Taihe Information | Supreme People’s Court: Does a settlement statement that bears only the signature of the project manager, without the company’s official seal, have legal effect on the company?

Release Date:

2026-07-17

Case No.: A construction contract dispute case between a certain road and bridge company and a certain construction company ( (2016) Supreme People’s Court Civil Petition No. 1054 ), Judgment date: September 29, 2016.

I. Introduction to the Problem

In the construction engineering sector, construction companies often appoint a project manager to oversee specific projects, and it is typically the project manager who handles business dealings with specialized subcontractors, labor subcontractors, and material suppliers. Accordingly, when a project manager signs contracts, settlement statements, and other documents without affixing the company’s official seal, do such legal acts nonetheless produce binding effects on the company? This issue is quite common in practice and has given rise to certain disputes. The present case, decided by the Supreme People’s Court, provides a highly authoritative reference for addressing this matter.

II. Key Points of the Judgment

The project manager serves as the legal representative of the construction enterprise on the project and is the project manager fully responsible for the entire construction process. Based on their understanding of the widespread practice in the construction industry of assigning responsibility to the project manager, coupled with extensive business dealings with the construction enterprise, the counterparty has reasonable grounds to believe that the project department possesses the authority to act on behalf of a certain construction company, including the right to confirm the actual quantities of work performed.

III. Case Summary

The applicant for retrial, a certain construction company, dissatisfied with the civil judgment No. 55 of 2014 rendered by the Guangdong High People’s Court, filed a petition for retrial with the Supreme People’s Court in a dispute over a construction contract with the respondent, a certain road and bridge company. The applicant contends that the three asphalt‑work summary tables, together with “Confirmation Form I” and “Confirmation Form II” for pavement works, are invalid because the project department’s seal cannot be used to amend contract terms or to settle accounts, and because the signatory acting as project manager lacked proper authorization. Accordingly, these documents cannot serve directly as the basis for determining the final actual quantities of work or the final settlement amount. Moreover, the provisions in the aforementioned documents regarding the confirmation of quantities are inconsistent with the contractual stipulation that payment shall be based on the actual constructed area, and they have not been ratified by the construction company. Furthermore, the interim measurement data demonstrate that both parties were aware that such confirmation forms did not constitute the final settlement of quantities but rather represented interim measurements; in accordance with the customary practices observed in the construction industry, these figures are merely statistical records intended solely as a basis for advancing progress payments, and do not reflect an accounting of the quantities actually completed. Consequently, they cannot serve as the definitive basis for establishing the actual quantities of work performed by the road and bridge company. In this case, the project should, pursuant to the contract, be settled on the basis of the actual constructed area, and the final settlement amount should be determined through a jointly prepared settlement statement by both parties. The failure to effect a final settlement rests with the road and bridge company, which has failed to fulfill its contractual obligation to submit the completion‑settlement documents as required. 。

IV. Judgment Result

The Supreme People’s Court rendered Civil Ruling No. (2016) Sup. Ct. Min Shen No. 1054: The application for retrial filed by a certain construction company is dismissed.

V. Reasons for the Judgment

With regard to whether the “Pavement Engineering Confirmation Form” can serve as the basis for determining the actual quantities of work. According to Article 2 of the former Ministry of Construction’s “Administrative Measures for the Qualification of Project Managers of Construction Enterprises,” which states: “For the purposes of these Measures, ‘construction enterprise’ refers to…” The project manager (hereinafter referred to as the “project manager”) is the project management professional entrusted by the legal representative of the enterprise to assume overall responsibility for the construction process of the engineering project, and serves as the legal representative of the construction enterprise on that project. Furthermore, Article 8 stipulates that, in the course of managing the construction of an engineering project, the project manager shall, in accordance with the engineering contract signed between the construction enterprise and the project owner, enter into a project contracting agreement with the enterprise’s legal representative, and, within the scope of authority granted by the legal representative, exercise the following management powers: (1) Organize the project management team; (2) Act, in the capacity of the legal representative of the enterprise, to handle external relations pertaining to the assigned engineering project and, upon authorization, sign relevant contracts; (3) Direct the production and operational activities of the engineering project, allocating and managing the human resources, funds, materials, machinery, and other production factors brought into the project; (4) Select construction work teams; (5) Implement appropriate economic distribution; (6) Exercise other management powers delegated by the legal representative of the enterprise. The project manager is the legal representative of the construction enterprise on the project and serves as the project manager fully responsible for the entire construction process. Based on its understanding of the project manager responsibility system commonly adopted in the construction industry, and considering the extensive business dealings that occurred during construction between the project department of Lot 11—established primarily with a certain construction company—and the company itself, the road‑bridge company has reasonable grounds to believe that this project department possessed the authority to act on behalf of the said construction company, including the confirmation of actual quantities of work. Accordingly, the legal effects arising from the project department’s affixing of its official seal and the relevant project manager’s signature on the “Pavement Engineering Confirmation Form” at issue extend to the said construction company. 。

VI. Summary of Practical Experience

In this case, the Supreme People’s Court held that, as the project manager serves as the legal representative of the construction enterprise and acts as its authorized agent on the project, third parties may reasonably rely on the project manager and the project department to possess the authority to handle matters such as the determination of actual work quantities on behalf of the construction enterprise. Even if the project manager does not, in fact, have the requisite authority, such conduct still constitutes apparent agency with respect to the construction enterprise; accordingly, the legal effects of the project manager’s signature extend to the construction enterprise.

We recommend, When appointing and assigning a project manager, the construction entity shall issue appropriate authorization documents to clearly define the project manager’s scope of authority, and attach such documents to contracts and other external agreements executed by the project manager, thereby mitigating legal risks arising from the appearance of agency. As for counterparties such as labor subcontractors and material suppliers, we recommend that, when entering into contracts with the project manager or conducting account reconciliation and settlement, they require the project manager to provide appropriate authorization documents, such as a power of attorney or a formal letter of engagement. Even if such documents are subsequently deemed invalid due to defects, the counterparty may still invoke apparent authority to hold the construction enterprise liable.

VII. Relevant Legal Basis

The Civil Code of the People’s Republic of China

Article 172 　If a person, without authority, exceeding the scope of their authority, or after the termination of their authority, nevertheless performs an act in the capacity of an agent, and the other party has reasonable grounds to believe that the person possesses such authority, the agency act shall be valid.

( Reposted from: Supreme Court Judicial Practice)

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