Regulations Of Compensation For Damage In The Construction Industry

The regulations of compensation for damage in the construction industry in this article will refer to the liability for compensation for non-contractual damage caused by the house and other construction works. The liability for compensation for damage under a contract will be introduced in another article.

Generally, the regulations of compensation for damage in the construction industry are mainly written in the Civil Code 2015.

When studying the regulations of compensation for damage in the construction industry, first of all, people need to know what are the conditions for giving rise to compensation? According to the general principle of compensation for non-contractual damage, the conditions for giving rise to the regulations of compensation for damage in the construction industry include: (i) There must be actual damage; (ii) The house or other construction works causes damage; (iii) The aggrieved person is not at fault in causing damage; and (iv) The damage does not arise from a force majeure event.

Who is responsible for compensation for damage under the regulations of compensation for damage in the construction industry? According to Article 605 of the Civil Code 2015, the person who is responsible for compensation for damage in the construction industry may be (i) The owner; (ii) The possessor; (iii) The person is assigned to manage the house or other construction works; or (iv) The person is assigned to use the house or other construction works. In addition to the above subjects, the person who is responsible for compensation for damage in the construction industry can be the executor. If the executor of the house or other construction work is partly fault that such house or construction work causes damage, he/she must jointly compensate for such damage[1].

Under the regulations of compensation for damage in the construction industry, parties may agree on the amount of compensation, on the form of compensation, which may be money, in-kind, or the performance of a work; on the method of compensation which may be lump-sum payment or payment in instalments on the ground of actual damage including damage to property, health or life, and mental damage. In addition, the investor or the owner of the construction works must stop constructing and take measures to immediately remove the person and property of the person damaged, and at the same time, rent and pay the housing rental cost to that person damaged when their house and construction works are subsided, cracked or damaged[2].

The above is an overview of the regulations of compensation for damage in the construction industry. If you have trouble with legal issues regarding the regulations of compensation for damage in the construction industry, please contact us: Phuoc & Partners is a professional consulting firm established in Vietnam which currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners. It is rated as one of the leading consulting firms specializing in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Merger and acquisition, Litigation. We are confident in providing customers with optimal and effective service.

[1] Article 605 of the Civil Code 2015

[2] Article 3.2 of Circular 03/2018/TT-BXD

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