The issue of exceeding the construction period during the construction process is quite common for contractors, and the resulting disputes such as exceeding the construction period are unavoidable issues for both parties. Among them, the determination of the overdue use fee for "scaffolding" (including the internal support formwork of the tall formwork support system) in professional subcontracting contracts has caused many controversies and differences. In judicial practice, courts in various regions also have different opinions on the nature of the overdue use fee for "scaffolding". If the overdue use fee of the "scaffold" is a settlement clause, it is difficult for the people's court to exercise its discretion to adjust it; If the overdue fees belong to the breach of contract clause, the court may exercise its discretion to adjust them in the event that the defendant argues that the liquidated damages agreed upon are too high. At the same time, in practice, there are often a large number of subcontracting contracts for the "scaffolding" profession where the contractor does not have the corresponding professional subcontracting qualifications, resulting in the invalidity of the signed "Construction Engineering Professional Subcontracting Contract". If the overdue fees are deemed to belong to the penalty clause, the penalty clause cannot be applied on the premise that the contract is invalid. Therefore, in judicial practice, it is particularly important for courts to understand and judge overdue fees.

1、 There are divergent views in judicial practice regarding the qualitative determination of overdue usage fees for "scaffolding"

To conduct a legal qualitative analysis of the overdue use fee for "scaffolding", we should first understand that the purpose of setting the overdue use fee for "scaffolding" is mainly to address the situation where the construction period of the project involved exceeds the agreed period due to reasons not caused by the professional contractor. If the actual construction time of the "scaffolding" professional subcontracted project exceeds the period stipulated in the professional subcontractor contract, and the "scaffolding" professional subcontractor is unable to dismantle and vacate the site on time, the general contractor agrees to pay the "scaffolding" professional subcontractor for the additional period of use fee according to certain standards. According to case studies, in the current judicial practice in Jiangsu Province, the people's courts have three main views on the nature of overdue use fees for "scaffolding":

1. The overdue use fee for scaffolding is a penalty for breach of contract

The main reason for considering the overdue use fee of "scaffolding" as a penalty for breach of contract is that: (1) the agreed standard for the overdue use fee of "scaffolding" is significantly higher than the cost standard within the contract period, and has punitive characteristics; (2) The overdue usage fee clause for scaffolding is often stipulated in the breach of contract liability clause, which complies with the rules for determining liquidated damages.

Representative Judgment Case: Jiangsu Provincial High People's Court (2017) Su Minshen No. 4436 Judgment Summary

During the contract period, the price for the fixed construction rental station to provide and build "scaffolding" for Xingsheng Company is 0.12 yuan/square meter per day, while the price for exceeding the contract period is 0.25 yuan/square meter per day, which is more than twice the price. The first instance court, based on the fact that the fixed construction rental station only needs to provide "scaffolding" for Xingsheng Company to use outside the contract period, and does not involve the construction of labor services, and the evidence provided by the fixed construction rental station is not sufficient to prove that its losses are equivalent to the agreed liability for breach of contract, ruled that the agreed amount of 0.25 yuan/square meter per day exceeding the contract period is significantly higher than the actual losses of the fixed construction rental station, and there is no impropriety in the judgment.

2. The overdue use fee of the scaffold belongs to the engineering payment

The legal nature of the overdue use fee for scaffolding should be engineering payment, not liquidated damages, for the following reasons:

(1) This fee does not conform to the economic penalty characteristics of liquidated damages. According to Article 107 of the Contract Law, "If one party fails to perform its contractual obligations or does not perform its contractual obligations in accordance with the agreement, it shall bear the liability for breach of contract, such as continuing to perform, taking remedial measures, or compensating for losses." Therefore, it can be seen that the liability for breach of contract refers to the adverse legal consequences that one party should bear when it fails to perform its contractual obligations or performs its contractual obligations in a manner that does not comply with the agreement, and liquidated damages are a punitive, compensatory, and economic sanction method for the contracting party who has committed a breach of contract to bear the liability for breach of contract. However, the overdue use fee for the "scaffolding" is not intended to impose economic penalties on the "defaulting party" for breach of contract. This fee is a flexible agreement on the pricing terms corresponding to the lease term that is difficult for the parties to accurately determine in advance from the beginning of the contract.

(2) The overdue use fee for scaffolding is the consideration paid by the general contractor for the overdue use of scaffolding, which is in line with the characteristics of engineering payments. The original intention of the "scaffolding" professional subcontractor is to allow the general contractor to continue using the "scaffolding" after the contract period expires, but only to pay the corresponding engineering fees, which meet the corresponding nature recognition of engineering fees in the construction field.

(3) There is already a clear penalty clause in the professional subcontracting contract for the "scaffolding" of both parties, indicating that their understanding of the penalty is fully foreseeable. If the overdue usage fee is a penalty, there is no need to set up a separate penalty clause.

Representative Judgment Case: Nanjing Intermediate People's Court (2017) Su 01 Min Zhong 3661 Judgment Summary

The contract between both parties clearly stipulates the cost calculation method during the construction period, as well as the cost calculation method for overdue use fees, indicating that both parties had a certain degree of foresight in the overdue use of the "scaffolding" when signing the contract, and agreed on different cost calculation standards accordingly. According to the contract agreement and the statements of both parties, they did not agree on the liability for breach of contract regarding the consequences of overdue use, but directly agreed on the calculation method of fees. Therefore, even if the overdue use fee includes the nature of liquidated damages, it does not violate legal provisions. The breach of contract liability for overdue payment agreed upon by both parties is not the same as the nature of overdue usage fees, and occurs at different stages of contract performance.

3. Overdue usage fees have both the nature of settlement and breach of contract liability

Representative Judgment Case: Suzhou Intermediate People's Court, Jiangsu Province (2016) Su 05 Min Zhong No. 8162 Judgment Summary

If the price outside the contract period is significantly higher than the price within the contract period, and the contractor only needs to provide the "scaffolding" to the employer for use outside the contract period, the contractor does not need to pay other costs such as manual installation costs. Therefore, if the agreed price outside the contract period is abnormally high, the people's court will determine that it has both the nature of payment settlement and the nature of breach of contract liability based on the content, wording, and liability agreement of the contract signed by both parties.

2、 This article believes that the issue of fees during the period of contract expiration should be analyzed in conjunction with the effectiveness of the contract, the provisions of the contract terms, and other specific factors. There are various possibilities for overdue fees to be recognized as engineering fees, liquidated damages, or converted into fees according to the contract agreement

1. Overdue expenses are recognized as project funds

If the construction project subcontracting contract or its supplementary agreement clearly stipulates that the project funds are divided into project funds within the construction period and overdue project funds beyond the construction period, the "scaffolding" overdue use fee clause is only a special agreement made by the "scaffolding" professional subcontractor to continue to be used by the employer, and the "scaffolding" overdue use fee should be an important part of the project funds rather than a breach of contract clause. At the same time, our lawyers have noticed that the court's judgment has analyzed cases where the agreement between the two parties on overdue fees belongs to the pricing clause, which mainly has the following characteristics:

(1) The provisions for overdue fees in professional subcontracting contracts are generally included in the construction period clauses, pricing clauses, and settlement clauses of the contract;

(2) The pricing standard for overdue fees stipulated in the construction engineering subcontracting contract is closer or slightly higher than the cost standard within the contract period;

(3) Professional subcontracting contracts often distinguish between costs within the construction period and overdue costs regarding the use of "scaffolding", and make different provisions.

2. Overdue fees are recognized as liquidated damages

If the overdue fee clause is included in the contract breach clause or if the overdue fee standard is relatively high and includes expressions such as "compensation", it is generally recognized as a penalty clause. For penalty clauses, courts often have the following handling methods:

(1) Compare and analyze the number of overdue days, overdue fees, and fees within the construction period stipulated in the construction project subcontracting contract, and determine whether to adjust the overdue fees based on the identified reasons for the overdue period and other factors;

(2) If the defendant argues that the liquidated damages agreed upon are too high, the people's court often requires the defendant to bear the burden of proof for the actual losses suffered by the plaintiff. If the evidence cannot be provided, there may be a rejection of the defendant's argument that the liquidated damages are too high;

3. Conversion of overdue expenses

If there is an invalid subcontracting contract for "scaffolding", the penalty clause of the contract cannot be applied. The court often combines the size of the fault of both parties and, according to Article 58 of the Contract Law, "After a civil legal act is invalid, revoked or determined to be ineffective, the property obtained by the actor due to the act shall be returned; if it cannot be returned or is unnecessary to return, it shall be compensated at a discounted price. The party at fault shall compensate the other party for the losses suffered as a result; if both parties are at fault, they shall bear their respective responsibilities" (now Article 157 of the Civil Code), and the work expenses shall be converted according to the contract. [Class Case Judgments: Jiangsu Provincial High People's Court (2017) Su Min Zhong No. 2024 Civil Judgment, (2021) Su 13 Min Zhong No. 3022 Civil Judgment]

3、 Issues to be noted regarding payment of overdue fees

1. Exceeding the usage time and building area of scaffolding

Due to the fact that the overdue usage fee occurs after the expiration of the contract, and the "scaffolding" project often adopts a double package model, the actual construction date of the "scaffolding" project needs to be recognized for the overdue usage time of the "scaffolding" overdue usage fee. Based on this, attention should be paid to whether both parties have deducted the contractually agreed period. At the same time, any delay in the construction period caused by the construction party's own reasons should be deducted, and the remaining time should be considered as the overdue use time. Based on this, the overdue use fee for the scaffolding should be calculated. At the same time, considering that the actual construction process often involves batch entry for material supply, batch entry for construction, batch entry for dismantling, and batch entry for material collection, even if there is an overdue use of the "scaffolding" involved in the project, the overdue use fee should be calculated based on the corresponding building area of the "scaffolding" that has not been dismantled due to overdue use.

2. The issue of standard recognition of overdue usage fees for scaffolding

Considering the serious damage caused by the wear and tear and aging of the "scaffolding" used beyond the deadline in practice, both parties generally consider the repair and maintenance costs incurred by the overdue use of the "scaffolding" on the basis of the normal usage fee stipulated in the contract when agreeing on the overdue use fee.

3. If the contract is invalid, attention should be paid to the degree of fault of the contractor

If the contract is invalid, attention should be paid to the degree of fault of the contractor. For example, during the construction process of the "scaffold", there may be specific problems such as the "scaffold" plan not being verified and approved by experts (such as the construction of high-rise module support systems, which belong to high-risk sub projects and require expert verification before implementation), problems with pre embedding, lack of relevant quality assurance certificates and work permits for the materials and personnel used, and the height of the "scaffold" not being synchronized with the construction floor.