Contract Preparation in Vietnam

In Vietnam, certain type of contracts has to follow forms requested by laws as such client is recommended to seek help from professional contract dispute lawyers in Vietnam to help draft or review.

 

Contract negotiation law firm in Vietnam

Contract is an agreement enforced by law. In Vietnam, contract is a civil transaction which parties enter into voluntarily, each of whom intends to create, change, or terminate one or more rights or obligations between them according to Vietnam Civil Code. Contract plays an important roles in business transaction. Written contract provide individuals and businesses a legal document reflecting agreement, expectation and mechanism to resolve potential disagreement or disputes.

The English speaking lawyers in Vietnam drafting or reviewing contracts under Vietnam laws will need to initially review the legal resources in relevant to the transactions, research related documents and the parties involved to provide legal opinions, make suggestions and propose an optimal solution to the client for negotiation and contract finalization.

Basic terms and conditions of the contracts being rights and obligations of parties to the contracts, and other terms in regard to duration, quality, payment, dispute handling procedures, applicable law and/or jurisdiction, confidentiality, force majeure, intellectual property clauses…among others have to be carefully taken into considerations.

Further, a contract should ensure the following points to be covered:

-Use right legal terms or terminology;

-Foresee the future scenarios;

-Describe the specific matters;

-Clearly mention obligations;

-Obtain a balance between parties involved.

There are specific contracts in Vietnam for various transactions being:

-Joint venture contract;

-Share purchase contract;

-Sales contract;

-Business cooperation contract;

-Licensing contract;

-Investment contract;

-Labour contract;

-Lease contract;

-Distribution contract;

-Construction contract;

-Prenuptial agreement. 

Each business transaction is different as such a contract is not a compilation of standard terms and conditions.  Professional contract dispute lawyers in Vietnam would consider the purpose of the contract, transaction type, significance of the deal, industry, Vietnam legal requirements and expectation of the client to prepare a legally enforceable contract for the client, to avoid misunderstanding and protect the client against legal disputes.

ANT Lawyers – English Speaking law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or service request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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Contract Dispute in Vietnam

Disputes occur during contract performance are beyond the control of the entity entering contractual relations. In developed countries, lawyers always invited to advise customers to identify potential disputes, and provide solutions, support and provide legal advice and to accompany the enterprises solve disputes in accordance with the provisions of the law, which help businesses to focus on its business activities. The contract should be carefully reviewed by lawyers. Foreign companies when entering Vietnam mostly follow suit to engage dispute or litigation dispute lawyers in Vietnam at early stage of the transactions. 

 

Contract Dispute

Contractual disputes in Vietnam shall be construed as conflicts, disagreements, conflicts between the parties regarding the implementation or non-implementation of rights and obligations in the contract. Disputes could arise in failure to collect the payment from debtor in sales agreement, construction contract disputes between investor and contractor, labour dispute between employer and employee, insurance disputes between ship owner and insurance company.

Contract disputes must satisfy the following factors:

First, there is a contract between the parties. The contract would be in different for ms therefore, there is a need to clearly define if the contractual relationship has been formed or not.

Second, there is a breach of obligations or duties that are in violation of a party in the contractual relationship.

Third, there is disagreement between the parties about the handling of infringement or the consequences of such violations.

It should be noted, the contract disputes arise from the breach. However, not all breaches of contract also lead to disputes.

How to settle the contract disputes in Vietnam?

Contractual disputes can be resolved by the following methods:

Negotiation is the process or behavior in which the two sides conduct exchanges, agreement on common interests and characteristics of disagreement and come to a unified agreement. The negotiation is without the presence of third parties. However, if the contract dispute lawyers in Vietnam would be involved during the negotiation process, at the role of representing or advising, counseling, then the negotiations tend to be more effective and parties would reach agreement.

Mediation is one of the options for disputing parties to end the conflict. Mediation is different from negotiating with the intervention of a third party. Mediator will help parties to achieve agreement and resolve conflict.

Court or arbitration: The settlement of the dispute in court would take time. The court’s ruling can be appealed. It should be noted that, per Vietnam laws, only Vietnam litigation or dispute law firms could represent the client at court. Commercial arbitration is available only in commercial-business sector. The advantage of this method is fast and efficient. However, compare with disputing at court, this method of handling dispute would take higher costs.

Disputes and dispute resolution matters are natural and inevitable in any countries including Vietnam. It is important that parties involved need to identify, anticipate disputes can occur. Contract or agreement should be reviewed by lawyers. When there is a dispute, the dispute lawyers in Vietnam will be able to help parties to with advice to reasonable solution to address the disputes effectively.

ANT Lawyers have litigation  and dispute  lawyers in Ho Chi Minh City, Hanoi and Da Nang cities that help clients dealing with dispute resolution and alternative dispute resolution in Vietnam.

 

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Effective Date of the Contract and the Time of Ownership Transfer

What is the Effective Date of the Contract and the Time of Ownership Transfer?

One of the most common disputes in contract disputes is the dispute on the effective date of the contract. In order to avoid these disputes, parties should refer to the nature of the validity of the contract as well as distinguish the difference between effective date of the contract and the time of ownership transfer.

 

Contract dispute lawyers in Vietnam

Regarding the effective date, contract shall take effect when contract meets all condition of participants in contract, condition of purpose and contents of contract and condition of form (in case there is regulation). Specifically, participants in contract shall have legal capacity in conformity with such contract and the participation shall base entirely on voluntariy will. For the second condition, the purpose and contents of the contract will not be contrary to the law and social ethics. When there are enough conditions met, a contract legally entered into shall take effect from the time when it is entered into, unless otherwise agreed or otherwise provided by law. From the effective date of the contract, parties shall mutually exercise rights and perform obligations as agreed. A contract may be amended or terminated as agreed by the parties or prescribed by law.

Through definition of the effective date of the contract, basic difference between dealing with breaches of contracts which have taken effect and dealing with breaches of invalid contracts can clearly be seen. In invalid contracts, the general remedy rule is restoring everything to its original state and returning to each other what have received. Dealing with breaches of contracts, which have taken effect, must be based on the terms of contract on how to handle such violations. If the contract does not stipulate, the provisions of law on such violation will be applied. It should be noted that there are many regulations from time to time, so the law must be properly applied.

Specially, a contract violating conditions of form validity shall be invalid, except that a party or the parties have fulfill at least two third of the obligations in the contract. A court, at their request, shall issue a decision on recognition of the validity of such contract. It is understood that the contract takes effect after the Court’s judgments or decisions take effect. After the contract takes effect, regulation of law will be applied to determine time of ownership transfer. Contract which can be recognized as valid does not mean that such contract will naturally take effect at the time of fulfilling two third of the obligations. Recognition of the Court is to force parties to continue to execise the obligations of the contract or resolve later disputes according to valid contract.

Time of ownership transfer normally belongs to stage of contract enforcement, which is after the effective date of the contract. Except for special contracts (such as contracts for gift), whose time of ownership transfer can be a condition of making contract be valid. With respect to other normal contract, time of ownership transfer is not related to validity condition of contract, which does not make the contract be valid or invalid. It should be noted that time of ownership transfer is stipulated differently with respect to different contract, different property and different specific time. According to Vietnam law of transfer of ownership rights by owner, when an owner transfers ownership rights to another person through a contract for sale and purchase, exchange, gift or loan, other contract of ownership transfer or through inheritance, the ownership rights of the owner shall terminate from the time when the ownership rights of the transferee arise.

The law stipulates that the time of establishing ownership rights and other property-related right shall be determined according to Civil Code 2015 and relevant laws. If there is no relevant regulations of law, the agreement of the parties shall be applied. If there is no either relevant regulations of law or agreement of the parties, the time of establishing ownership rights and other property-related rights shall be the time when the property is transferred. The time when the property is transferred is the time when the obligee or his or her legal representative possesses the property. In case where the property which has been not transferred and there are yield or income arise from that property, such yield or income shall belong to the transferor, unless otherwise agreed.

Legal significance of determining time of ownership transfer is to determine who is responsible for the risk and property. According to law, owner shall bear all risks of the property under his or her ownership, unless otherwise agreed or unless otherwise prescribed by laws. The holder of other property-related rights shall bear risks of the property within his or her right scope, unless otherwise agreed with the owner of the property or unless otherwise prescribed by laws.

ANT Lawyers - a Law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or serive request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529. 

 

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When a Contract is Invalid Due to Non-compliance With Form in Vietnam?

Generally, contracts for sale and purchase of goods and service contract shall be expressed in verbal or written form or established with specific acts. For types of contract which must be made in writing provided by law, such contract must comply with such form regulation. Particularly, contract for international purchase and sale of goods shall be conducted on the basis of written contracts or other forms of equal legal validity.

 

Contract dispute law firm in Vietnam

There are two cases of non-compliance with form: (i) form of contract is not in accordance with the law and; (ii) contract violates against regulations on notarizing or authorization. It should be noted that the form of contract shall be the conditions for its effectiveness in cases where it is provided by law. The time limit of requiring the court to declare a contract of non-compliance with form in Vietnam invalid is 02 years, from the establishment date of contract. After such time limit, if there is still no request for declaring contract invalid, such contract still remains valid.

When the contract is invalid, the general rule is restoring everything to its original state and returning to each other what have received. The non-compliance with form contract could be valid de facto contract if recognized by the Court’s decision when one party or the parties has fulfill at least two third of the obligation contract. Obligations means work whereby one or more entities must transfer objects, rights, pay money or provide valuable papers, perform or not perform certain work for the interests of one or more other entities. However, one party or the parties fulfilling at least two third of the obligation contract will not naturally make such contract valid unless there is decision of the the Court to recognize such. Specifically, according to request of one party, after fully considering conditions mentioned above, the Court shall make a decision on recognizing the validity of such contract.

It is important for parties to have a proper contract with terms and conditions that provide sufficient details with consideration of the nature of the business transactions and the possible resolution when potential disputes arise.  Further, the law governing the contract and the dispute resolution clause which refers to court or arbitration choice should be as clear as possible to avoid confusion and extended time resolving the arisen disputes.

ANT Lawyers - A Contract dispute law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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Fundamental Contract Breaches in Law on Commerce 2005 and CISG 1980

What Are Fundamental Contract Breaches in Law on Commerce 2005 and CISG 1980?

Fundamental breach is a type of contract breach, in which the Law on Commerce 2005 defines that a breach of contract committed by one of the parties is fundamental if it causes damage to the other party to the extent that the other party fails to achieve purpose of contract conclusion. The significant factor that makes the difference between the fundamental and minor breach of contract is the materiality.

 

Contract Dispute Lawyers in Vietnam

Fundamental breach is an important foundation for the imposition of trade remedies such as temporary suspension of performance, suspension of performance or contract cancellation when the contract has no specific agreement. Nonetheless, Law on Commerce 2005 does not provide further guidance on fundamental breach. Court or arbitrator has a right to determine whether a breach is fundamental on a case-by-case basis. 

As set forth in CISG 1980, a breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result. CISG also does not provide specific provisions to explain fundamental breach in details. Nonetheless, it can be deemed that in order to constitute a fundamental breach, three following factors need to be met: (i) a breach is made, (ii) detriment resulted from such breach substantially deprives him of what he is entitled to expect under the contract, and (iii) the breach can be foreseen.

The difference between constitution of a fundamental breach under CIGS 19080 and Law on Commerce 2005 is that: a breach cannot be treated as under CISG 1980 in case the breaching party did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result. Law on Commerce 2005 does not stipulate factor (iii) as mentioned herein but requires that (1) a breach is made and (2) damage resulted from such breach causes other party failed to achieve its purpose of contract conclusion to constitute a fundamental breach. The aggrieved party accordingly has a right to impose remedies such as temporary suspension of performance, suspension of performance or contract cancellation.

The consequence factor of fundamental breach in Law on Commerce 2005 is similar to CIGS 1980. In case the purchaser is aggrieved party, what he/she is entitled to expect under the contract is right to receive the goods, to own the goods and to sell to other parties to earn profits or manufacture products or other ways he/she can make a profit. In case the seller is aggrieved party, what he/she is entitled to expect under the contract is right to receive payments, which is profits he/she may earn. The purpose of contract conclusion as provided in Law on Commerce 2005 is same as what the purchaser and seller are entitled to expect under the contract as stipulated in CISG 1980.

ANT Lawyers - a Dispute Law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or service request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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How to Determine Penalty and Compensation for Damages from Breach of Commercial Contract?

When drafting a contract, especially a commercial business contract, in addition to basic provisions such as the object, scope of the contract, value and payment method, rights and obligations of the parties, dispute settlement, information confidentiality, and the regulations on the penalty for a breach of the contract and damage compensation are also very important.

 

Contract dispute lawyers in Vietnam

Penalty for a breach of the contract

Under the provisions of the Commercial Law 2005, penalty for a breach means that the breaching party must pay a sum of money to the aggrieved party due to the breach of the violating party if the parties agree in the contract on the fine for a breach. Thus, the penalty for a breach only arises when there is a breach of the contract by the violating party and the parties have agreed on the penalty.

The law gives the right to agree on sanctions for violations to contractual parties, but this freedom to negotiate is limited. Specifically, the parties are only allowed to agree to a maximum penalty of 8% of the breached contractual obligation value, except traders providing assessment services issue assessment certificates showing incorrect results caused by their unintentional faults, they must pay penalty therefor to customers. The penalty level shall be agreed upon by the parties but must not exceed ten times the assessment service charge. In fact, the dispute settlement agency also bases on the prescribed limit of the law to handle; therefore, even if the parties agree to a higher penalty for a breach, it is not applicable in practice.

Compensation for damage

Compensation for damage means a remedy whereby the breaching party pays compensation for the loss caused by a contract-breaching act to the aggrieved party. The basis for arising damages is a breach of the contract; there is material loss and act of breaching the contract is the direct cause of the loss. Difference from penalty for a breach, liability to compensate for damages caused by breaches of contract performance obligations arises even in cases where the parties do not have an agreement on this matter. Besides, the law does not provide any regulation to limit the amount of compensation; it is based on the actual damages that the aggrieved party can prove.

When participating in the transaction, if both types of sanctions are specified in the contract, they should clearly specify the basis for the amount of compensation for the damages and the penalty for violation.

In fact, there are many cases where the parties do not agree clearly or agree on the penalty but the amount of the penalty exceeds the prescribed level, the excess could be considered invalid. The parties should also note that there will be no agreement on late payment interest on the infringement penalty and the amount of compensation damages.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Dispute Attorneys in Hanoi, Ho Chi Minh City and Danang, will help customers conveniently drafting contracts and assist in resolving contract disputes in Vietnam.

 

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Debt Trading Contracts in Vietnam

What Are Regulations on Debt Trading Contracts in Vietnam?

Along with the development of socio-economic activities, right to collect debt has become an asset right, hence its transferability is also recognized. Vietnam law recognizes debt as a commodity that can be traded through a debt trading contract. However, in order for the debt trading contract to be legally valid and ensure the rights and obligations are enforced, the parties need to pay attention to the provisions on the debt trading contract.

 

Debt trading contract in Vietnam

Firstly, in terms of the right to enter into a debt trading contract, according to the provisions of the Civil Code on the sale and purchase of property rights, the property right is the right to claim debt in Vietnam. Accordingly, the right to recover debt becomes the subject of a contract that the parties can transfer as if it were a special type of property. In addition, the debt trading contract aims to transfer ownership of the right of debt recovery and at the same time transfer the debt seller’s obligations to the debt purchaser. This is a transaction that does not affect the interests of the debtor totally. Therefore, the transfer of the right to demand does not require the consent of the obligor, whereby the parties can enter into a debt trading contract without the consent of the debtor.

Secondly, in terms of the form of the debt trading contract, based on the provisions of law prescribing debt trading contract by credit institutions and foreign bank branches, debt trading contract is a written agreement on the transfer of the right to collect debt for a debt arising from a lending operation, payment on behalf of the guarantee, whereby the debt seller transfers ownership of the debt to the debt purchaser and receives payment from the debt purchaser. Therefore, the debt trading contract must be made as a written document.

Furthermore, the debt trading contract must be signed by the legal representative or the authorized representative of the debt purchase and sale parties. Therefore, according to this provision, the debt trading contract does not require the parties to be notarized or authenticated. If necessary, the parties can agree on the notarization or authentication of the debt trading contract. In addition, the parties can make an agreement that the contract can be made in a foreign language and the parties need to consent on which language of the contract will be used in case of a dispute arisen. In addition, in case the debt purchaser and debt seller are organizations with legal status, in addition to the legal representative to sign, the contract needs to be stamped. These are strict regulations on the established form to ensure the legality of the contract’s form.

Thirdly, when drafting a debt trading contract, it must contains the following principal contents: (i) Time for signing the debt trading contract; (ii) Names and addresses of the parties to the debt trading contract; (iii) Name and title of the representative of the parties to the debt trading contract; (iv) Name and address of the debtor and related parties (if any) to the purchased or sold debt; (v) Details of debt purchased and sold: Loan amount, loan period, purpose, book value of the debt up to the time of debt purchase and sale; (vi) Security measures for the debtor’s payment obligation for the purchased or sold debt (if any); (vii) Debt selling price, payment method, payment term; (viii) Time, method and procedures for transferring debt documents and records, including dossiers and documents on debt security (if any); The time the debt purchaser becomes the subrogator, the debt seller has obligations; (ix) Rights and obligations of debt sellers and debt buyers; (x) Liability of the parties for breach of contract; (xi) Settlement of arising disputes. These are the basic and mandatory contents of a debt trading contract. In addition, the parties can make agree on other contents in the debt trading contract that are not contrary to the provisions of the laws.

In addition, during the implementation of the debt trading contract, the law allows the parties to agree to amend, supplement or cancel the content of the debt trading contract. However, the decision to amend, supplement or cancel must be based on ensuring compliance with the provisions of law.

Therefore, the establishment of a debt trading contract in Vietnam is basically the same as other property rights transfer transactions. However, debt is a special object of property rights, therefore the parties need to strictly comply with the provisions of law on the content and form of the contract to ensure the legality of the contract as well as the rights and obligations of the parties. It is suggested to engage lawyers with specialization in debt recovery and dispute resolution to assist drafting or reviewing debt trading contract for its effective usage.

ANT Lawyers – A Law Firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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How Amendment to Contracts in Vietnam Can be Made?

Once a contract is made legally, contracting parties shall implement and such contract is respected by third parties. As stated in Civil Code 2015 (“CC”): “Each commitment or agreement that does not violate regulations of law and is not contrary to social ethics shall be bound by contracting parties and must be respected by other entities”. However, in the implementation process, the contract can be amended, which means, rights and obligation of parties can be amended accordingly.

 

Contract Dispute Lawyer in Vietnam

Due to the fact that the contract is result of before agreement, amendment shall follow certain conditions. According to laws, parties may agree to amend a contract. Enterprises need to pay attention to some following issues when amending the contract in the implementation process:

Firstly, entities participating in contract amendment is the matter which enterprises need to notice. Both contract and supplemental agreement are made on behalf of the parties, which means between two juridical persons. In reality, juridical persons only carry out transactions through representatives, it may be legal representative or authorized representative. Therefore, entities participating in contract amendment shall be representative of juridical persons. A civil transaction entered into and performed with a third person by a representative in accordance with his/her scope of authorization shall give rise to rights and obligations of the principal. Regarding consequence of civil transactions made by unauthorized persons or by representatives beyond scope of representation, such civil transactions shall not give rise to rights and obligations of the principal or not give rise to rights and obligations of the principal with respect to that part of the transaction which exceeded the scope of representation, except for any of the following cases: (i) The principal recognizes the transaction or gives consent; (ii) The principal knows it without any objection within an appropriate time limit; (iii) It is the principal’s fault that the other party does not know or is not able to know that the person entering into and performing the civil transaction therewith was unauthorized or beyond his/her scope of representation. In above circumstances, the unauthorized person must fulfill the obligations to the person with which he/she transacted or the obligations owning to the person with which he/she transacted in respect of the part of transaction which is beyond the scope of representation, unless such person knew or should have known that the representative was unauthorized or the scope of representation was exceeded but still transacted. A person having transacted with above representative has the right to terminate unilaterally the performance or to terminate the made civil transaction or to terminate the civil transaction with respect to that part which is beyond the scope of representation or with respect to the entire transaction and to demand compensation for any damage, except that such person knew or should have known that that the representative was unauthorized or the scope of representation was exceeded or the case of which the principal recognizes the transaction or gives consent. If above representatives and the other party in a civil transaction deliberately enter into and perform such transaction and thereby cause damage to the principal, they must jointly compensate for the damage.

Form of agreement on amending contract is the second matter which needs to be taken into consideration. Amendment shall comply with the form of the initial contract. For instance, if the initial contract is made in written, notarized, certified, registered, the amendment shall follow such forms. The form of contract shall be the conditions for its effectiveness in cases where it is provided by law. Therefore, the form of amended contract shall be the conditions for its effectiveness in cases where it is provided by law. In invalid contracts, the general rule is restoring everything to its original state and returning to each other what have received. The condition for the contract of non-compliance with form recognized by the Court’s decision is that one party or the parties has fulfill at least two third of the obligation contract. However, not one party or the parties fulfilling at least two third of the obligation contract will naturally make such contract invalid but there must go through the Court. Specifically, according to request of one party, after fully considering conditions mentioned above, the Court shall make a decision on recognizing the validity of such contract. This principle also applies to contracts amendment. It is important that parties to consult with lawyers at early stage to anticipate matters of dispute and clearly have clauses drafted to avoid potential future disputes.

ANT Lawyers – A Law firm in Vietnam has law offices in Hanoi, Ho Chi Minh City and Da Nang.  The lawyers at each law offices in Vietnam have consistently made valuable and important contributions to our profession through the cases we handled on daily basis to facilitate business transaction or represented our clients to access justice.

 

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Conditions for Cancellation of Contract in Vietnam

What are Conditions for Cancellation of Contract?

When entering into a contract, the parties in a contractual relationship always aim for certain interests and purposes. However, in reality, the contract is not always implemented seriously and in good faith. According to Vietnam laws, parties are entitled to cancel the contract to protect rights and interests. Therefore, it is not rare for a party to request to cancel the contract in order not to be bound by the contract. However, it should be noted that the right of cancellation is only applied in some certain circumstances which stipulated by the law. This is to limit arbitrariness of cancelling the contract.

 

 Contract dispute law firm in Vietnam

The basic condition for cancelling the contract is the breach. However, it should be noted that not all breaches of contract will result in cancelling the contract. This is stipulated in both of general law and specialized law. According to Commercial law 2005 (“CL”), the sanction of cancelling the contract is applied in case of breaching act be a condition for the cancellation of the contract as agreed upon by the parties or in case of substantial breach of contractual obligations from a party. Specifically, contractual breach means the failure of a party to perform, to fully or properly perform its obligations according to the agreement between the parties or the provisions of CL. Substantial breach means a contractual breach by a party, which causes damage to the other party to an extent that the other party cannot achieve the purpose of the entry into the contract. Civil Code 2015 (“CC”) also stipulates correspondingly but it uses the term “serious breach”: “A party has the right to cancel the contract and shall not be liable to compensate for damage in the following cases: (i) A breaching act of one party is a condition for the cancellation of the contract as agreed upon by the parties; (ii) The other party seriously violates the obligations in the contract; (iii) Others circumstances as provided by law. Serious violation means the failure to fulfill obligations properly by a party which make the other party cannot achieve the purpose of the entry into the contract”. However, currently there is no specific guidance on identifying the substantial breach of contractual obligations and the serious breach of contractual obligations. Therefore, determining whether a party’s breach is considered as a substantial breach of contractual obligations or a serious breach of contractual obligations will be within the competence of the jurisdiction.

A lawfully concluded contract may be canceld when a party breaches its basic contractual obligations. After cancelling the contract, such contract shall be invalid from the time it is entered into, and the parties shall not have to continue performing their contractual obligations, except for their agreements on their post-cancellation rights and obligations and resolution of disputes. The parties shall have the right to claim benefits brought about their performance of their contractual obligations. If parties have indemnity obligations, their obligations must be performed concurrently. Where it is impossible to make the indemnity with benefits which one party has enjoyed, the obliged party must make the indemnity in cash. Breached parties are entitled to claim damages.

In conclusion, from the regulation of law, it can be seen that nature of contract is to benefit for the parties and not to be canceld. The cancellation is very serious so the contract can only be canceld in some certain conditions. The contract cannot be canceld as a sanction if there is no contract breach. Simultaneously, the party requesting cancellation also needs to know that such request is only accepted if there is enough foundation to affirm that the other party has substantial breach of contractual obligations or the serious breach of contractual obligations.  Parties encountering potential dispute should consult with dispute lawyers in Vietnam for proper resolution.

ANT Lawyers – A Law firm in Vietnam has law offices in Hanoi, Ho Chi Minh City and Da Nang.  The lawyers at each law offices in Vietnam have consistently made valuable and important contributions to our profession through the cases we handled on daily basis to facilitate business transaction or represented our clients to access justice

 

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