Newsletter
Impacts of Five New National Holidays on Performance of Government Procurement Contracts
The Legislative Yuan, Taiwan’s legislature, recently approved five additional national holidays. While the legislative process was not without controversy, the amendment to the memorial and public holiday regulations was ultimately finalized and promulgated by Taiwan President Lai Ching-te. The new holidays have broad legal implications on the performance of government procurement contracts, especially those for construction projects.
For contractors, if the contract term is calculated in calendar days, they may assert an unforeseeable change in law and apply for an extension of deadline or exclusion of the new holidays from the contract term. For design and construction supervisors, they need to factor in the holidays during the design phase, and recommend the project owner to adjust the contract term or ask the contractor to apply for an extension during the construction phase. As to project owners, they should recognize the impact of the holidays on the contract term, and instruct relevant agencies to work with the contractors regarding deadline extension in advance.
In the past, deadline extensions had been allowed in reaction to amendments to the Labor Standards Act, so extensions per se are not contentious. However, whether contractors may claim management fees for the duration of an extension remains unsettled. Because the Public Construction Commission under the Executive Yuan (“PCC”) regards changes in legislation as “circumstances not attributable to either party,” if the contract contains change of circumstances provisions, those provisions should be followed; if not, the contractor may cite Article 6 of the PCC Regulations to claim the proportional increase in performance costs. In contrast, judicial decisions tend to be conservative, and courts have held that legal amendments constitute reasons not attributable to either party, and thus the project owner is not obligated to pay management fees for the duration of the extension. Nevertheless, a few judgments cited Article 6 of the PCC Regulations to require the project owner to pay the increase in contract price due to the extended deadline (see Taiwan High Court Civil Judgment Jian-Shang-Zi No. 45 2022).
But notably, the PCC Regulations state that if the contractor submits a bid after a new law is announced, or if the contract performance is delayed for reasons attributable to the contractor, the statutory provisions governing deadline extension will not apply. Although the impact of additional national holidays is milder compared to that of previous labor law amendments, contractors should be cautious and prepared because of the courts’ stricter attitudes toward deadline extension and liquidated damages for delays.