Ta Diu Thuong, LLM

International University, HCMC National University

Contractual relations between parties engaging in business activities are regulated under VCC and Commercial Law 2005

CONTRACT is civil transaction or unilateral legal act which gives rise to, changes or terminates civil rights and/or obligations. A Contract can be verbal, in writing (inc. eContract) or certain acts. (Art.121- VCC 2005) Contract on Property Sale/Purchase is an agreement between the parties whereby the seller has the obligation to hand over the property to the buyer and receive payment, while the buyer has obligation to accept the property and make payment to the seller (Art. 428 of VCC 2005) Commercial activities are those carried out to gain profits (as in previous slides)

Classification: 1. Unilateral - only one party has rights/obligations to the other 2. Bilateral - each party has rights/obligation to the other 3. Main (principal) and supplemental 4. For benefit of 3rd party 5. Conditional - implementation depends on rise, change or termination of ceratin fact. 6. Domestic and International (territorial effect)

Principles: 1. Equality before law 2. Freedom and mutual agreement 3. Application of habits and customs as parties choice 4. Customer protection 5. Recognition of data massage in business activities Contents: agreements between parties to commercial contract on rights and obligations. 1. Quantity and quality 2. Parties rights and obligations 3. Place and method of delivery/payment 4. Remedies to the breach and Discharge 5. Other, including bDSP; and

Features: 1. Agreement between trade persons only (art.6 of VCL). Non-trade persons may choose application of VCL 2. Forms: Writing, oral, or act. Some of types must be in writing, e.g international contract on sale of goods 3. Subjects: tradeable goods, at present or in the future. Goods are All types of moveable assets including moveable assets to be formed in the future; and objects attached to land (art.3 VCL) 4. Content: Express parties rights/obligations in sale where seller has to transfer, property rights transfer and receive money. Purpose: profit-gaining. Such content differ this type of contract from others.

Content: Common law: no limit, but subject must be well defined. Civil law: must-have are subjects, quality and price. Vietnam law: VCL 2005 set no limits in content, unlike VCL1997. International law tries to codify and set out best practices and principles for international contracts.
* Apart from parties agreements legal regulations can also limit the contracts content

Part I. CONTRACT FORMATION:

Anytime parties reaching agreement. There must be established: offer, acceptance, and time and enforcement of contract. These essentials are not stipulated 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 offer of the offering party to the other specified party. Offeror may send to one or multiple offerees, with specified time to reply; No time fixed --> offer takes effect upon offerees receipt; Offer is considered received when:
a. transferred to the place of residence (individual); or headquarters (legal person) b. introduced into the official information system of the offeree; c. Offeree knew the offer to enter into the contract by another mode.

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 clearly stated the eligibility for modification or revocation of 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 offer takes 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

2. ACCEPTANCE: is offerees reply to the offeror on the acceptance of the whole contents of the offer. Time limit for acceptance: When the offeror fixes a time limit for reply, it takes effect within that time limit; If the offeror receives the reply when its expired, the acceptance shall be considered a new offer In cases of late, for objective reasons which the 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.

3. TIME AND CONDITIONS of ENFORCEMENT

A. Generally, contracts enter into enforcement at the moment parties reach an agreement. Moment may vary depending on contract nature. Contract in writing, with direct contract: last party sign Indirect contact: acceptance of offeree oral contact: moment that parties agree upon contracts provisions. Burden of proof are laid on the parties Silence: can also be acceptance if there is agreement on such silence. Contracts on sale of goods enter into enforcement at the moment they are entered into, unless otherwise agreed upon or provided for by law.

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 completely voluntarily and meet other principles of contract stipulated by laws; Representative shall be duely authorized (note Art. 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 as stipulated by laws. Format shall meet requirements of laws (art. 24 VCC2005)

Part II. IMPLEMENTATION

1.Principles - Contracts must be

performed: in accordance with all provisions of the agreement; honest, cooperation, best manner that benefit parties, and ensures mutual trust; without infringement to State and public interests, as well as legitimate rights and interests of other persons.

2. Rights & obligations of parties (no provisions in the contract): Seller: Goods Delivery is the main obligation a.Right subject and quality: usually provided for in the Contract. If no provisions, Art. 39 VCL defines 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 amount and bare all expenses if buyer rejects. Documents: hand over in reasonable time. If 3rd party involve time passed to that 3rd party b. Right time: If only time limit is provided, Buyer can deliver goods anytime within or before the expiration date with due inform. No agreement on time line reasonable (art. 37 and 50 VCL 2005)

c. Right place: Goods attached to land place where such goods exist; contract contains a provision on goods transportation, the seller is obliged to deliver goods to the first carrier; contract contains no provision on goods transportation, and at the time the contract is entered into, the parties know the location of the goods storage, the place of goods loading or the place of goods manufacture, the seller shall have 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/her place of residence identified at the time the purchase and sale contract is entered into in cases he/she has no place of business. (Art. 35.2 VCL) d. Pre-delivery examination shall be available to buyer, unlike Civil Code (art. 44 - VCL)

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 agreed upon by the parties, ownership of goods shall be passed from the seller to the buyer at handover of the goods. Installment sale ownership rights retain until full payment g. Waranty Seller shall ensure goods warranty as soon as practical situation permits and all bear expenses (art. 49 VCL). Other cases not provided for by VCL Civil Code (art. 446 and 448)

Buyer : Receipt and Payment

If buyer rejects to receive breach of contract. In this case, seller can dispose as think appropriate. Payment: Art. 50 and 52 VCL Where no agreement on goods price or on the price-determining method nor other price indexes, the goods price shall be determined according to the price of such type of goods under similar conditions, time of goods purchase and sale, geographical market, payment mode and other conditions which affect the prices. Place of payment place of business OR Place of delivery of goods/documents.

Time of payment Art. 55 VCL Seller delivers the goods or the goodsrelated documents. Buyer is not obliged to make payment until the goods examination can be completed in cases where an agreement is reached according 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

3. Breach and Remedies Breach: - failure to fulfill, or to properly fulfill contractual obligations, imposed by the contract and laws. a. Actual breach of contract: red. . b. Actual material damage: is damage that can be evaluated in money. Direct and indirect damage. In commercial activities, damage is defined in Art. 302.2 and 306 VCL. c. There is relationship between the breach and actual material damage: d. Breaching party is at fault: Fault shall be committed by representative of legal person. Fault party is at fault if cannot prove the contrary.

Remedies a. Compulsory implementation of contract: upon request of party suffering breach, the implementation shall be continued correctly and the fault party shall bear all expenses occurred. . b. Penalty (liquidated damages): party suffering breach may request an amount of damage compensation for the breach. Parties are free to agree on amount of compensation for one or more breaches, but the total compensation shall not exceed 8% value of breaching part. c. Compensation: Value of compensation shall include value of actual damage suffered by a party and the opportunity cost that party should have received.

d. Temporary suspension of implementation: unilaterally by a party. Enforcement remains. e. Cancellation: whole or a part of contract. Parties are no longer be bound with obligations of the contract. g. Other agreements not in contrary with Vietnamese laws and/or International law regulations.

4. Exemption from liability for breaches: a. A force majeure event b. A breach by one party is entirely attributable to the other party's fault; c. A breach is committed by one party as a result of the execution of a decision of SABs which the party cannot know, at the time the contract is entered into. The fault party shall bear the burden of proof of cases of liability exemption. Further regulations are stipulated by VCC 2005 (Art 161 onwards) and VCL (Art. 296)

Part III. DISCHARGE

1. By performance 2. By agreement 3.Operation of law: e.g bankruptcy 4.Breach of contract: 5.Impossibility: specific things are no longer exist