“Black and white contracts” are among the hardest problems in the field of construction project contract management. In the course of bidding and tendering of a construction project in China, since the provisions of the government on such matters as prices of contracts for tendering and bidding differ from those of the parties to such contracts, in order to evade the supervision and administration of the government the parties to such contracts usually sign two contracts, one of which is concluded pursuant to the requirements of the tendering and bidding documents and of the governments that will be used for submission to the competent administrative authorities for inspection, records and notarization, which is called a“white contract”, the other of which is signed privately that is to be actually implemented, called a “black contract”.
In case of disputes arising in the course of implementation, for the sake of different interests, each party to such contracts tends to select the contract whose provisions are in his favor, and thus the problem which contract shall prevail comes into being. This is the so-called black and white contract phenomenon.
Black and white contract- which should be taken as the base for the settlement of construction payment? The Supreme People’s Court specially formulated in Article 21 of the Explanations on the Application of Legal Issues in the Trial of Construction Project Contract Dispute Cases adopted on 29 September 2004 that “in case of discrepancies between the substantial contents of the construction project contract separately stipulated by the parties and the contract filed for recordal for the same construction project whereby a bidding is won, the contract filed for recordal whereby the bidding is won shall be taken as the base for settlement of the construction payment. ”