivery the 5th work according to the contract, the Defendant asked the Plaintiff to undertake additional 2 works in the project.

Work 1. The parties agree to adhere to the above BOQ attached the construction contract. The Plaintiff made a report about the work and submitted the work to the Defendant which it accepted. The invoice was place for such additional work of 1,071,592.12 baht. Upon receipt, the Defendant was to make payment within 15 days of 30 January 2017.

Work 2 The Defendant agree on turn-key contract of additional work apart from the BOQ. The Plaintiff submitted the work and placed the invoice demanding for the payment of 559,485.74 baht. Upon receipt, the Defendant was to make payment within 15 days of 14 March2017.

The Defendant refused to make payment and its action was regarded as a breach of contract.

In total, the Defendant is responsible to pay 2,841,091.12 baht with interests of 7.5% of the amount of 2,503,481.47 baht counting from the date after the date of lawsuit. The Defendant filed the Respondent and Counter-Claim of 748,235.50 baht.

On a hearing date, parties could reach a settlement and the Defendant agreed to pay 1.5 million baht.

The above is worth mentioning since the Project 2 concerning these parties were in another court.


Project 2



Summary 

Approximately in 2017, during which the Plaintiff was constructing the building in Project 1, the representative of the Defendant ask the Plaintiff to examine the area and place the pricing of the new Building “Mayonnaise and Boiler”. The Plaintiff offers 30,592,535.20 Baht (excluding VAT). In the meantime, the Plaintiff initiated the construction according to the Conceptual Design per Defendant’s request. The defendant also escalated the basis construction – piling work in 3 buildings. However, when the Plaintiff proposed the draft of Construction Contract, the Defendant tried to avoid the signatory and finally issued the contract to be settled at the price of 30 million baht. The Plaintiff requested the advanced payment in which the Defendant paid 2 million baht. The Plaintiff proceeded the work but the Defendant, by bad faith, informed the Plaintiff to cease the work and refused to make payment for the work in Project 1. Therefore, the Plaintiff ceased to proceed and issue the Performa Invoice for the work in Project 2.

Later in 28 September 2017 the Defendant filed a consumer lawsuit to the Nonthaburee Provincial Court on the basis of breach of contract, claiming for compensations of 4 million baht. It claims that the piling at the Mayonnaise and Boiler Building were damaged, some of the piling work did not conform with the report and that the Plaintiff abandoned the work.

We, as the Plaintiff’s attorney, submitted the Respondent and Counter-Claim that the claim was false. The Plaintiff already fixed the piling where no expenses were charged and work has been delivered to the Defendant. The Plaintiff did not abandon the work but the removal of equipment and staff from the area must be done. We also submitted the Petition that this case was not a consumer claim to be decided by the President of the Court of Appeal. Since the Defendant and the Plaintiff entered into construction contract of more than 30 million baht and the building would be used for the benefit of the Defendant’s business and commerce, the Defendant was not regarded as a consumer subject to the Consumer Case Proceeding Act.

The President of the Court of Appeal decided that the claim was not a consumer case. On the trial day, the Plaintiff and the Defendant withdrew their claims and agreed to negotiate on the value of the contract. However, the parties cannot make a final settlement.

On 1 November 2016 the Defendant sent the Construction Contract of 30 million baht to the Plaintiff. The Plaintiff requested an advanced payment of 2 million baht in which the Defendant made a payment in knowing that the work under the contract caused tremendous expenses.

To undertake the partial work, the Plaintiff have made upfront payment and placed a bill according to the work done for 5,866,327.64 baht.

Upon receiving the bill, the Defendant did not claim if any inaccuracy, non-performance, or under-standard work occurred. Therefore, it was regarded as acceptance. However, the Defendant refused to make payment and send a letter to cease the construction and remove equipment from the area. The Defendant’s action was regarded as a breach of contract.

On 21 June 2018, the Plaintiff filed the lawsuit for construction payment of 4,452,959.64 Baht against the Defendant at the Samut Songkram Provincial Court. In this regard, 2 million baht of advanced payment was offset from the construction value of 6,452,959.64 baht. The Defendant filed a counter-claim of 4 million baht against the Plaintiff.

On 15 March 2019, Samut Songkram Provincial Court adjudged that the Defendant make a payment of 4,452,959.64 baht with interests of 7.5% of 5,866,327.64 baht counting from the date after the date of lawsuit as well as the attorney fees of 10,000 baht. The Counter-Claim was dismissed.

Note: the Defendant in the latter case refuse to negotiate because they believe that they did not sign the contract. The case is not final.