THE STATE COUNCIL SOCIALIST REPUBLIC Of VIETNAM Independence-freedom-Happiness htmlhtmlhtml----- Hanoi, 1 July 1991.
A civil contract represents an agreement between two or more parties which establishes, modifies or terminates the rights and obligations of those parties in the sale and purchase, hire, loan, borrowing or donation of property, or the provision of an act or a service, or any other agreement in which one party or many parties perform to meet a requirement in living or consumption.
Civil contracts shall be concluded on the principles of voluntaries, equality and compliance with the law and social standards.
Individuals entitled to enter into civil contracts:
1.Individuals who are eighteen (18) years of age or older who have the capacity to understand and perform their rights and obligations under a contract and to bear responsibility for the performance of those obligations, shall be entitled to enter into ci vil contracts.
2. Individuals under eighteen (18) years of age shall be entitled to enter into civil contracts only if they obtain the consent of their parents or guardian, except where those contracts are of minor value relating to daily necessities.
3. Individuals aged between sixteen (16) years and eighteen (18) years shall be entitled to enter into civil contracts, provided they have their own assets guaranteeing the discharge of payment obligations, except in the event that it is stipulated by the law that the party to the contract must be eighteen (18) years of age or older.
Organizations entitled to enter into civil contracts:
1. State agencies and economic and social organizations, (hereinafter referred to as organizations) which have legal status, shall be entitled to enter into civil contracts.
An organization having legal status must satisfy the following conditions:
(a) having its own assets and being able to bear responsibility for those assets;
(b) being able to independently enter into legal relations and to appear as either plaintiff or defendant in legal proceedings;
(c) be legally established and recognized by the law as an independent organization.
To enter into civil contracts through a representative:
An individual or a legal entity may enter into a civil contract through a legal or mandated representative and shall enjoy all rights and be liable for all obligations arising from those contracts so entered into by that representative within his authorit y.
1. A legal representative of a legal entity is the head of that legal entity; he shall enter into civil contracts only within the limit of his authority as stipulated by law or by the charter of the legal entity.
2. The legal representative of an individual under eighteen (18) years of age or an insane person shall be his parents or legal guardian which persons shall have full power to enter into civil contracts in the interests of the person represented.
1. A mandated representative shall be entitled to enter into civil contracts but only within the scope of the mandate agreed upon by the two sides: the mandator and the mandatory. The other party to the civil contract shall be informed of the mandate.
2. The mandatory shall delegate his mandate to another person only with the consent of the mandator.
3. Mandates shall be established in writing or certified by a notary public, if it is stipulated by law that contracts entered into by mandatories must be established in writing or certified.
4. A mandate shall be terminated upon the mandatory performing it, its time limit expiring or it being withdrawn by the mandator.
Principles for the performance of civil contracts:
1. A civil contract shall be performed in accordance with its terms and with the quality, quantity, duration, location, formal requirements and other items stipulated in the contract. A civil contract shall be modified or terminated in accordance with t he agreement of the contracting parties or stipulations of the law.
2. The contracting parties shall be obliged to exchange information and to co-operate with each other in the course of performance of the contract.
Responsibility for breaches of civil contracts:
The contracting parties shall be responsible for breaches which occur in the conclusion and performance of civil contracts.
Protection of legal rights and interests of parties to civil contracts:
The State shall protect the legal rights and interests of contracting parties.
Conclusion, Performance, Modification and Termination of Civil Contracts
Conclusion of Civil Contracts
Offer, acceptance and conclusion of contracts:
1. The party proposing to an individual or a legal entity to enter into a contract the main clauses of which are clearly stated shall be responsible for his proposal for the duration of time stipulated.
2. The acceptance of the contract shall be valid only for the duration of time stipulated in the proposal.
3. Silence shall not be interpreted as acceptance of the contract unless otherwise agreed upon.
Principal contents of a civil contract:
1. The principal contents of a civil contract shall be the main items stipulated by law for each kind of contract and other items agreed upon by the contracting parties.
2. Depending on the type of contract involved, the parties may agree to include any of the following main contents:
(a) the object of the contract which may be an asset or an act;
(b) quantity and quality;
(d) duration of time, location, manner of performance of the contract;
(e) rights and obligations of the parties;
(f) responsibility for breaches of the contract.
forms of contracts:
1. The parties may enter into contracts either orally or in writing.
2. In respect of those contracts which the law requires to be in writing and registered or certified by a notary public, the parties shall comply with those legal requirements.
Time at which contracts become effective:
1. A contract shall take effect as from the time of its conclusion unless otherwise agreed upon by the parties or provided for by the law.
2. The time of conclusion of an oral contract shall be the time at which the parties agree on the main contents of the contract.
The time of conclusion of a contract in writing shall be the time at which the parties sign the written contract.
Where the contract is required to be certified by a notary public, the time of conclusion of the contract shall be the time of such certification by the notary public.
1. A contract shall be null and void in the event of any of the following:
(a)its contents are illegal or against social standards;
(b)one or more of the parties to the contract are not of sufficient capacity to enter into contracts;
(c)the contract is entered into by a person under eighteen (18) without the consent of his parents or legal guardian in accordance with paragraph 2 of article 3 of this Ordinance, in which case his parents or guardian are entitled to request that the cour t declare the contract invalid.
2. When a contracting party makes an error as to the principal contents of the contract or is the victim of deception, he shall be entitled to request the court to declare the contract invalid.
3. Where any part of the contract is invalid that part shall be severed from the contract without affecting the validity of the remaining parts.
Settlement of the invalidity of contracts:
1. An invalid contract shall be of no effect as from the time of its conclusion.
2. If the contract has not been performed or is only partially performed, the parties shall cease performance of it.
3. Where the contract has been performed either in part or in full, the parties shall be obliged to return to each other any assets which have already been exchanged pursuant to the contract provided that those assets are not required by law to be confisc ated if the assets are not able to be returned in kind, they shall be returned in cash.
4. The part at fault in the conclusion of an invalid contract which has caused damage to the other party shall indemnify it against such damage except where the injured party has concluded the contract in full knowledge of the cause of invalidity of the c ontract.
5. Any illegal income derived from the performance of an invalid contract shall be confiscated.
Performance of Civil Contracts
Duration of time for the performance of a contract:
1. A contract shall be performed in accordance with the duration of time agreed for its performance.
2. In the event that no agreement exists as to the duration of time for the performance of the contract, the parties shall be entitled to perform, or to request the performance of, the contract at any time.
3. Any party committed to perform a contract within a specified duration shall perform the contract prior to or after that duration of time only if he has the consent of the other party to the contract.
Location for the performance of contracts:
1. A contract shall be performed at the location agreed on by the parties or at the location provided for by law depending on the type of contract involved.
2. In the event that no agreement exists as to the location for the performance of a contract, the contract shall be performed at the place of residence of the party committed to an obligation to perform it. In the event that no agreement exists as to th e location for payments under the contract in cash, payments shall be made at the place of residence of the party accepting those payments in cash.
If the object of the contract is a house, a construction work or a valuable perennial tree, the location for the performance of the contract shall be the place where the house, construction work or tree is located.
fulfillment of an obligation to deliver an object:
1.A party to a contract shall have fulfilled his obligations to deliver an object pursuant to a contract only when he has delivered the object to the other party as agreed.
2.If the object is delivered within the deadline agreed, the party who has failed to deliver the object shall bear responsibility for any damage which may be caused up to the time the object is delivered.
fulfillment of an obligation to refund money:
Any obligation to refund money shall be fulfilled at the location, in the manner and within the time agreed by the parties.
fulfillment of an obligation to perform or not to perform an act:
1.A party which has agreed to perform or not perform an act shall be deemed to have fulfilled his obligation only when he has or has not performed such act in accordance with the manner agreed.
2.A party which has agreed to perform an act but who has failed to do so in accordance with the manner agreed shall be subject to a further request by the other party to the contract to perform the act anew or to cease performing the contract.
3.A party which has agreed not to perform an act but has failed to not do so shall be subject to a further request by the other party, to the contract to stop performing this act or to cease performing the contract.
Performance of a contract involving the participation of several persons:
1.If a party to a contract comprises a number of participants with independent obligations, each participant shall fulfill his own obligations.
2.If a party to a contract comprises several participants with joint obligations, the other party to the contract shall be entitled to request that one of the participants with such joint obligations to perform the whole contract.
When one of the participants having joint obligations performs the whole contract, he shall be entitled to ask the other participants having those joint obligations also to fulfill to his benefit their respective shares of those obligations.
Conditional performance of contracts:
Where the parties agree on a condition precedent for the performance or termination of a contract, the contract shall be performed or terminated upon such condition occurring.
Performance of contracts in the interests of a third person:
1.Where the parties agree to the performance of a contract in the interests of a third person, the party concluding the contract in the interests of the third person as well as that third person shall be entitled to request that the other party perform th e contract.
2.Where the third person relinquishes up his interest, the party committed to perform the contract on that person's behalf shall no longer be liable for performance of the contract, unless otherwise agreed by the contracting parties.
Transfer of rights and obligations of contracting parties:
1.A contracting party may transfer its rights in a contract to another person, unless expressly prohibited from doing so by the contract or by the law. Any such transfer shall be notified to the other party to the contract.
2.A contracting party may transfer its obligations to perform a contract to another person provided that the other party to the contract agrees.
Modification and Termination of Civil Contracts
Modification of contracts:
1.The parties may agree to modify the contract and deal with the consequences of such modification, provided the law does not stipulate otherwise.
2.Where the contract is required to be in writing,registered or certified, any modifications to it shall require the same formalities.
Termination of contracts:
A contract shall be terminated in the following circumstances:
1.The contract has been performed in full.
2.The contract is terminated by agreement between parties.
3.The contract must be terminated pursuant to the law.
4.The individual who has entered into the contract dies, or if a legal entity, is liquidated or goes bankrupt and the contract is required to be performed by that particular individual or legal entity only.
5.The contract cannot be performed due to circumstances of force majeure. Circumstances of force majeure are cases in which unpreventable and insurmountable objective circumstances occur, despite the taking of all necessary measures.
Cancellation of contracts:
1.A party shall be entitled to cancel a contract on the conditions agreed on by the contracting parties or as provided for by the law.
2.When a contract is canceled, the parties shall return to each other any assets they have received pursuant to that contract. If they are unable to return the objects in kind, they shall return them in cash. The injured party shall be entitled to liqui dated damages.
Unilateral cessation of performance of contracts:
1.A party shall be entitled to unilaterally cease performance of a contract on the conditions agreed on by the parties or as provided for by the law. The party unilaterally ceasing performance of the contract shall immediately inform the other party of su ch action.
2.When the performance of a contract is unilaterally ceased the contract shall be deemed to have been terminated as from the time the other side is informed of the cessation. Any party which has delivered an object or performed any act pursuant to the co ntract shall be entitled to seek reimbursement from the other party for same. The party which has unilaterally ceased the performance of the contract shall be entitled to request liquidated damages.
Measures Ensuring the Performance of Civil Contracts
Assets as security:
1.The parties may agree for the whole or parts of houses, construction works, sea ships or perennial trees to be mortgaged as security for the performance of a contract. Property mortgaged as security must be owned by the mortgagor party and be capable o f being sold.
2.Property mortgaged as security shall remain in the possession of the mortgagor unless otherwise agreed.
Property mortgaged as security:
1.Mortgages of property shall be established in writing and certified by a notary public.
2.In the security document mention shall be clearly made of the type, quantity, quality and value of the property mortgaged, the duration of the mortgage and the manner in which property mortgaged is to be treated.
Obligations of the mortgagor:
A mortgagor shall have the following obligations:
1.To deliver to the mortgagee the original document certifying ownership of the assets.
2.To maintain the property mortgaged, to use it and benefit from it only with the consent of the mortgagee.
3.Not to sell, donate, hire, lend or exchange the property and not to use it to guarantee another obligation.
Obligations of the mortgagee:
1.The mortgagee shall return documents certifying ownership of the property mortgaged upon the mortgagor fulfilling his obligations.
2.Where the mortgagee takes possession of the property mortgaged for the duration of the mortgage, he shall fulfill the obligations stipulated in clauses 2 and 3 of articles 32 of this Ordinance.
Dealing with property mortgaged:
1.Where the mortgagor fails to perform the contract at all or in accordance with the manner agreed, the property mortgaged shall be dealt with in the manner agreed by the parties or sold by way of auction upon decision being made by the court at the reque st of one of the parties.
2.The mortgagee shall take priority in the distribution of the proceeds of the sale of the mortgaged property. If the proceeds of such sale are insufficient for payment, the mortgagor shall guarantee the remainder using other assets.
Pledge of assets:
1.The contracting parties may agree to pledge assets other than houses, construction works and perennial trees, in order to guarantee the performance of contracts. The assets pledge must be owed by the pledgor and be capable of being sold.
2.Assets pledged shall be maintained by the pledgor unless otherwise agreed by the parties.
forms of pledge of assets:
1.A pledge of assets shall be established in writing with clear reference to the type, quantity, quality and value of the assets pledged, the duration of the pledge, and the manner in which those assets pledged are to be treated.
2.The document containing the pledge of assets shall be certified by a notary public if so required by law.
Obligations of the parties to a pledge of assets:
1.The pledgor shall deliver the assets in accordance with the agreement. If there exist any documents evidencing ownership of the assets pledged, those documents shall also be delivered up.
Where the assets pledged remain in the possession of the pledgor, they shall be maintained and shall not be sold, donated, hired, lent or exchanged, neither shall they be used to guarantee another obligation and they shall be used only with the consent of the pledgee.
Obligations of the pledgee:
1.Where the pledgee takes control of the assets, he shall maintain them, and shall not sell, donate, hire out, lend or exchange them and shall use them only with the consent of the pledgor.
2.The pledgee shall return to the pledgor the assets pledged and the documents attesting to their ownership upon the pledgor fulfilling all of his obligations.
Dealing with pledged assets:
Pledged assets shall be treated in accordance with the provisions of article 36 of this Ordinance which deal with the issue of assets as security.
1.A guarantee is a commitment by an individual or a legal entity, generally referred to as the guarantor to bear responsibility for another if at its deadline a contract has not been performed by that other person at all in accordance with the agreement. The guarantor shall provide a guarantee only in the form of either assets or the performance of a service.
2.The guarantor, after fulfillment of his commitments, shall be entitled to request that the accommodated party fulfill his obligations towards him.
forms of guarantee:
All guarantees shall be established in writing.
Guarantee documents shall be certified by a notary public if so required by the law.
Advance Security funds
Advance security funds:
1.An advance of security funds is a specific sum of money advanced by one party to another in order to guarantee a commitment or the performance of a contract.
2.If the party making the advance gives up his commitment or does not perform the contract, the funds advanced shall be deemed to belong to the recipient of the money. If the recipient of the funds advanced gives up his commitment or does not perform the contract, he shall return to the party who has made the advance a sum twice the amount of the funds advanced unless otherwise agreed by the parties.
Responsibility for Breach of Civil Contracts
Responsibility for breach of contract:
A party who fails to perform a contract at all or in accordance with the manner agreed shall be liable for breach of contract, unless otherwise provided by the law.
Responsibility for non-performance of contracts:
Where a party fails to perform a contract he shall perform it at the request of the other party and pay liquidated damages.
Responsibility for delay in the performance of contracts:
Where a party has failed to fulfill his obligations prior to expiry of duration for performance of a contract that party shall continue to perform the contract and pay liquidated damages. The injured party shall be entitled to unilaterally cease performa nce of the contract or terminate it completely.
Responsibility for performance of contracts which does not conform with the required quantity:
1.In cases where a party performs a contract but not in conformity with the required quantity, he shall continue to fully perform it.
2.In such cases the other party shall be entitled either to accept such performance, unilaterally cease performance of the contract or terminate it completely. In the event that he accepts such performance, he shall be obliged to pay for the quantity rec eived.
3.The party in breach of the contract shall pay liquidated damages.
Responsibility for performance of contracts which does not conform with required quality:
1.Where a party violates the quality standards agreed upon or provided for by law, the injured party shall be entitled to reject the subject of the contract or if he accepts, to request a reduction in price or improvement in quality and the payment of liq uidated damages.
2.for the duration of guarantee of quality, if that quality does not conform with that agreed or provided for by the law, the party having the guaranteed object shall be entitled to request that it be repaid free of charge, a reduction in the price paid, exchange for another object or return of the original object and full refund of its price and the payment of liquidated damages.
Responsibility for untimely performance of contracts:
Where a party does not achieve a timely completion of a product or performance of a service as agreed upon, the injured party shall be entitled to reject that product or service and request a timely completion; he shall also be entitled to unilaterally ce ase performance of the contract or terminate it completely.
The party in breach shall pay liquidated damages.
Responsibility for delivery of an object of a type other than that required:
Where a party delivers an object which is not of the type required, the other party shall be entitled to reject that object and request that an object of the required type be delivered instead, to cease performance of the contract or to terminate the cont ract and seek liquidated damages.
Responsibility for delayed or insufficient payment:
In the event that a deadline for payment under a contract expires, and a party has not paid or has not fully paid the amount due, the other party shall be entitled to request immediate and full payment together with interest as agreed upon by the parties or provided for by the law.
Payment of liquidated damages:
1.The party in breach of a contract due to his own fault and who causes damage to the other party shall pay liquidated damages.
2.Liquidated damages shall be paid in full except where otherwise provided for by the law. Liquidated damages may be paid in kind, cash or the provision of a service. Where the damage caused by a lack of attention is far greater than the ability of the party in breach to pay liquidated damages, the party in breach may be liable only for a reduced amount.
3.Damage shall be calculated by reference to actual losses caused to the injured party which can be valued in monetary terms. Damage shall include loss of assets, expenditure incurred in preventing and limiting such loss and actual loss of revenue.
Cases where payment of liquidated damages not required:
A party in breach of a contract shall not be liable for payment of liquidated damages in the following circumstances:
1.The damage is fully caused by the fault of the injured party.
2.The damage is caused by circumstances of force majeure, unless otherwise provided for by law.
Responsibility of several persons causing the damage:
1.Where the party in breach of a contract is comprised of several persons who cause the damage, those persons shall be jointly liable to pay liquidated damages provided joint responsibility is agreed upon and provided for by law.
2.Where the party in breach of the contract is comprised of several persons who cause the damage, and their responsibility for such damage is independent of each other, each person shall be liable to pay liquidated damages for that part of the damage caus ed by his own fault.
Payment of liquidated damages where both parties at fault:
If the damage is caused due to the fault of both parties, the injured party shall not be indemnified for the part of damage caused by his own fault.
Penalty for breach of contracts:
1.Apart from liability for breach of contract as provided for in articles 44, 45, 46, 47, 48, 49 and 50 of this Ordinance, the party in breach of the contract shall pay to the other party punitive damages as if the parties have so agreed or the law so pro vides.
2.The amount of punitive damages shall be agreed upon by the parties, unless otherwise provided for by law.
Limitation of Actions at Law
Expiry of time for actions at law:
1.An injured party may within three years as from the date of the breach of a contract, commence proceedings in the court unless otherwise provided by the law. Upon expiry of this time limit, the injured party shall lose its right to commence such procee dings.
2.Where due to objective reasons the proceedings cannot be commenced within the time limit stipulated in the first paragraph of this article, the delay caused shall not affect the expiry of the time for commencement of proceedings at law.
3.In respect of contracts breached prior to the day upon which this Ordinance takes effect, the time for expiry of proceedings at law shall be calculated as from the day upon which this Ordinance takes effect.
Scope of application:
1.The provisions of this Ordinance shall apply to business contracts of registered owners of business which are not classified as private according to the provisions of the Law on Private Enterprise.
2.The provisions of this Ordinance shall apply to civil contracts concluded by a party represented by a foreign individual or legal entity and which are to be performed in Vietnam, unless otherwise provided by any international conventions signed or adher ed to by Vietnam.
This Ordinance shall be of full force and effect as from 1 July 1991.
Any previous provisions on civil contracts which are inconsistent with this Ordinance shall be repealed.
The Council of Ministers and the Supreme People's Court shall, within the scope of their respective authority issue detailed provisions for the implementation of this Ordinance.
for The State Council of the Socialist Republic of Vietnam The Chairman
VO CHI CONG