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Author: Phạm Huyền

Notes on content and form of the contract when drafting contract

Entering into contracts takes place in a common, frequent, and continuous way. However, not all individuals and organizations have properly and fully complied with the provisions of the law on the content and form of the contract. The parties should pay attention to the following contents from the time of drafting the contract if the parties want the valid contract and ensured rights and interests:

1. Regarding the content of the contract

The Civil Code 2015 stipulates that if the content of the contract is contrary to the prohibition provisions of law and to social morality, the contract will be invalid. Therefore, the parties need to accurately determine the source of the law governing the contractual relationship to serve as a basis for determining the relevant prohibition Sources of law include direct laws such as the Civil Code 2015, Commercial Law 2005, etc., and specialized laws based on the subject matter of goods purchased and services provided.

The drafting party needs to learn about the subject matter of the contract, the needs, and requirements of the parties, etc. to determine the type of contract and the terms required in the contract. Some of the principal contents commonly included in a contract include:

  • Information of the parties;
  • The subject matter of the contract;
  • The price and payment method;
  • The contract performance such as time and place of goods delivery and/or provision of services;
  • The contract termination and consequences of contract termination;
  • The breach of contract and sanctions for handling violations;
  • The force majeure events;
  • The methods of settlement of disputes (dispute settlement agency);
  • The contract validity.

For sale contracts, the subject matter must satisfy the following conditions:

  • Must be a tradable property;
  • Must be specified. If it is an object, it must be clearly identified through quantity, characteristics, etc. If it is a property right, there must have papers or other proofs of ownership of the seller;
  • Not the property in a dispute over ownership;
  • Not the property being distrained for judgment enforcement;
  • Not being property being used to secure the performance of civil obligations, unless otherwise provided for by law or otherwise agreed by the parties;
  • If the subject matter is a property restricted from being traded, the purchase and sale must comply with the law on order and procedures for transferring ownership of such property.

2. Regarding the form of the contract

In case the law does not stipulate the form of the contract that the parties intend to sign, the parties should still choose the written form to have a basis for implementation and evidence in case of a dispute. If the law has specific provisions on the form of the contract, the parties need to comply so that the contract is not declared invalid. The form of a contract is prescribed in legal documents, here are some regulations on the form of some specific types of contracts:

The contract must be made in writing

  • Law on Science and Technology 2013: Contract for scientific research and technology development; Technology transfer contract; Science and technology service contract.
  • Law on Intellectual Property 2005, amended and supplemented in 2009: Contract for transfer of copyright and related rights; Contract of use of copyright and related rights;

The contract must be notarized or authenticated

  • Land Law 2013: Contracts for transfer, donation, mortgage, and capital contribution with land use rights and land-attached assets, except for real estate business.
  • Housing Law 2014: Contracts for purchase, sale, donation, exchange, capital contribution, mortgage of houses, transfer of commercial housing purchase and sale contracts, except for the case specified in Clause 2, Article 122 of the Housing Law, etc.

3. Things need to be done when the content and form of the contract are illegal 

  • The parties need to agree and amend the illegal content with advice and support from individuals/organizations with legal knowledge or providing legal services;
  • Change the form of the contract to comply with the provisions of the law, for example, if the law requires it to be notarized/ authenticated in writing, it will be done in this form;
  • When the contract has been entered into, if the parties discover any violation, the parties can only agree and amend the contract when the parties are in good faith. If one of the parties does not have goodwill, the agreement cannot be implemented. Therefore, from the time of drafting and/or before entering into a contract, the parties should contact a legal service provider for support and ensure their interests.

The parties’ compliance with the law on the content and form of the contract, as well as detailed agreement and anticipation of possible disputes, will ensure the rights and interests of the parties. Above is the article “Notes on content and form of the contract when drafting contract”. Hope you will get useful value when reading this article.

Best regards,

Legal consequences of partially invalid civil transactions

Civil transactions need to satisfy certain conditions of the law to be valid. However, due to many reasons, one of the parties has performed improperly or inadequately those conditions, which results in the invalidity of the established civil transaction. Invalidity is divided into total invalidity and partial invalidity, let find out partially invalid civil transactions with TNTP.

1. Partially invalid civil transactions

  • A civil transaction shall be partially invalid when one part of the transaction is invalid but does not affect the validity of the remaining parts.
  • A civil transaction shall be invalid if it does not satisfy one of the conditions regulated in Article 117 of Civil Code 2015 unless otherwise stipulated by Civil Code. For example, a civil transaction must be established in writing following regulations, but if that written form does not comply with the provisions of law, it is considered invalid due to a violation of the form conditions. However, if one party or the parties has performed at least two-thirds of its obligations in a transaction, at the request of one party or parties, Court shall issue a decision to recognize the validity of that transaction.
  • The content of a civil transaction may include many issues such as subject matter, time, location, price, payment method, rights and obligations of the parties, etc. If there is a violation of Article 117 of Civil Code 2015, that content will be invalid, and the rest will remain in effect (binding the parties).
  • A partially invalid transaction is usually a transaction whose subject matter includes many different things or different acts. Because the subject of the transaction is mistaken or the subject does not have the right to dispose of all the objects in the transaction (the object is not under the ownership of the subject or is under multiple ownership without the co-owner’s consent), the part of the transaction related to these objects is invalidated, while the other parts are still valid.
  • For example, according to Civil Code 2015, except for special cases, the rate of interest for a loan agreed by the parties may not exceed 20% per year. In case the parties sign a contract for loans and agree on an interest rate exceeding 20%/year of the loan amount, the excess interest rate will not take effect and other contents of the contract will still be valid if they comply with Article 117 of Civil Code 2015.

2. Legal consequences of partially invalid civil transactions

  • Regarding the time of invalidity of the transaction: When a civil transaction is partially invalid, the invalid content will not give rise to, change or terminate any civil rights and obligations of the parties related to such content from the time when the transaction is established.
  • Regarding the responsibilities of the parties: The parties shall restore the original state and return to each other what was received within the scope of the invalid content. In case it is not possible to return it in kind, it will be converted into money for a refund. The return of the object or money will depend on the parties’ agreement. If no agreement is reached, in principle, with the subject matter of the transaction being an object, then the receiving party is obliged to return the received object (intact) to the obligee when the content of the transaction is invalid.

The parties are obliged to implement the remaining effective contents, in case of failure to perform the obligations properly and fully, they will be subject to corresponding sanctions, which may be compensated for the damage, fines for violations…

The bona fide third party in receiving yield and/or income is not required to return such yield and/or income. The bona fide third party is a party who does not know or cannot know the contents of the invalid civil transaction; yield is a natural product that property brings; profit is the income earned from the exploitation of the property.

  • Regarding the compensation for damage: The party at fault causing damage must compensate, the compensation will be calculated according to the law based on the parties’ agreement and the actual damage that occurred.

3. Resolutions for the partially invalidated civil transactions

  • When a part of a civil transaction is invalid, the parties need to agree to amend the terms related to the invalid content, in case of failure to reach an agreement, the parties shall comply with the provisions of the law on consequences of partially invalid civil transactions;
  • Resolve the arising issues related to invalid content such as compensation for damage to the infringing party, restoration of original rights and interests;
  • If the invalid content affects the implementation of the remaining contents, the parties should agree, establish and enter into a new civil transaction with more correct and sufficient content;
  • In case the parties need legal advice and support on the content of a civil transaction, you can contact us for timely and effective support.

Above is the article “Legal consequences of partially invalid civil transactions”. We hope this article was useful to you.

Best regards,

Procedures for initiating a lawsuit against debtors at the court

Proceeding with debt collection procedures are always challenging, especially in case the debtors are individuals as they are often unable to repay, or deliberately avoid making the payment. When you want to perform debt collection, despite having applied many methods but the debtor is still inactive and refuses to pay the debt, you can sue the debtor at a competent People’s Court. What is the specific procedure for initiating a lawsuit against the debtor at the Court?

1. Conditions for initiating a lawsuit at the Court

First, the dispute is still within the statute of limitations for lawsuits. According to the Code of Civil Procedure 2015, the statute of limitations for initiating a lawsuit is 02 years from the date the individual, agency, or organization should know that their lawful rights and interests are infringed. Previously, when the statute of limitations has expired, according to the Code of Civil Procedure 2005, you are still entitled to file a lawsuit at the Court for a property claim, which may still be accepted by the Court. However, according to the new Code of Civil Procedure, this procedure is no longer available. The court will still accept your petition for debt collection, but whether it will consider resolving or returning the file will depend on your explanation for the overdue statute of limitations.

Second, a lawsuit for debt collection must be initiated under the correct Court’s jurisdiction. The related parties have the right to initiate a lawsuit to request the District Court where the defendant resides or works to settle the case if neither the parties nor the disputed property is overseas and an overseas request for judicial assistance is not required. If the involved parties or the disputed assets are overseas or an overseas request for judicial assistance is required, the involved parties must request the Provincial Court where the defendant resides or works to initiate a lawsuit.

 2. Procedures for initiating a lawsuit against debtors at the court

The petition file includes:

  • Lawsuit petition form
  • Documents and evidence to prove that the lawsuit claim is grounded and lawful (Debt papers/Loan contract and other documents)
  • State agency’s certification of the defendant’s residential and working address
  • If the plaintiff is an individual: A notarized copy of the plaintiff’s ID card or household registration book.
  • If the plaintiff is an organization: Business registration license or establishment decision, operation license.

Initiating a lawsuit:

After the Court receives the petition file, the following tasks must be conducted:

  • If it is the case of returning the lawsuit petition as prescribed in the Civil of Procedure Code, the Court shall return the lawsuit petition and attached documents/evidence to the plaintiff.
  • If it is not the above case but the lawsuit petition is not following the prescribed form or does not have all the prescribed contents, the Court shall notify the plaintiff of required amendments and supplements within a fixed time limit.
  • If all the conditions are met in accordance with regulations, the Court shall allow the plaintiff to advance the court fees within 15 days from the date of receipt of the notice.

Notice of payment of court fee advance

After accepting the valid lawsuit file, the court shall send a notice of court fee advance payment to the plaintiff. Within 07 days upon receipt of the court’s notice, the plaintiff must pay the court fee advances to the competent civil enforcement authorities.

Lawsuits acceptance

After the plaintiff pays the court fees in advance, he/she will receive a corresponding receipt of payment from the competent civil enforcement authorities. Accordingly, the court will issue a notice of acceptance when the receipt for court fees advance payment is submitted by the plaintiff.

Mediation, evidence access and debates at the Court

After accepting the case, the Court will hold meetings for mediation and disclosure of evidence within 2-3 months from the date of acceptance. If the mediation is unsuccessful during this period, the Court will proceed to bring the case to trial and notify the trial schedule to the plaintiffs.

Above is an article that guides the procedure and related documents for initiating a lawsuit against the debtor at the Court. Hopefully, through this article, TNTP can equip you with a better understanding of the procedures for initiating a lawsuit against the debtor at the Court, thereby, you may decide on the appropriate form of debt collection.

Sincerely,

Notes for drafting an appendix

During the performance of the Contract, new problems may arise or the parties need to explain and specify the terms of the contract in detail, which will cause the parties to amend, supplement or change some contents in the signed contract. The parties often sign an Appendix to solve this above problem. What content should the parties pay attention to when signing the Appendix? Let’s clarify with TNTP the topic: Notes for drafting an appendix.

1. What is an Appendix?

Under Article 403 of Civil Code 2015 “Appendices providing details on certain terms and conditions of a contract may be attached to the contract. The appendices shall have the same effectiveness as the contract. The contents of the appendices shall not contradict the contents of the contract.”

The terms and conditions of the appendices contradict those of the contract, such terms and conditions of the appendices shall be ineffective unless otherwise agreed by the parties. If the parties agree on the appendix with the contrary provision, it shall be deemed that such provision in the original contract has been amended.

  • Distinguish between an Appendix and an ancillary contract:
  • Firstly, in nature: The appendix is ​​a part of the contract, established to clarify some terms in the contract. An ancillary contract is an independent contract, separate from the principal contract. However, the validity of the ancillary contract will depend on the principal contract, which may be terminated because of the invalidity of a principal contract.
  • Secondly, regarding the content: The appendix is established to explain one or several terms of the contract, so its content must not be contrary to the contract’s content unless otherwise agreed. The ancillary contract’s content contains the contract’s content as stipulated in Article 398 of the Civil Code 2015.
  • Thirdly, based on arising: The Appendix arises from one or several clauses in the Contract. The ancillary contract arises from the Principal contract.

2. Notes for drafting an Appendix

  • Regarding the form: Form is considered the effective condition of the contract in case it is regulated by law. Since the Appendix is considered a part of the contract, it must comply with the formal requirements of the contract stipulated by law, for example, to be in writing, to contain notarization, and authentication, … Therefore, before signing the Appendix, the parties should comply with the regulations on the form of the contract to avoid violation and the invalidity of the Appendix.
  • Regarding the content: The content of the Appendix depends on the contract, so when establishing the Appendix, it is necessary to base it on the content of the original contract. The contents of the Appendix must be consistent and not be contrary to the contents of the contract. If the terms of the Appendix are contrary to the contents of the contract, this provision shall not be effective. However, if the parties accept the content of the Appendix containing a clause contrary to the content of the Contract, that provision shall be considered as amended in the contract. To prove that the parties accept a clause that is contrary to the contract, the parties should draft this content in the contract or the Appendix, for example, “In case the appendix contains conflicting content, contrary to the contract, the parties shall prioritize the application of the content specified in the Appendix.”

In addition, when signing the Appendix, the parties need to comply with the valid conditions of civil transactions specified in Article 117 of Civil Code 2015.

3. Effectiveness of the Appendix

The Appendix has the same effect as the contract. Accordingly, when the Contract is terminated or invalidated, the Appendix will also terminate or be invalidated.

Above is the article “Notes for drafting an Appendix”. We hope this article was useful to you.

Best regards,

Procedures for civil judgment enforcement for debtors

The stage of civil judgment enforcement plays a very important role in debt recovery because then, the judgment enforcement agency being a competent authority will have enough resources and human resources to carry out the judgment enforcement measures, which forces the debtor to perform the debt payment obligation in accordance with the effective decision or judgment of Court or Arbitration Center. In this article, let’s find out with TNTP the civil judgment enforcement procedure for the debtor.

1. Guidance on the right to request civil judgment enforcement

When issuing a judgment or decision, Court, Council dealing with the competition case, or the commercial Arbitrator must explain it to the involved parties, and at the same time clearly specify in the judgment or decision the right to request judgment enforcement, the judgment enforcement obligation, the statute of limitations for requesting judgment enforcement.

After the judgment or decision of Court takes effect, it must be respected by agencies, organizations and all citizens. Accordingly, enterprises, especially debtors, within the scope of their responsibilities, must strictly abide by judgments and decisions and take responsibility before the law for judgment enforcement.

2. Issuing judgments and decisions to involved parties

After the judgment or decision takes effect, Court, Council dealing with the competition case, or commercial Arbitration that has issued the judgment or decision specified in Article 2 of Law on Civil Judgment Enforcement must issue to the involved parties a judgment or decision with the words “For enforcement”. At that time, the plaintiff may proceed to send this judgment or decision together with the dossier to request the judgment enforcement agency to execute the judgment or decision.

3. Transfer of judgments and decisions

Depending on the type of judgment or decision that Court has issued, the judgment or decision must be transferred to the competent civil judgment enforcement agency immediately after the decision is issued or within 15-30 days from the date of legal effectiveness of decisions and judgments.

4. Issuance of judgment enforcement decisions

Active execution of judgments

Within 5 days after receiving the judgment or decision, the head of the judgment enforcement agency must issue a judgment enforcement decision in the following cases:

  • Fines, retrospective collection of illicitly earned money and assets, court fees and charges;
  • Refund of money and assets to involved parties;
  • Confiscation into the state budget or destruction of material evidence and assets; other state budget remittances;
  • Withdrawal of land use rights and other assets subject to remittance into the state budget;
  • Decision on application of provisional urgent measures.

Within 24 hours after receiving the decision on application of provisional urgent measures transferred by the court or directly by the involved parties, heads of civil judgment enforcement agencies must issue judgment enforcement decisions and assign enforcers to organize the enforcement.

Enforcement of judgments on request

The time limit for voluntary judgment enforcement is 10 days from the date the debtor receives or is properly notified of the judgment enforcement decision. Upon the expiry of the above time limit, the debtor who has judgment enforcement conditions but does not voluntarily execute judgments will be subject to coercive judgment enforcement.

In case the debtor fails to perform his/her obligations according to the contents of the legally effective judgment or decision, the creditor has the right to file an application for judgment enforcement. At that time, the head of the civil judgment enforcement agency will issue a judgment enforcement decision, the judgment enforcement agency will then perform the determination of judgment execution conditions, and coercive judgment enforcement according to the provisions of Law on Civil Judgment Enforcement.

Current law does not specify the time to complete a debt dispute, because depending on the case, the ability to recover debt will proceed quickly or slowly. Enterprises that want debt recovery to take place quickly and effectively need to actively collect information and conditions for judgment enforcement of the debtor and provide it to the judgment enforcement agency. Besides, it is necessary to seek the advice of legal expertise units to ensure their rights.

Best regards,

Suing the debtor in court, is this form of debt recovery effective?

Suing the debtor is often the method chosen by the creditor. When most of the methods applied to debt collection do not bring the desired results, the enterprise will initiate a lawsuit against the borrower in court. However, filing a debt recovery lawsuit is not easy and simple in reality. Here are some difficulties in debt recovery by suing in Court.

1. Suing the debtor progress slow due to failure to send procedural documents to clients, defendants and persons related to the case

During the proceedings, in order to have a basis for settling the case, Court usually has to send procedural documents to plaintiffs, defendants and persons with related rights and obligations to the case. However, many defendants or persons with related rights and obligations often deliberately evade and do not cooperate in solving the case… It is possible that information related to assets, interests and obligations of related parties has been agreed in detail in credit contracts, financial contracts and other agreements, but due to the delay or failure to send the Court documents to the defendant or related person, the settlement of the case has been delayed when the credit institution files a lawsuit against the customer, the mortgagor.

2. Court’s case settlement time is extended

The non-cooperation of the defendant and the person with related interests and obligations in this case will prolong the court’s settlement of the case. Courts must verify and post procedural documents according to the provisions of Civil Procedure Code before they can judge in their absence. In addition, some defendants also authorize lawyers to participate in the proceedings with the aim of prolonging the time limit for settling the case as long as possible (requiring collecting more documents and evidence, soliciting an expert assessment of documents, etc.). For complicated cases with many people with related interests and obligations, the trial court being postponed many times is inevitable, which causes frustration and fatigue for the credit institutions in participating in the proceedings.

3. About the time to Suing the debtor 

According to Article 179 of Civil Procedure Code 2015, for civil and business or trade cases that are disputes related to credit contracts, the time limit for trial preparation is 02 months from the date of acceptance of the case (for complicated cases, the chief judge of the court may extend the time limit for trial preparation but must not exceed 02 months), but in fact many courts do not strictly comply with the time limit for trial preparation prescribed by Civil Procedure Code.

4. The process of judgment enforcement is difficult

After the court’s decision or judgment is issued, the creditor has the right to request the competent judgment enforcement agency to execute the court’s decision or judgment by means as prescribed by law. However, in many cases, the judgment or decision is completely in favor of the creditor, but the judgment enforcement process may be slow and unenforceable for many reasons such as the process of verifying the assets to be executed taking a long time, the debtor’s having no assets for judgment enforcement; or the debtor being no longer active to be able to repay the debt, etc. This leads to the creditor taking a long time to collect the debt, or even not being able to recover the debt despite the clear and legal decision and judgment of the Court.

Initiating a lawsuit to recover a debt is not simple for many different reasons. However, there is no denying the popularity and value of suing in debt recovery activities. Creditors should consider their options based on the actual situation, the debtor’s financial ability, and their own time and budget to make a wise decision.

Best regards,

TNTP & ASSOCIATES INTERNATIONAL LAW FIRM

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  • Email: ha.nguyen@tntplaw.com


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