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Author: Phạm Huyền

Decree 70/2025/ND-CP on E-invoices generated by POS cash registers with network connection for transfer of electronic data to tax authorities

Written by Phạm Huyền on . Posted in Our Activities.

On March 20, 2025, Decree No. 70/2025/ND-CP (“Decree 70/2025”) was promulgated to amend and supplement Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government on invoices and documents (“Decree 123/2020”). Decree 70/2025 introduces several significant changes concerning invoice types, the timing of invoice issuance, invoice contents, and, most notably, new regulations regarding invoices generated from cash registers. In the following article, TNTP’s lawyers will analyze the new provisions on invoices generated from cash registers with network connection for transfer of electronic data to tax authorities

1. Definition E-invoices Generated by POS cash registers with network connection for transfer of electronic data to tax authorities

• According to Article 89 of the Law on Tax Administration 2019, an electronic invoice (“E-invoices”) is an invoice with or without a code issued by the tax authority, presented in the form of electronic data created and recorded by organizations or individuals selling goods or providing services via electronic means, in accordance with the laws on accounting and taxation. This definition includes invoices generated from cash registers connected to the tax authority’s electronic data system.

• Clause 3, Article 89 of the Law on Tax Administration 2019 further stipulates that an electronic invoice with a tax authority’s code is one in which a code is issued by the tax authority before the organization or individual selling goods or providing services sends it to the buyer.

From these provisions, it can be understood that an electronic invoice generated from a cash register connected to the tax authority is a form of electronic invoice that is pre-coded by the tax authority prior to being delivered to the buyer. Each transaction invoice issued by organizations or individuals will be transmitted directly to the tax authority’s database.

2. Entities Required to Use E-invoices Generated from Cash Registers Connected to the Tax Authority

(i) Business households and individual businesspersons paying tax under the presumptive method with annual revenue from VND 1 billion or more;
(ii) Enterprises engaged in the sale of goods and provision of services, including direct sales to end consumers (such as shopping malls, supermarkets, and retail businesses excluding automobiles, motorcycles, and other motor vehicles);
(iii) Food and beverage services;
(iv) Restaurants;
(v) Hotels;
(vi) Passenger transportation services, direct support services for road transport, art services, entertainment, recreational activities, cinema operations, and other personal services as specified in the Vietnamese Standard Industrial Classification System.

Accordingly, whereas Decree 123/2020 did not impose a mandatory requirement to use E-invoices generated from cash registers, Decree 70/2025 specifies the categories of entities that must implement this invoicing method. This marks a major policy shift in tax administration for the abovementioned entities.

3. Principles for E-invoices Generated from Cash Registers Connected to the Tax Authority

According to Clause 8, Article 1 of Decree 70/2025, the principles for issuing E-invoices from cash registers connected to the tax authority’s data system include:

a) The invoice must be identifiable as having been printed from a cash register connected to the tax authority’s electronic data system;
b) A Digital signature on that e-invoice is optional;
c) The expenditure on goods and services using such invoices (or photocopies, or verified through the General Department of Taxation’s e-portal) shall be considered legitimate with sufficient supporting documents for tax purposes.

Hence, compared to traditional tax declaration methods, E-invoices from connected cash registers offer several advantages: faster processing time, no requirement for digital signatures, and recognition of tax-deductible expenses based on these invoices. This mechanism benefits both sellers and the tax authority’s administrative processes.

4. Required Information on E-invoices Generated from Cash Registers

Clause 8, Article 1 of Decree 70/2025 provides that the required details on E-invoices from cash registers include:

a) Name, address, and tax code of the seller;
b) Name, address, tax code/personal identification number/phone number of the buyer (if requested by the buyer);
c) Name of goods or services, unit price, quantity, and total amount payable. In cases where the seller is subject to the credit-invoice VAT method, the invoice must clearly state the pre-VAT price, VAT rate, VAT amount, and total price including VAT;
d) Date and time of invoice issuance;
e) Tax authority code or electronic data enabling the buyer to retrieve and declare the electronic invoice generated from the cash register.

Sellers may send E-invoices to buyers via electronic means (SMS, email, or other forms), or by providing a link or QR code for the buyer to access and download the invoice.

Previously, Decree 123/2020 did not clearly specify the required content of invoices generated from cash registers. Decree 70/2025, however, provides a detailed legal framework, thereby facilitating the consistent and effective implementation of such invoices and contributing positively to the broader tax system and society.

This article was prepared by TNTP’s lawyers under the topic: “Decree 70/2025/ND-CP on E-invoices generated by POS cash registers with network connection for transfer of electronic data to tax authorities.” We hope the information provided proves valuable to our readers.

Sincerely,

 

Coercive measures for the enforcement of civil judgments

Written by Phạm Huyền on . Posted in Our Activities.

In the process of civil judgment enforcement, parties often tend not to voluntarily comply with court judgments, decisions, or arbitral awards. To anticipate and address such situations, Vietnamese law provides for a comprehensive framework of coercive enforcement measures applicable to judgment debtors who deliberately fail to fulfill their obligations despite possessing sufficient execution capacity. These are instruments of state authority granted to civil judgment enforcement agencies and enforcers. The application of coercive measures must comply with legal provisions and be carefully considered and selected by the enforcer to suit each specific case, aiming to ensure the legitimate rights and interests of the relevant parties. In this article, TNTP will present the system of coercive judgment enforcement measures currently regulated by law.

1. Principles for applying and selecting coercive measures

The selection and application of coercive enforcement measures must not be arbitrary. Instead, it must be grounded in specific legal criteria and procedural safeguards, as articulated under Decree No. 62/2015/ND-CP. Pursuant to Article 13 of the Decree, the enforcement officer must consider the following factors in determining the appropriate enforcement measure:

• Based on the content of the judgment, decision, and the judgment execution obligation: The enforcer must consider the contents of the enforceable judgment or decision, including the type of obligation imposed – whether monetary payment, transfer of property, performance or non-performance of specific act and the nature and extent thereof. The enforcement measure must correspond to the nature of the obligation.

• Consideration of the judgment debtor’s conditions: The financial capability, assets, income, and specific circumstances of the judgment debtor are crucial factors in deciding which enforcement measure can be effectively and practically implemented. For example, the measure of deduction of money from accounts cannot be applied if verification results show that the judgment debtor does not have a bank account; instead, the measure of subtraction of income may be considered.

• Based on the involved party’s written request and actual situation: The legitimate and lawful request of the judgment creditor regarding a coercive measure also serves as a basis for the enforcer’s consideration. Additionally, the specific situation at the locality where the judgment is enforced may influence the selection or organization of the coercive measure.

A balanced consideration of these factors enables enforcement officers to adopt proportionate and legally sound enforcement strategies tailored to each case.

2. System of Coercive Judgment Enforcement Measures

Pursuant to Article 71 of the Law on Enforcement of Civil Judgments 2008 (as amended in 2014), the following coercive measures are available:

• Deduction of money from accounts; recovery and handling of money and valuable papers of judgment debtors: This measure is applied when the judgment debtor has money in a bank account or owns valuable papers (such as stocks, bonds, etc.). For instance, to deduct money from an account, the enforcer will issue a decision requiring credit institutions to transfer money from the judgment debtor’s account to the judgment enforcement agency to secure the payment obligation. Example: The enforcer requires Bank A to deduct VND 100,000,000 from Mr. B’s savings account to pay Mr. C according to the judgment.

• Subtraction of incomes of judgment debtors: This measure aims to subtract the periodical incomes that the judgment debtor receives for judgment enforcement. The enforcer will require the agency, organization, employer, or social insurance agency currently paying salaries, pensions, allowances, or other lawful incomes of the judgment debtor to perform a subtraction of a certain percentage or amount as stipulated by law. Example: The judgment enforcement agency requires Company X to subtract 20% of employee D’s monthly salary to fulfill the payment obligation to Ms. E according to the legally effective court judgment.

• Attachment and disposal of the debtor’s property: This allows the enforcement officer to attach and dispose of the debtor’s property. This applies to both movable and immovable property, including property held by third parties. For instance, the enforcer may attach and auction Mr. G’s house to pay a debt of VND 5 billion under an arbitral award.

• Exploitation of assets of judgment debtors: Instead of distraining and disposing of assets, the law permits the enforcers to apply the measure of asset exploitation in certain cases (e.g., where the value of the enforcement asset is disproportionately high compared to the judgment obligation). The purpose is to derive income or yields from the asset’s exploitation to satisfy the enforcement obligation. For instance, if the enforcement asset is agricultural land use rights valued at VND 2,000,000,000, the judgment enforcement officer may lease out the land on a seasonal basis and use the proceeds to fulfill a judgment obligation of VND 200,000,000.

• Forcible transfer of objects, property rights, and papers: This measure is applied when the content of the judgment or decision requires the judgment debtor to hand over a specific object (such as an antique, a car agreed upon for sale…), transfer a property right (such as the right to demand payment from a third party, land use rights…), or a certain type of paper (such as a Certificate of land use rights, etc.) to the judgment creditor.

• Forcible performance or non-performance of certain jobs by judgment debtors: This is a group of non-pecuniary coercive measures, applied when the obligation involves performing or not performing a specific act. Example: Forcing Mr. L to dismantle the encroaching construction part on Mr. M’s house according to the judgment.

The above is the article “Coercive measures for the enforcement of civil judgments” that TNTP sends to readers. We hope this article will be useful to readers interested in this issue.

Best regards,

risks in the contractsfor the purchase and sale

Time of pass of risks in the contracts for the purchase and sale of goods (Part 2)

Written by Phạm Huyền on . Posted in Pháp luật Hợp đồng.

In the previous article, TNTP analyzed the risks in the contracts for the purchase and sale of goods and the pass of risks in cases where there is a fixed place of delivery of goods. In this article, TNTP will continue to analyze the remaining cases of the time of risk pass in the contract of sale of goods.

2. Time of pass of risk in the contract of sale of goods

Case 2: Pass of risks in cases where there is no fixed place of delivery of goods

Unless otherwise agreed, if the contract contains provisions on the goods transportation and the seller is not obliged to deliver the goods at a given place, the risk of goods loss or damage shall be passed to the purchaser as soon as the goods are delivered to the first carrier. For the pass of risks in this case, the following two conditions are required, one is that the contract contains provisions on the goods transportation and the other is that the seller is not obliged to deliver the goods at a given place. In case the above two conditions are not satisfied, the pass of risks will be determined according to the remaining cases regarding the time of pass of risks.

If the contract contains provisions on the goods transportation, the seller or the purchaser will have to sign a contract for the carriage of the goods. Regardless of which party entering into the contract of carriage and the goods are carried by more than one person, the risk of goods loss or damage passes to the purchaser when the goods have been delivered to the first carrier. In order to avoid a dispute with the purchaser about the time of pass of risks, the seller needs to fulfill the following responsibilities:

  • Where goods are handed over to the carrier without being identified with specific signs or marks on them, accompanied with transportation documents or otherwise, the seller must notify the purchaser of the handover of goods to the carrier and identify names and methods of recognizing transported goods.
  • Where the seller is obliged to arrange the goods transportation, the seller shall have to enter into necessary contracts for the transportation of goods to the destination by means of transportation suitable to specific circumstances and under normal conditions for such modes of transportation.
  • Where the seller is not obliged to purchase insurance for the goods in the course of transportation and if requested by the purchaser, the seller must supply to the purchaser all necessary information on the goods and the transportation thereof to enable the purchaser to purchase insurance for the goods.

Case 3: Pass of risks in cases where goods are handed over to a bailee that is not a carrier

Unless otherwise agreed, if the goods are being kept by a bailee that is not a carrier, the risks of goods loss or damage shall be passed to the purchaser in one of the following cases:

  • Upon receipt by the purchaser of documents of title to the goods. Proof of ownership of goods are documents showing the seller’s pass of ownership of goods to the purchaser such as bills of lading, invoices, delivery notes, certificates, etc.
  • Upon the confirmation by the bailee of the purchaser’s right to possession of the goods. In this case, the seller needs to agree in advance with the bailee on the confirmation of the purchaser’s receipt of the goods by means of delivery records signed by the purchaser and the bailee, videos, and photos of the receipt of the goods.

If neither of the above two cases falls, the party that bears the risk is the seller.

Case 4: Pass of risks in case of purchase and sale of goods in transportation

Unless otherwise agreed, if the subject matter of the contract is goods in transportation, the risk of goods loss or damage shall be passed to the purchaser from the time the contract is entered into.

“Goods in transportation” in this case are not the goods that are the subject of the contract and are in the process of being transported from the seller to the purchaser. “Goods in transportation” means that at the time of entering into the contract, the goods are being moved from one place to another, have no fixed location, are not the subject of any contract, and are under the ownership of the seller. The risk is passed to the purchaser immediately after the parties enter into the contract.

The following example can be considered to better understand this case, Party A (Hung Yen, Vietnam) signed a contract to buy and sell agricultural products with Party B (China). When Party A transported agricultural products to Huu Nghi International Importer (Lang Son), received information that this border gate had temporarily stopped customs clearance for the import and export of goods to trace and check cases related to COVID-19. Therefore, the two parties could not carry out the delivery of goods and were forced to terminate the contract. On the way to transport the goods back to Hung Yen, Party C (Hanoi, Vietnam) had agreed to buy the goods of Party A and the two parties had entered into a contract. Thus, from the time Party A and Party C enter into the contract, the risk of goods loss or damage is passed to Party C.

Case 5: Pass of risks in other cases

If not falling into cases 1, 2, 3, 4, the risk of goods loss or damage is to be passed to the purchaser as from the time the goods fall under the purchaser’s right of disposal and the purchaser breaches the contract by rejecting the goods, specifically the purchaser did not perform the receipt of goods as agreed on the time and place to receive the goods.

The risk of goods loss or damage is not to be passed to the purchaser if the goods are neither clearly identified by their signs, codes, or bills of transportation, nor notified to the purchaser, nor identified by any means.

3. Notes on the issue of “determining risks” when entering into the contracts for the purchase and sale of goods

  • When entering into a contract, the parties need to have foresight about the risks that may arise, thereby agreeing to the terms of the contract at the time when the parties must bear the risks.
  • For contracts of great value, where goods are prone to risks, the parties need to agree specifically on the way, transportation, place, and time to deliver and receive the goods, and also buy insurance for the goods in transportation.

Above is the article “Time of pass of risks in the contracts for the purchase and sale of goods (Part 2)”. We hope this article is useful to you.

disputes over contracts for the sample contracts

Practical lessons for businesses from disputes over contracts for the sample contracts

Written by Phạm Huyền on . Posted in Pháp luật Hợp đồng.

Samples good are used for formative sales contracts between the parties to the purchase and sale contracts. According to the sample sales contract, the seller is obliged to provide the same types of goods as the sample to the buyer. However, in practice, many disputes have occurred related to this issue. So, when signing and executing a sample contracts, what should businesses pay attention to?  Let’s find out the article below with TNTP.

1. What is a sample good?

Sample goods are used as samples for production, processing, buying, and selling. In the international sale and purchase of goods, samples are used for form-based sales contracts between the subjects of the contract foreign trade. According to the Sample contracts and sale contract, the seller is obliged to provide the same type of goods as the confirmed and agreed with samples to the buyer.

2. Notes for businesses when performing a sample contracts

Causes of disputes over contracts for the sale and purchase of goods according to the form

One of the reasons for the dispute related to the sample of goods is that the parties do not trust the weather or climate when taking samples, saving samples, or preserving samples. Because sample quality can change under the influence of temperature and humidity, especially with chemicals such as petroleum coal.

Sampling process and procedures

The sampling procedure also needs the parties to comply with the principles witnessed by the 3-party shift: seller, buyer, intermediary representative other objectivity. The finished sample should be sealed and signed by the parties.

The sampling process also needs to be documented with a clear date and time, signed by the parties. This is 1 of the risks that businesses are very likely to encounter when buying and selling goods in a form that ignores this principle.

Commonly applied subjects of form-based contracts for the sale and purchase of goods

The commonly used sample purchase method applies to items with quality specifications that are less susceptible to fluctuations due to environmental impacts, difficult to standardize, which is difficult to describe as garments, nuts, ore, or petroleum, and for each item, the sampling quantity is also different.

It is not recommended to buy, sell goods, or process the production of difficult management goods or toxic and dangerous goods during the preservation of such goods.

Therefore, businesses need to pay attention to each item that applies this method accordingly.

3. Note when agreeing, compose a sample contracts

The period before signing the Sample contracts

Before the Parties sign a contract for the sale and purchase of goods according to the form, it is necessary to conduct the acceptance of the sample product.  The seller and the buyer should make a written agreement on the process of handling and preserving goods, and comparative measures on goods according to the stored and goods produced. The conditions for acceptance of goods, because of which the delivery of goods and the transfer of ownership from the seller to the buyer are received. These agreements are the basis for the parties to detail, strictly, and fully ensure in the Purchase and Sale Contract.

The period after signing the Sample contracts

In the form-based contract for the sale and purchase of goods, there are clear criteria for the quality of the goods. If there are standards on goods being applied, it is also necessary to specify which standards apply.

For goods that must ensure 100% sample varieties, the seller must be obliged to deliver goods 100% of the sample goods agreed upon by the parties. In addition, for goods that do not need to ensure the same quality as 100% samples, the parties need to agree on a clause limiting the difference in the quality of goods in the Contract, if the goods provided by the seller exceed the permissible limit, then are considered to be in breach of contractual obligations.

Above is TNTP’s article on “Practical lessons for businesses from disputes over contracts for the sale and purchase of goods according to the form”.  Hope the above article provides you with useful information for you.

Best regards.

Legal provisions on the debt collection right

Legal provisions on the debt collection right

Written by Phạm Huyền on . Posted in Debt Collection, Kiến Thức Pháp Luật, Thu hồi nợ.

Debt collection right, by which the obligee can request the obligor to pay a sum of money, has been increasingly valued thanks to its popularity and its capacity to meet the demand for convenient circulation in civil and commercial transactions, etc. The following article TNTP will answer questions from readers related to this topic.

1.Define

The right of debt collection is a property right to secure the performance of a civil obligation. According to Article 105 of the Civil Code 2015, Property rights are one of four types of property including objects, money, valuable papers and property rights.

The right of debt collectionis a civil right recognized and protected by law, enabling the obligee to request the obligor to perform a property obligation towards him/her. This right can be understood as a right where the obligee requires the obligor to pay a sum of money or objects, including receivables, the right to demand payment and other rights arising from the contract or prescribed by law.

It can be seen that the right debt collection is a typical property, expressed in intangible form and only binding on the obligor in case the parties have entered into a civil transaction and the obligor has not yet fulfilled its payment obligations. If the debt has been paid, the obligee’s right of debt collection will terminate accordingly.

2. Legal provisions 

 2.1 Transfer of the right of Debt collection 

According to the current law, the right of debt collection is a property right, whereby obligee can demand the obligor to pay the debt or be entitled to request a competent authority to force the obligor to make the payment.

Right of debt collection is transferable under the provisions on transfer of right to demand, in which the assignee will be the party to have the right of debt collection toward the obligor.

Transfer of right of debt collection will base on the following provisions:

Regarding the transfer:

Article 365 of Civil Code 2015 regulates as below:

“A party having the right to demand the performance of a civil obligation may transfer such right to demand to a subrogatee of the obligee as agreed…

Where a person having a right to demand transfers such right to a subrogatee, the subrogatee of the obligee shall become the person having the right to demand.…”

The following rights to demand are not transferable:

+ The right to demand support or the right to demand compensation for any damage resulting from harm to life, health, honor, dignity or reputation;

+ The obligee and the obligor agree that the right to demand may not be transferred;

+ Other cases prescribed by law.

The consent of the obligor is not required for the transfer of the right to demand. However, the assignor of the right to demand must notify the obligor in writing of such transfer, unless otherwise agreed.

The obligor has the right to refuse to perform the obligation:

Article 369 of the Civil Code stipulates: The obligor’s right to refuse:

“Where the obligor is not notified of the transfer of the right to demand or where the subrogatee of the obligee does not prove the authenticity of the transfer of the right to demand, the obligor has the right to refuse to perform the obligation with respect to the subrogatee of the obligee.

Where the obligor is not notified of the transfer of the right to demand and has already fulfilled the obligation with respect to the person having transferred the right to demand, the subrogatee of the obligee may not demand the obligor to perform the obligation with respect to that subrogate”.

2.2 Sale of Debt collection right

The right of Debt collection is also defined as a subject of sale contracts between the parties. Based on Article 450 of the Civil Code on the sale of property rights, right of debt collection is a property right that can be offered for sale. Currently, many businesses have engaged in debt trading activities.

2.3 Mortgage of Debt collection right

According to the Civil Code 2015 from Article 317 to Article 327 on the mortgage of property, Right of debt collection is an asset, which can be subject to mortgage in accordance with the provisions of this Code. Debt collection right is mortgaged to secure the performance of other civil obligations in the system of legal documents on registration of secured transactions.

Hopefully, with the above sharing of TNTP, readers can get an overview of the definition and legal provisions on debt collection right.

Fines for breaches in commercial contracts

Fines for breaches in commercial contracts

Written by Phạm Huyền on . Posted in Pháp luật Hợp đồng.

Among various remedies for handling violations when performing the contract, Fines for breaches are considered one of the most commonly used ones, besides forcible payment of damages. Agreements on Fines for breaches in commercial contracts will help the parties take the responsibility for the contract performance more seriously and also serve as a basis for the aggrieved party to force the violating party to bear a fine to partially remedy the consequences caused by the violation.

Legal provisions on Fines for breaches in contracts

Fines for breaches are stipulated in the Civil Code 2015 (“Civil code”) and the Commercial Law 2005 (“Commercial law”), in which Fines for breaches in commercial contracts of the parties, whereby the violating party must pay a sum of money to the aggrieved party. Thus, to apply this remedy, the parties must have an agreement on Fines for breaches in contracts.

Civil Code and Commercial law respect the parties’ agreement on Fines for breaches, however, certain limits on the level of fines are set out in some particular cases. Clause 2, Article 418 of the Civil Code stipulates that the fine levels shall be agreed upon among the parties unless otherwise prescribed by relevant laws. Article 301 of Commercial law also stipulates that the fine level for a breach of a contractual obligation or the aggregate fine level for more than one breach must not exceed 8% of the value of the breached contractual obligation portion, except for fines in case of incorrect assessment results.

In the commercial field, the parties need to identify and distinguish between the value of the breached contractual obligation and the contract value, whereby the scope of the contract value is broader than that of the contractual obligation under violation. The violating party will have to pay a fine calculated on the value of the violated contractual obligation, not on the value of the whole contract. For example, in a sale contract, when the buyer makes a late payment, the buyer only has to pay a fine for the late payment, not the entire contract value.

Conditions for applying Fines for breaches in contracts

To apply fines for violations in practice, all of the following 03 conditions need to be met:

  • The parties have an agreement on Fines for breaches in the contract, the fines may be in force when one or all parties commit one or more acts of contract breach. In case no agreement is reached in the contract, no Fines for breaches can be applied. This is a principled regulation that requires the parties to have an agreement in advance if they want to apply fines for violations. Such agreement may have been available since the parties signed the contract or were supplemented by the parties during the performance of the contract.

In case the agreed fine level exceeds the limit prescribed by law, it will be automatically set equal to the fine level prescribed by law when a dispute arises. In the field of commerce, if the parties agree on a fine exceeding 8% of the breached contractual obligation’s value, the excess will have no effect and the fine will only be determined according to the law.

  • One or the parties perform one or more acts of contract breach, and according to the agreement in the contract, the violating party must bear a fine for a such violation when doing so. The agreement on fines for breaches is only considered one necessary condition. However, performing one or more acts of contract breach by one or the parties is another required condition for the fines to arise in practice.

Acts of contract breach are not exempt from liability. Some following exemptions from liability are:

  • Occurrence of a liability exemption case as agreed by the parties;
  • Occurrence of a force majeure event that occurs objectively, unforeseeable, and cannot be remedied even though all necessary and permissible measures have been applied;
  • The violation of one party is entirely due to the other party’s fault. In case the violation is caused partly by the violating party’s fault, they will have to bear the fines corresponding to their fault;
  • The violation of one party is for the implementation of a competent state management agency’s decision that the parties could not know at the time of entering into the contract.

The violating party will be obliged to prove the circumstances of their exemption from liability. Otherwise, it means that the violating party is not exempt from liability and will have to pay fines as agreed in the contract instead.

Difference between Fines for breaches in commercial contracts in Civil Code and in Commercial law

  • On the application scope: Fines for breaches in Civil Code are applied in the civil field in general, while that in the Commercial Law are applied to commercial business activities taking place mainly between traders, including activities for profit purposes such as goods trading, providing services, investing, commercial promoting, etc. Traders are defined as legally established economic organizations, individuals with independent and regular commercial activities and a sufficient business registration certificate.
  • Regarding the level of fines: Civil Code does not stipulate a limit on the level of Fines for breaches unless specialized laws have specific provisions. Accordingly, the parties can freely agree on the fine levels for violations. Commercial law limits the number of fines for breaches, specifically, the fines will be agreed upon by the parties but must not exceed 8% of the value of the breached obligation, except for fines in case of incorrect assessment results.

Are enterprises obligated to agree on Fines for breaches during contract drafting?

Fines for breaches are one of the remedies to handle and settle the violations of one or the parties in the process of establishing, performing, and terminating the contract. Current law does not stipulate that the parties must agree on this remedy, but the agreement of parties in the contract is a required condition to apply this remedy.

The parties should agree on remedies for breaches in the contract to:

(i) Guarantee the performance of the contract;

(ii) Prevent the act of violation from one party;

(iii) Provide the aggrieved party with sufficient proof to ensure their legitimate rights and interests when being infringed.

As mentioned above, if enterprises want to apply the remedy, they need to agree in the contract on the violating acts subject to fines, the level of fines for breaches corresponding to each act, the time limit for paying fines for breaches, etc.

Above is the article “Fines for breaches in commercial contracts”. We hope this article is useful to you.

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