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Is it correct to say :

They will have finished the project until next summer .

or we should say:

They will have finished the project by next summer.

Please explain for me which one is correct. Thanks

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Both are grammatical.

"They will have finished the project until next summer" means that the project is currently done (finished), but it will start up again next summer. In this sense, it is really the individual responsibilities that have been temporarily discharged; the project itself continues, or perhaps restarts at a later date. It would be better to use "finished with" rather than just "finished".

"They will have finished the project by next summer" means that the project is expected to complete some time between now and next summer.

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No, you can't use until in the manner you describe although it's an error that one frequently hears from people learning English as a second language.

Things will be finished/done/accomplished either ON a certain date or BY a certain date (deadline/week/season etc). ON indicates that the work will be completed that particular day. BY indicates that the work will be finished either before the day concerned or ON the day concerned.

Until - used as a preposition, as in your example - means up to the time that. But it requires a different construction.

He is not expected home until this evening.
She did not finish work until nearly midnight.
I shall be at the library until 6pm.
John did not complete his degree until he was 25.

You could also say:

John will not have finished his degree until he is 25.

but you CANNOT omit the NOT to make it a positive sentence, saying: John will have finished his degree until he is 25. You have to change it to something like: by the age of or by the time that he is - or to reword the sentence: John will be 25 by the time that he finishes his degree.

Until is also used as a conjunction (often shortened to till).

We shall stay at home until she returns from school.

So, with your examples, either:

They will have finished the project BY next summer
or
They will not have finished the project UNTIL next summer.

You will find helpful examples and explanations at the sources below:

https://dictionary.cambridge.org/pt/gramatica/gramatica-britanica/until
https://sentence.yourdictionary.com/until
http://www.englishcollocation.com/how-to-use/until

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