VNBizLaw Contract Law

8/3/2019 VNBizLaw Contract Law

1/22

Ta Diu Thuong, LLM

International University, HCMC National University


2/22

Contractual relations between parties engaging inbusiness activities are regulated underVCCand

Commercial Law 2005CONTRACT is civil transaction or unilaterallegal act which gives rise to, changes or

terminates civil rights and/or obligations. AContract can be verbal, in writing (inc.eContract) or certain acts. (Art.121- VCC 2005)

Contract on Property Sale/Purchase is anagreement between the parties whereby theseller has the obligation to hand over theproperty to the buyer and receive payment,

while the buyer has obligation to accept theproperty and make payment to the seller (Art.428 of VCC 2005)

Commercial activities are those carried out togain profits (as in previous slides)


3/22

Classification:

1. Unilateral- only one party hasrights/obligations to the other

2. Bilateral- each party hasrights/obligation to the other

3. Main (principal) and supplemental

4. For benefit of 3rd party5. Conditional- implementation depends

on rise, change or termination of ceratin

fact.6. Domestic and International (territorial

effect)


4/22

Principles:

1. Equality before law

2. Freedom and mutual agreement3. Application of habits and customs as

parties choice

4. Customer protection5. Recognition of data massage in business

activities

Contents: agreements between parties tocommercial contract on rights andobligations.

1. Quantity and quality2. Parties rights and obligations

3. Place and method of delivery/payment

4. Remedies to the breach and Discharge5. Other, including bDSP; and


5/22

Features:

1. Agreement between trade persons only(art.6 of VCL). Non-trade persons maychoose application of VCL

2. Forms: Writing, oral, or act. Some of typesmust be in writing, e.g internationalcontract on sale of goods

3. Subjects: tradeable goods, at present orin the future. Goodsare All types of

moveable assets including moveableassets to be formed in the future; andobjects attached to land (art.3 VCL)

4. Content: Express partiesrights/obligations in sale where seller hasto transfer, property rights transfer and

receive money. Purpose: profit-gaining.Such content differ this type of contractfrom others.


6/22

Content:

Common law:no limit, but subjectmust be well defined.

Civil law:must-have are subjects,

quality and price.Vietnam law:VCL 2005 set no limits incontent, unlike VCL1997.

International lawtries to codify and setout best practices and principles forinternational contracts.

* Apart from parties agreements legalregulations can also limit the contractscontent


7/22

Part I. CONTRACT FORMATION:Anytime parties reaching agreement. There must be

established: offer, acceptance, and time andenforcement of contract. These essentials are notstipulated by VCL 2005, so VCC will regulate.

1.OFFER is expression of the intention to enter

into the contract and to be bound on this offerof the offering party to the other specifiedparty. Offeror may send to one or multiple

offerees, with specified time to reply; No time fixed --> offer takes effect uponofferees receipt;

Offer is considered received when:a. transferred to the place of residence (individual); orheadquarters (legal person)b. introduced into the official information system of the

offeree;c. Offeree knew the offer to enter into the contract byanother mode.


8/22

1. OFFER:

Offeror can revoke or modify anytime: before/at the time offeree receives the offer; or

conditions for modification or revocation of the

offer arise in cases where the offeror has clearlystated the eligibility for modification or revocationof the offer when such conditions arise.

Offer terminates when:

Offeree declines the offer;

Time limit for reply of acceptance has expired.

Notice on modification or revocation of the offertakes effect;

Notice on revocation of the offer takes effect;

Its so agreed upon by the offeror and the

offeree within the time limit for reply by the offeree


9/22

2. ACCEPTANCE: is offerees reply to theofferor on the acceptance of the whole contentsof the offer. Time limit for acceptance:

When the offeror fixes a time limit for reply, ittakes effect within that time limit;

If the offeror receives the reply when itsexpired, the acceptance shall be considered anew offer

In cases of late, for objective reasons whichthe offeror knew or would have known, such

acceptance remains effective.When the parties are in direct contact,telephone or other means, the offeree must

immediately reply whether to accept or not,except for agreement on the time limit for reply.

CO O S


10/22

3. TIME AND CONDITIONSof ENFORCEMENT

A. Generally, contracts enter into enforcement atthe moment parties reach an agreement.Moment may vary depending on contract nature.

Contract in writing, with direct contract: lastparty sign

Indirect contact:acceptance of offeree

oral contact:moment that parties agree uponcontracts provisions. Burden of proof are laid on

the parties

Silence: can also be acceptance if there isagreement on such silence.

Contracts on sale of goods enter intoenforcement at the moment they are entered

into, unless otherwise agreed upon or providedfor by law.


11/22

B.Conditions (Refer to Art. 122 - VCC 2005):

Parties to contracts shall have the civil act

capacity: business license of trade persons. Parties to contracts shall act completelyvoluntarily and meet other principles of contractstipulated by laws; Representative shall be duely authorized (noteArt. 145 VCC) Purpose and content of contracts shall not

violate law and not contrary to social ethics.Goods shall not be on the prohibition list asstipulated by laws. Format shall meet requirements of laws(art. 24 VCC2005)


12/22

Part II. IMPLEMENTATION

1.Principles - Contracts must beperformed:

in accordance with all provisions ofthe agreement;

honest, cooperation, best manner

that benefit parties, and ensuresmutual trust;

without infringement to State andpublic interests, as well as legitimaterights and interests of other persons.


13/22

2. Rights & obligations of parties (noprovisions in the contract):

Seller: Goods Delivery is the mainobligationa.Right subject and quality: usually providedfor in the Contract. If no provisions, Art. 39 VCLdefines incompatible goods.Buyer can reject to accept incompatible goods.Liabilities of parties in such case (Art. 41 VCL

2005). Exceed: Seller shall receive back that amountand bare all expenses if buyer rejects.Documents: hand over in reasonable time. If 3rd

party involve time passed to that 3rd partyb. Right time: If only time limit is provided,Buyer can deliver goods anytime within or before

the expiration date with due inform. Noagreement on time line reasonable (art. 37and 50 VCL 2005)

c Right place:


14/22

c. Right place: Goods attached to land place wheresuch goods exist;

contract contains a provision on goodstransportation, the seller is obliged to delivergoods to the first carrier;

contract contains no provision on goodstransportation, and at the time the contractis entered into, the parties know the location ofthe goods storage, the place of goods loading or

the place of goods manufacture, the seller shallhave to deliver the goods at such place; In other cases, the seller shall have to deliver

goods at his/her place of business, or his/herplace of residence identified at the time thepurchase and sale contract is entered into incases he/she has no place of business. (Art.

35.2 VCL)d. Pre-delivery examination shall be availableto buyer, unlike Civil Code (art. 44 - VCL)


15/22

e. Ownership and IP rights assurance of Seller:

The ownership right of the purchaser over goods

sold is not disputed by any third party; The goods are lawful;

The handover of the goods is lawful. (Art. 45

VCL)Unless otherwise provided for by law or agreedupon by the parties, ownership of goods shall bepassed from the seller to the buyer at handover ofthe goods.

Installment sale ownership rights retain until fullpayment

g. WarantySeller shall ensure goods warranty as soon aspractical situation permits and all bear expenses

(art. 49 VCL).Other cases not provided for by VCL Civil Codeart. 446 and 448

Buyer : Receipt and Payment


16/22

Buyer :Receipt and Payment

If buyer rejects to receive breach ofcontract. In this case, seller can dispose asthink appropriate.

Payment: Art. 50 and 52 VCL

Where no agreement on goods price or onthe price-determining method nor other priceindexes, the goods price shall be determined

according to the price of such type of goodsunder similar conditions, time of goodspurchase and sale, geographical market,

payment mode and other conditions whichaffect the prices.

Place of payment place of business OR

Place of delivery of goods/documents.


17/22

Time of payment Art. 55 VCL

Seller delivers the goods or the goods-related documents.

Buyer is not obliged to make payment until

the goods examination can be completedin cases where an agreement is reachedaccording to the provisions on pre-delivery

examination.Suspension of payment Art. 51 VCL

Deceit

Disputed goods , with proof

Incompatible goods, with proof

Compensation upon incorrect proof


18/22

3. Breach and RemediesBreach: - failure to fulfill, or to properly

fulfill contractual obligations, imposed bythe contract and laws.a. Actual breach of contract: red. .

b. Actual material damage: is damagethat can be evaluated in money. Direct andindirect damage. In commercial activities,

damage is defined in Art. 302.2 and 306 VCL.c. There is relationship between thebreach and actual material damage:d. Breaching party is at fault: Fault shallbe committed by representative of legalperson. Fault party is at fault if cannot

prove the contrary.


19/22

Remediesa. Compulsory implementation of contract:

upon request of party suffering breach, theimplementation shall be continued correctlyand the fault party shall bear all expensesoccurred. .

b. Penalty (liquidated damages): partysuffering breach may request an amount ofdamage compensation for the breach. Parties

are free to agree on amount of compensationfor one or more breaches, but the totalcompensation shall not exceed 8% value ofbreaching part.

c. Compensation: Value of compensationshall include value of actual damage sufferedby a party and the opportunity cost that partyshould have received.


20/22

d. Temporary suspension ofimplementation: unilaterally by a party.

Enforcement remains.

e. Cancellation: whole or a part of

contract. Parties are no longer be boundwith obligations of the contract.

g. Other agreements not in contrary withVietnamese laws and/or International lawregulations.


21/22

4. Exemption from liability for breaches:

a. A force majeure event

b. A breach by one party is entirelyattributable to the other party's fault;

c. A breach is committed by one party as aresult of the execution of a decision ofSABs which the party cannot know, at thetime the contract is entered into.

The fault party shall bear the burden ofproof of cases of liability exemption.

Further regulations are stipulated by VCC2005 (Art 161 onwards) and VCL (Art. 296)


22/22

Part III. DISCHARGE

1. By performance

2. By agreement3.Operation of law: e.g bankruptcy

4.Breach of contract:

5.Impossibility: specific things are nolonger exist

VNBizLaw Contract Law

Documents

Transcript of VNBizLaw Contract Law