What should a Contractor do when the Supervision Consultant has signed the Acceptance Minutes but the Investor refuses to approve?
In construction practice, there are many cases where the Acceptance Minutes have been signed and confirmed by the Supervision Consultant and the Contractor, but the Investor does not sign or does not agree with the value of the Acceptance Minutes. This increases the risk of disputes arising in relation to payment obligations. Therefore, the question arises as to what the Contractor should do where the Acceptance Minutes have legal validity to protect its lawful rights and interests in cases.
1.Principles for signing Acceptance Minutes
Acceptance in construction typically involves the participation of three main parties: the Investor, the Contractor, and the Supervision Consultant. Accordingly, the Contractor is responsible for performing construction works in accordance with the agreed scope, volume, and quality as stipulated in the construction contract signed with the Investor. On that basis, the Supervision Consultant carries out supervision, inspection, and evaluation of the Contractor’s actual construction results. The scope of work performed by the Supervision Consultant is stipulated in a separate contract signed with the Investor.
In the relationship between the Investor and the Supervision Consultant, the Investor may authorize the Supervision Consultant to conduct acceptance and represent the Investor in signing the Acceptance Minutes. Such authorization is often recorded in the supervision consultancy contract or other agreements between the Investor and the Supervision Consultant. Therefore, when assessing the legal validity of the Acceptance Minutes, it is necessary to rely on the scope of work and authority of the Supervision Consultant, as well as whether the Supervision Consultant has complied with the agreed procedures and content of acceptance. This is a fundamental principle for evaluating the validity of the Acceptance Minutes in cases where disputes arise between the parties.
2.Reasons why the Investor does not sign or does not accept the value of the Acceptance Minutes
In practice, there are three main reasons leading to the Investor not signing or not accepting the Acceptance Minutes, although these Minutes have been signed by the Supervision Consultant and the Contractor.
The first is where the Investor has authorized the Supervision Consultant to conduct acceptance and sign the Acceptance Minutes, but the acceptance results do not accurately reflect the actual volume or quality of work performed by the Contractor. The cause may arise from the Contractor performing construction in violation of the contract, or the work failing to meet technical or quality requirements, yet the Supervision Consultant still records the construction as being properly and fully performed. In this case, the Investor has grounds to consider that the acceptance does not comply with the agreed principles and to refuse to recognize the value of the Acceptance Minutes.
The second is where additional works arise during the construction process, but the parties fail to reach a written agreement. This leads to disagreements after the Contractor completes the construction regarding the volume of work and the payment value of the additional works with the Investor. Such a lack of agreement becomes the basis for the Investor to refuse payment obligations, leading to disputes between the parties.
The third is where the Investor intentionally does not sign or does not accept the value of the Acceptance Minutes to avoid payment obligations. Specifically, the Investor may cite reasons such as the quality of the completed work not conforming to the parties’ agreement or the signing of the Acceptance Minutes not complying with agreed procedures. In such cases, if the Investor cannot provide supporting evidence, it may be understood that the Investor is intentionally breaching payment obligations. The following section of this article will provide matters that the Contractor should note to protect its lawful rights and interests.
3.What should the Contractor do when the Investor does not accept the value of the Acceptance Minutes?
Where the Contractor has fully performed works in accordance with the parties’ agreement but the Investor does not sign or does not accept the value of the Acceptance Minutes and does not fulfill payment obligations, the Contractor should note the following:
First, the Contractor should review the entire legal documents, particularly the construction contract and its appendices, to clearly determine the provisions on acceptance, payment, and the role and authority of the Supervision Consultant. Whether or not the contract stipulates the authority of the Supervision Consultant to sign the Acceptance Minutes will be an important basis for evaluating the validity of the Acceptance Minutes. The purpose of this review is to enable the Contractor to accurately determine the legal value of the Acceptance Minutes, serve as a basis to bind the Investor’s responsibility, and proactively choose measures to protect its payment claim rights when disputes arise.
Second, the Contractor should also collect all documents proving that the completed work volume and quality are sufficient and in accordance with the parties’ agreement in the construction contract. Such documents include, but are not limited to: work acceptance minutes, stage acceptance minutes, construction logs, reports of the Supervision Consultant, site photos, as well as correspondence exchanged between the parties during the construction process. These will be important evidence to prove that the Contractor’s work complies with the parties’ agreement in case the dispute arises.
Third, where negotiation measures do not bring results, the Contractor may consider initiating legal proceedings to request dispute resolution at the dispute settlement authority agreed upon by the parties in the contract, such as Commercial Arbitration or Court. Proactively assessing risks, preparing dossiers, and developing legal strategies early will help the Contractor avoid passivity and better protect its interests.
In addition, to avoid unfavorable situations where the Investor intentionally breaches payment obligations for the reasons mentioned above, the Contractor should ensure that works are performed in accordance with quality and timeline requirements, and that acceptance procedures and payment request processes comply with the contract in terms of content and procedures.
In conclusion, the Contractor should proactively review documents and prepare appropriate plans to resolve disputes. Collecting sufficient evidence and selecting an appropriate dispute resolution mechanism will help the Contractor protect its lawful rights and interests.
The article “What should a Contractor do when the Supervision Consultant has signed the Acceptance Minutes but the Investor refuses to approve?” is provided by TNTP. If there are any issues related to dispute resolution in construction, feel free to contact TNTP for detailed consultation.
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