Author: Phạm Huyền

Along with the development of social life, civil transactions have been on the rise, in fact, transactions are also increasingly diverse in types as well as subjects. However, due to various reasons, many transactions are declared invalid because they do not meet the conditions prescribed by the law, mainly due to ignorance of the law,… Here we will present the conditions for a civil transaction to take effect.

1. The concept of civil transactions

According to Article 116 of the Civil Code in 2015, a civil transaction is understood as a contract or a unilateral legal act that gives rise to, changes or terminates civil rights and obligations. Thus, basically, civil transactions will consist of two types: (i) contracts; (ii) unilateral legal acts in which contracts are considered a common form and are used extensively in social life.

2. Conditions for civil transactions to take effect

Conditions for civil transactions to take effect are specified in Article 117 of the Civil Code, which includes the following four conditions:

• Conditions on subject capacity

Depending on specific civil transactions, the subject will have to have legal capacity, corresponding and appropriate behavioral capacity, such as transactions related to real estate that require the subject to have behavioral capacity, including from full 18 years old and not lose the ability to perceive and master behavior.

• Conditions on the will of the parties

The parties when establishing civil transactions must be completely voluntary, this is expressed in the fact that there must be a unity between the will (inner desire) and the expression of the will (revealed outside the objective world), in case the parties are involved in the transaction due to deception, being coerced will not meet this.

• The purpose and content of civil transactions do not violate the prohibitions of the law, are not contrary to social ethics

Basically, civil law recognizes and respects the agreement of the parties, but this agreement must not be contrary to the prohibitions of law and social ethics.

Prohibitions of the law are provisions of the law that do not allow the subject to perform certain acts. To determine whether a transaction violates the prohibition of the law, each party needs to rely on specific legal provisions. For example, a fixed-term marriage agreement is considered a violation of the law, or a transaction is established with the purpose of infringing on the personal and property rights of others, violating public and social order,… cannot be effective.

Social ethics are common norms of behavior in social life, recognized and respected by the community. Unlike the law, moral standards are not written into written laws that are coercive or imperative, but are carried out by people according to social consciousness and conscience and public opinion.

• Conditions on the form of civil transactions

Other than the above three conditions, all civil transactions must be complied with. For this condition, the form of a civil transaction shall be considered only as a condition of the validity of a civil transaction in cases provided for by law. For example, in many cases, contracts for the transfer of land use rights, land use rights and assets attached to land, housing purchase and sale contracts to take effect are required to be notarized or authenticated in writing in accordance with the Provisions of the Land Law of 2013 and the Law on Housing in 2014.

3. What do individuals need to do when civil transactions are invalid?

In case of entering into or performing an invalid civil transaction, the parties should do the following to minimize the risks caused by this transaction:

• Review and find out the reasons leading to invalid transactions;
• Agree with the other party on whether to perform the contract or not to perform it (if possible);
• If the parties want to continue performing civil transactions, it is necessary to overcome and supplement the effective conditions that the parties have not previously met or violated;
• Determine the amount of damage (if any) as a basis for claiming damages against the party causing the damage or agree on smaller damage compensation.

Above is the article “For a civil transaction to take effect, what conditions should be met?”. We hope this article was useful to you.

Best regards,

Mediation is one of the methods to resolve disputes and recover debts between businesses. In previous articles, TNTP has analyzed the benefits of mediation, the pros and cons of pre-trial mediation and trial mediation. In this article, TNTP will analyze the differences between the two types of mediation and choose the type that will be more beneficial to the business.

1. About the cost of pre-trial mediation and trial mediation

Pre-trial mediation will be conducted before trial mediation, and businesses can choose to conduct both methods. However, unlike pre-trial mediation when businesses may not pay any costs or only pay a very small fee, trial mediation can only be conducted when the Court has accepted the petition, which means that the plaintiff must pay the full court fee advances.

For some disputes with a small amount in dispute, the court fee advance may be insignificant. However, if the amount in dispute is from several billion to several tens of billions, the plaintiff has to pay tens to hundreds of millions for court fee advances. Thus, compared with pre-trial mediation, the cost of trial mediation will be much higher.

2. About the time to conduct pre-trial mediation and trial mediation

If the pre-trial mediation stage goes smoothly and the parties agree on a successful mediation plan, the total time from the time the Court conducts the mediation until the issuance of the Decision on recognition of the successful mediation results can only last a month. This decision is also enforceable equivalent to the Court’s decision or judgment at the first instance or appellate stage.

On the contrary, trial mediation begins after the Court accepted the petition, the Court needs time to arrange the mediation schedule. The time from filing a lawsuit petition to when the Court accepts this petition lasts from 03 to 06 months, but this period may be longer depending on the actual circumstances and cases. Thus, in case the parties agree on a mediation plan for the Court to issue a decision on recognition of the agreements between involved parties, it will take at least 03 months from the filing of the petition. Thus, compared with pre-trial mediation, trial mediation will take more time to be conducted.

3. Should businesses choose pre-trial mediation or trial mediation?

Creditors can conduct both methods of mediation because the Court is the organizing authority for pre-trial mediation and trial mediation. When the two parties mediate successfully, the Court issues the decision to recognize the successful conciliation result or the decision on recognition of the agreements between involved parties. The debtor must perform the debt payment obligation to the creditor, in case the debtor fails to perform this obligation as committed, the creditor has the right to request the enforcement agency to force the debtor to make the payment.

However, one of the most important factors for successful mediation is that both parties must have good faith, if the debtor does not cooperate, both methods will not be successful. At that time, the case will be moved to the first-instance trial stage, the Court will base on documents and evidence to issue a judgment to settle the case.

The above is the analysis of TNTP related to pre-trial mediation and trial mediation. Hope this article is useful for businesses.

Best regards.

Chairman of the Board and Director/General Director are two different titles in a joint stock company. In many enterprises, the Chairman of the Board concurrently holds the title of Director and General Director. Does the law allow businesses to do so? In this article, we will answer the above question and analyze the order and procedures for the Chairman of the Board be holding together the position of Director and General Director.

I.Definition of “Chairman of the Board, Director/General Director”

• The Chairman of the Board is a member of the Board of Directors, elected as the head, representing the Board of Directors – the most powerful body in the company.
• The Director, or General Director, is the person who runs the day-to-day business of the enterprise and will be under the supervision of the Board of Directors. The director can be a member of the Board of Directors by appointment or an outside individual hired by the company under a contract. The term of office of the Director in accordance with the Law on Enterprises shall not exceed 05 years and may be re-appointed for an unlimited number of terms.

II. Can the Chairman of the Board also holding together Director/ General Director potision at the same time?

Currently, the law on enterprises does not directly stipulate whether the Chairman of the Board of Directors can concurrently hold the position of Director or General Director. However, in Article 156 of the Enterprise Law 2020, the law provides for two cases where the Chairman of the Board of Directors cannot concurrently be the Director/General Director, specifically: “The President of the Board of Directors of a public company or a joint stock company prescribed in Point b Clause 1 Article 88 of this Law must not concurrently hold the position of Director/General Director.” Therefore, in the spirit of the Enterprise Law, the Chairman of the Board may holding together the position of Director/General Director if that individual does not fall into any of the following cases:

• Being the chairman of the Board of a public company;
• Being the chairman of the Board of a joint-stock company in which more than 50% of charter capital is held by the State or the total number of voting shares (except for enterprises in which 100% of charter capital is held by the State).

III.  Procedure for the Chairman of the board to be holding together the position of Director

Step 1: Evaluate the condition

The Chairman of the Board who is appointed as the Director/General Director must ensure the conditions and requirements on professional capacity and behavioral capacity are not prohibited by law. Specifically:

– Have full capacity for civil acts and are not prohibited by law from managing an enterprise, for example: not being a minor or being criminally prosecuted; serving a sentence; Officials and public employees; Commissioned officers, non-commissioned officers in agencies and units of Vietnam People’s Army and in police authorities and units;

– Having experience and professional qualifications in business administration of the company or the qualifications specified in the company’s charter.

– Especially for enterprises in which the State holds more than 50% of the charter capital or the total number of voting shares and its subsidiaries, the individual may be appointed to the position of Director, General Director must not be a relative of the executives and controllers of the company and the parent company, of the representative of enterprise’s investment or state investment in the company and the parent company. “relatives” of a person include: the spouse, biological parents, adoptive parents, parents-in-law, biological children, adopted children, children-in-law, biological siblings, siblings-in-law and biological siblings of the spouse.

Step 2. Board of Directors Meeting

• The Board of Directors holds a meeting and collects opinions on the appointment of the Chairman of the Board of Directors concurrently with the position of Director/General Director and approves the appointment of the Director by direct vote. Opinions will be taken in writing or in other forms prescribed by the company’s charter.
• The appointment of the Chairman of the Board concurrently with the position of Director/General Director of the company is approved when the majority of the members of the Board of Directors (> 50%) approve unless the company’s charter obligation higher rates.

Step 3. Issue the Minutes of the Board of Directors’ meeting, the Board’s Decision/Resolution, and the Appointment Decision

After the Board of  Directors approves the appointment of the Chairman of the Board as the Director/General Director, the company will issue the Minutes of the Board of Directors meeting, the Decision/Resolution of the Board of Directors, and the appointment of the Director/General Director.

Step 4: Carry out business registration or legal representative changes

The company carries out procedures for business registration/change of legal representative with the Business Registration Office – Ministry of planning and investment, where the company’s head office is located in accordance with the law.

In the event that the appointment of the new Director or General Director changes the legal representative, the company needs to carry out procedures for changing the legal representative. Enterprises need to submit resolutions, decisions, and a copy of the minutes of the Board of Directors meeting to prove that the change of directors has been recognized by the company.

Above is the article “Can the chairman of the board be completed director/general director?” We hope this article was useful to you.

Best regards,

Currently, business debt collection has always been the top concern of business owners. To collect business debts effectively, the debt collector must have in-depth legal knowledge, analytical skills, and methods to solve debt settlement problems. The following article will analyze the basic steps of debt collection for companies.

Step 1: Verifying dossiers, requests for business debt collection

This is the first step that companies need to do for each business debt and debtor before engaging in debt collection. The verification, examination, and analysis of dossiers will provide us with a more general view of each debt case in order to analyze the options of settlement approach, the amount to be collected and the expected steps in the debt collection process. Specific steps include:

• Verifying the legality of dossiers and requests for debt collection: reviewing and evaluating the company’s dossiers and requests, comparing dossiers, vouchers and documents related to the company’s debt collection request.
• Have a preliminary verification of the payment subject and payment ability of the obligor

Step 2: Negotiating for collect business debt 

This is the most important step in the debt collection process, requiring companies to have both debt collection-related knowledge and skills, and to be skillful and flexible to obtain the highest efficiency. During the process of meeting and negotiating with the party that is obligated to pay the business debt, if this party has goodwill in debt payment, debt payment via negotiation will be most optimal option. There will be many negotiating methods, but the ones to be applied in reality will be as follows:

• Accepting late payment in installments, divided into small terms and deciding on the final payment deadline
• Partially reducing or exempting from debt, interest or expense based on each company’s policy and point of time
• Flexible approval for payment in cash, goods, securities or debts clearing, obligations ..
• Other flexible options in negotiation suitable with the company’s policies and capabilities, and also ensuring the solvency and efficiency of debt collection

Step 3: Initiating a civil lawsuit in collect business debt 

This is a solution putting a lot of pressure on the debtors, however, it is rarely taken into account by companies. For uncooperative, evading debtors, or for large debts, this solution is suitable and effective in business debt handling and collection. Of course, it should be considered the final solution because it is very costly in terms of cost, manpower and time. In addition, it is only effective when there is the support of a law firm, a professional lawyer, to protect the company’s legal rights and interests maximally.

The tasks that the Law Firm/Lawyer will support you are as below:

• Drafting a lawsuit petition, lawsuit dossier and initiating a lawsuit at a competent People’s Court or a commercial arbitration center
• Representing the client or appointing a lawyer to protect the client
• Consulting, drafting documents requesting the judgment enforcement

The above are the most basic steps to support companies in effective debt collection. In fact, some extremely complicated and difficult situations may arise, however, the appropriate application of professional legal knowledge and techniques as well as the flexibility in debt collection will bring about favourable results.

Best Regard

The Covid-19 pandemic, which broke out at the beginning of 2020 and continued for a long time, has had a profound effect on the entire economy, causing negative impacts on the operations of businesses, and seriously affecting the ability to pay bills. corporate debt and leading to an increase in bad debts at credit institutions. To be able to minimize and prevent bad debt from increasing, it is extremely urgent to research and come up with solutions to prevent bad debt. In this article, we will analyze and suggest measures for credit institutions to prevent bad debt from happening.

1. What is bad debt?

Bad debt is understood as bad debt when the borrower is unable to pay the debt when it is due to be paid as committed in the credit contract. According to the definition of “bad debt” in Clause 8, Article 3 of Circular 11/2021/TT-NHNN stipulating the classification of assets, the level of deduction, the method of making provisions for risks and the use of provisions for settlement Risk management in operations of credit institutions, foreign bank branches, “Nonperforming loan (NPL) refers to a bad debt on the balance sheet which is classified into group 3, 4 or 5.”; in there,

Those with bad debt will be listed in the list of bad debt customers on the Vietnam National Credit Information Center CIC system. National Credit Information Centre

2. Measures for prevention of bad debt at credit institutions

Along with credit, work is the prevention of bad debt risks. In the past time, to prevent bad debt risks, credit institutions often apply the following main measures:

• Implement appropriate credit policy:

Credit policy includes customer policy, credit size and limits policy, and interest rate policy. Develop and apply appropriate credit policies to help credit institutions enhance their specialization in credit analysis, create a common consistency in credit activities to limit risks, and improve profitability for credit institutions.

• Improve the efficiency of credit appraisal, inspection, and supervision after credit granting:

This is to assess the feasibility of investment projects, production, and business plans, to serve the lives of customers who request loans, and at the same time to assess the customer’s ability to repay debts, contributing to minimizing credit risk. After granting credit, the credit institution shall periodically or irregularly check the loan’s use purposes, the situation of production and business activities, and the inventory turnover of customers to have appropriate solutions.

• Credit rating and scoring for customers:

A credit rating and scoring system must be built suitable for each customer as a basis for credit granting approval and credit quality management. The credit rating and scoring for customers are done by methods: qualitative, quantitative, or combination. Among these methods, the qualitative method is superior because it reflects more accurately the status of customers and debts, which has been applied by many credit institutions.

• Apply credit security measures:

The application of credit security measures with assets to prevent risks, create a second source of repayment for debts, and create an economic and legal basis to recover debts already lent to customers. In fact, in addition to small loans for life that are unsecured, most of the loans of credit institutions are fully or partially guaranteed.

• Require customers to buy credit insurance:

Many credit institutions have applied this credit risk prevention measure in collaboration with insurance units in recent years. When taking this measure, the credit institution benefits from sharing the insurance premiums collected from customers according to the agreement with the insurer, and at the same time has a sure source of repayment when the customer is at risk. Accordingly, if the customer encounters problems such as unemployment, casualty, and no income to repay the debt, the insurance company will pay.

• Setting up and using the risk reserve fund:

Currency trading is the riskiest business. Therefore, the establishment of a risk reserve fund is to protect depositors, help credit institutions preserve business capital, and create a strong foundation for credit institutions in their operations. Due to the loss of capital, the bank has to find a source of compensation. This source is taken from the hedging fund of the credit institution.

3. Legal services to support debt recovery of TNTP

With a team of experienced legal experts, TNTP is confident in assisting customers in recovering bad debts. With the motto of always protecting the legitimate rights and interests of the Clients, TNTP tries and ensures to support the Clients and deploy the work in the fastest, most timely, and most effective way, regularly reporting the progress of the case. work as well as giving the next action plan so that the Client can easily monitor and evaluate the work results. Clients can completely trust and feel secure when using TNTP’s debt collection support legal services.

Above is the article “Measures for prevention of bad debt at credit institutions”. We hope this article was useful to you.

Best regards,

1. For additional information and the newest articles from TNTP and Associates International Law Firm, please join our Facebook Fanpages at:

• https://www.facebook.com/TNTPLAWFIRM
• https://www.facebook.com/giaiquyettranhchapthuhoino

2. Please click on the following link to learn more about legal knowledge:

https://dsdc.com.vn/en/category/legal-newsletter/

3. Please click on the following links to learn more about the legal services of TNTP and Associates International Law Firm:

• Dispute resolution services: https://dsdc.com.vn/en/the-dispute-resolution-services-from-tntp-law-firm/
• Legal consulting services: https://dsdc.com.vn/en/legal-consulting-services-from-tntp/
• Debt collection services: https://dsdc.com.vn/en/debt-collection-services-from-tntp/

4. For additional information, please contact us at:

TNTP and Associates International Law Firm

Lawyer Nguyen Thanh Ha

Phone: 0931 798 818

Email: ha.nguyen@tntplaw.com

When we reference a representative, we usually think of two cases: legal representative or authorized representative. However, there are civil transactions although entered and performed by the legal representative or authorized representative, they don’t have the right to enter into and perform the civil transactions. In this case, whether the signed contract will be invalidated or not and how to mitigate or restore damage from them. Please read this week’s article of TNTP.

1. Cases of civil transactions entered and performed by unauthorized persons or representatives beyond scope of representation

 Some cases where civil transactions entered and performed by unauthorized persons or representatives beyond scope of representation (known as unauthorized persons) such as:

• The signatory is the legal representative of the juridical persons but does not have the authority to sign. This case usually occurs when the representative signs transactions that must be approved by the Members’ Council for Limited Company, the General Meeting of Shareholders, or the Board of Directors for a Joint-stock company.
• The signatory is not the legal representative of the Enterprise and does not have the legal authorization of the person competent to sign. In some contracts, the signatory is the Deputy Director, head of department/de…but not legally authorized.
• The signatory has a written authorization, but the content of the transaction is beyond his/her scope of authorization.
• The signatory is not a person who is authorized by a member of a household, co-operative group, or a non-juridical person

 2. Consequences

In principle, civil transactions entered by unauthorized persons shall not be invalid but prescribe in non-giving rise to rights and obligations, except for any of the following cases.   Specifically, Clause 1, Article 142, Article 143 of the Civil Code in 2015 stipulates:

For the principal: in the case where a civil transaction is entered into by unauthorized persons, shall not give rise to the rights and obligations of the principal, except for any of the following cases: (i) The principal recognizes the transaction;  (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 there with was unauthorized.

  For the unauthorized persons who entered and performed civil transactions: the unauthorized person must fulfill the obligations to the person with which he/she transacted unless such person knew or should have known that the representative was unauthorized.

For a person having transacted with an unauthorized person: he/she has the right to terminate unilaterally the performance of or to terminate the civil transaction entered and to demand compensation for any damage, except where he/she knew or should have known that the representative was unauthorized, or the principal recognizes the transaction.

In addition, if the unauthorized person and the other party in a civil transaction deliberately enter into and perform a transaction and thereby cause damage to the principal, they must jointly compensate for the damage

 3. How to prevent risk and remedy the consequences

Remedying consequences:

If entering a transaction with an unauthorized person, in order to limit the risk, a person having transacted needs to prove that the enterprise, the principal recognizes the transaction or knows it without any objection. For example:

• The person authorized to sign was present at the meetings, negotiations, or at the signing meeting and had no objections.
• The enterprise has used the assets obtained from the performance of the contract for the purpose of the company’s business or the general operation of the enterprise and these activities of the enterprise are information that the principal already knows is obliged to know.
• Enterprises have been signing and performing contracts that are not in accordance with their own private authority.

Preventing risk before entering and performing contracts:

• To limit risks, before signing the contract, it is necessary to note and carefully check the information and documents showing the authority of the signatory such as Certificate of business registration, Company Charter to determine the authority to sign, etc. documents appointing representatives for households, cooperative groups or other organizations that do not have legal status.
• In case the signatory is not the legal representative, it is necessary to verify the competence to approve the Decision of the Members’ Council for a limited liability company with two or more members, the Decision of the General Meeting of Shareholders, or the Board of Directors for a joint-stock company.
• If you have asked the partner to provide the necessary documents but are refused, you should consider them carefully before signing the contract.

Here is our experience with the contracts entered into and performed by unauthorized persons or representatives beyond scope of representation.

Best regards

1. For additional information and the newest articles from TNTP and Associates International Law Firm, please join our Facebook Fanpages at:

• https://www.facebook.com/TNTPLAWFIRM
• https://www.facebook.com/giaiquyettranhchapthuhoino

2. Please click on the following link to learn more about legal knowledge:

https://dsdc.com.vn/en/category/legal-newsletter/

3. Please click on the following links to learn more about the legal services of TNTP and Associates International Law Firm:

• Dispute resolutionservices: https://dsdc.com.vn/en/the-dispute-resolution-services-from-tntp-law-firm/
• Legal consultingservices: https://dsdc.com.vn/en/legal-consulting-services-from-tntp/
• Debt collection services: https://dsdc.com.vn/en/debt-collection-services-from-tntp/

4. For additional information, please contact us at:

TNTP and Associates International Law Firm

Lawyer Nguyen Thanh Ha

Phone: 0931 798 818

Email: ha.nguyen@tntplaw.com