Author: TNTP LAW

Mortgage of property – Basic content you need to know

Written by TNTP LAW on 14 November, 2023. Posted in Contract Law.

Currently, the need for borrowing money has become essential in daily life and business activities. To mitigate the risks that may arise from loan transactions, a Mortgage of property is considered one of the effective legal tools commonly applied by the parties involved. Therefore, when applying the mortgage of property measure, parties should proactively study the legal regulations regarding this measure. In this article, TNTP will present some basic information about mortgage of property.

1. What is a Mortgage of property?

The mortgagor shall hold the mortgaged property. The parties may agree to deliver the mortgaged property to a third person to hold.

2. Mortgaged property

Mortgaged properties are the properties or rights chosen by the parties to secure the rights of the mortgagee when there is a breach of the secured obligations. Mortgaged properties include both real and movable properties. These properties can be existing or future assets. Mortgaged properties must meet all the conditions specified by law, such as being owned by the mortgagor, being identifiable, and being transferable in civil transactions. Parties should take note of the following:

• In cases where the entire or part of the real or movable property has accessory objects, those accessory objects are also considered part of the mortgaged property unless otherwise agreed.

• Concerning mortgage on land use rights that the mortgagor owns property on land, such property shall also be part of the mortgaged property, unless otherwise agreed.

• Where mortgaged property is insured, the mortgagee must notify the insurer that the insured property is being mortgaged. The insurer shall pay the insured sum directly to the mortgagee upon the occurrence of an insured event. If the mortgagee failed to notify the insurer that the insured property was mortgaged, the insurer shall pay the insured sum in accordance with the insurance contract and the mortgagor shall be obliged to make payment to the mortgagee.

3. Effectiveness of mortgage of property

The effectiveness of a mortgage of property includes the effectiveness in binding the rights and obligations of the parties in the mortgage relationship and the effectiveness against third parties.

A mortgage of property contract becomes effective from the moment it is concluded unless otherwise agreed or specified by law. Therefore, a mortgage of property contract can become effective at one of three points in time: the statutory point, the agreed point, or the point of conclusion. The priority order is determined in decreasing order as follows: the statutory point, the agreed point, and the point of conclusion.

The statutory point can be understood as when the law has regulations on registering, notarizing, authenticating, etc., for a mortgage of property. According to Land law, unless it is related to real estate business, a mortgage contract for land use rights, land use rights and properties attached to land must be notarized or authenticated (Article 167, Land Law 2013).

Mortgage of property becomes effective against third parties from the moment they are registered. When the mortgage of property becomes effective against third parties, it gives the mortgagee the right to demand the mortgaged property before anyone else, even if someone else has possession of it.

4. Termination of property mortgage

A mortgage of property shall terminate in any of the following cases:

• The obligation which is secured by the mortgage has terminated.

• The mortgage of the property has been cancelled or substituted with another security.

• The mortgaged property has been realized.

• As agreed by the parties.

This article, “Mortgage of property – Basic content you need to know” is provided by TNTP for your reference. If you have any questions or need further clarification, please feel free to contact TNTP for timely assistance.

Sincerely,

INTECH PARTNER DAY 2023 program with the motto: CONNECTION – COOPERATION – DEVELOPMENT

Written by TNTP LAW on 13 November, 2023. Posted in Hoạt động của TNTP.

On October 27, 2023 at the INTECH Group Business Hub Building, the branch of TNTP & Associates International Law Firm (” TNTP “) participated in the INTECH PARTNER DAY 2023 Program – A program organized by INTECH Group to create opportunities to exchange, connect and tighten cooperation between INTECH Group and partners; as well as connecting partners of INTECH Group together to share opportunities, cooperate, develop sustainably and reach out.

INTECH Group was established in 2012, is a unit specializing in providing comprehensive solutions for factory and cleanroom, with strengths in consulting, design, construction, maintenance and being a distribution representative, partner with reputable manufacturers in the world.

During its operation, INTECH Group has achieved a number of outstanding achievements as follows:

– Top 100 in FAST500 Fastest Growing Enterprises in Vietnam in 2022.
– In 2022, surpassing the strict standards of the NEBB US, INTECH Group has mastered cleanroom technology and reached the world’s highest cleanliness level Class 1 according to ISO 14644 standards, this achievement was voted as one of 10 Vietnamese science and technology events in 2022.
– In 2023, INTECH Group was recognized as a pioneer enterprise in the field of cleanroom approved by the Ministry of Planning and Investment and the United States Agency for International Development – USAID IPSC Project.

Let’s take a look at the activities of INTECH Partner Day 2023 took place on October 27, 2023:

– Conference: Exchange and share about the topic “Restructuring for sustainable development”;
– Introduction to visiting exhibition and networking exchange;
– Gala Dinner: Connection – Cooperation – Development.

In the current development trend, cooperation is one of the effective ways to help develop business activities of enterprises. Besides expanding the access to new customers, building business partnerships also help enterprises provide more value to their existing customers.

Not just a simple strategic relationship, business partnership also helps enterprises create a sustainable symbiotic development ecosystem, develop in vision instead of going alone in the business process. Most business cooperation relationships bring many benefits to enterprises and are suitable for all kinds of enterprises, scales and operating models. It is important that enterprises and partners actively cooperate and always build and nurture for the development relationships, with the aim to create “win-win” value for both sides.

With the participation from INTECH Group’s partners network, including customers, strategic suppliers, associations, business clubs, training and human resource development organizations, as well as enterprise support organizations, the program is a great opportunity for TNTP to connect, learn and create new cooperation opportunities.

Through learning and sharing, TNTP in particular and enterprises in general can shape a future of mutual development, prosperity, and contribute to the community and society in a positive way.

TNTP sincerely thanks for the meaningful and practical value of the program and hopes that INTECH Group will continue to organize helpful programs in the future.

Best regards,

Deposit – Basic content you need to know

Written by TNTP LAW on 8 November, 2023. Posted in Legal newsletter.

Deposit is a long-standing civil remedy in various civil transactions. The deposit method plays a role in enhancing the awareness of fulfilling the obligations of parties in civil contracts. Simultaneously, it is an effective legal tool to protect the rights and interests of parties when the obligations in the main contract are violated. To gain a better understanding of the deposit method, readers can follow this article by TNTP.

1. Definition of Deposit

Deposit is an act whereby one party (hereinafter referred to as the Depositor) transfers to another party (hereinafter referred to as the Depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract.

Deposits are formed through the agreement of the parties when they intend to establish a contract (the deposit agreement is formed before the contract is concluded) or when they aim to secure the performance of obligations in an already established contract. Accordingly, one party will transfer assets to the other, specifically money, precious metals, gemstones, or other valuable assets, to ensure the conclusion or to secure the performance of the contract. Deposited assets serve the dual function of securing the performance of obligations and being used for payment if the transaction is carried out as intended by the parties.

Note: In cases where one party in the contract transfers a sum of money without specifying whether it is a deposit or an advance payment, this amount is considered an advance payment.

2. Forms of Deposit

The Civil Code 2015 (“CC 2015”) does not specifically stipulate the form of deposits. Therefore, parties can agree on deposits verbally, in writing, etc. However, to fully express and clarify the contents of the deposit, as well as to limit risks and protect the legal rights of parties in case of disputes, it is advisable to document the deposit.

A deposit agreement can be expressed through a separate document or as a clause in the main contract. In the case of a deposit to conclude a contract, the deposit must be documented separately because, at the time of concluding the deposit agreement, the contract has not yet been formed.

3. Rights and Obligations of the Depositor

The Depositor has the following rights and obligations:

• Request the Depositary to cease exploitation, use, or the establishment of civil transactions regarding the deposited assets; carry out preservation and maintenance to prevent the depreciation or loss of value of the deposited assets;

• Exchange, replace the deposited assets, or use the deposited assets in other civil transactions with the consent of the Depositary;

• Pay the Depositary reasonable expenses for the preservation and maintenance of the deposited assets. Reasonable expenses are understood as the actual, necessary, and legally acceptable expenses at the time of expenditure that the Depositary must pay to ensure the preservation of the deposited assets without loss, damage, or deterioration;

• Register ownership rights to the assets or perform other obligations as stipulated by the law to ensure that the Depositary becomes the owner of the deposited assets in case the Depositor violates the commitment to conclude or perform the contract;

• Other rights and obligations as agreed upon or as stipulated by CC 2015 and related laws.

4. Rights and Obligations of the Depositary

The Depositary has the following rights and obligations:

• Demand that the Depositor cease exchanging, replacing, or establishing other civil transactions regarding the deposited assets without the consent of the Depositary;

• Take ownership of the deposited assets in case the Depositor violates the commitment to conclude or perform the contract;

• Preserve and maintain the deposited assets;

• Refrain from establishing civil transactions, exploiting, or using the deposited assets without the consent of the Depositor;

• Other rights and obligations as agreed upon or as stipulated by CC 2015 and related laws.

5. Handling of Deposited Assets

The handling of deposited assets is carried out as follows: If the contract is concluded and executed, the deposited assets are returned to the Depositor or used to fulfil the monetary obligation. If the Depositor refuses to conclude the contract or perform it, the deposited assets belong to the Depositary, and the Depositary must return the deposited assets and an amount equivalent to the value of the deposited assets, except in cases with different agreements.

This article “Deposit – Basic content you need to know ” is provided by TNTP for your reference. If you have any issues or questions, please contact TNTP for timely assistance.

Sincerely,

Pledge of property – Basic content you need to know

Written by TNTP LAW on 7 November, 2023. Posted in Legal newsletter.

In Vietnam, the law stipulates nine measures for securing obligations. Among them, a prevalent measure employed by parties to ensure the performance of obligations is the Pledge of property. To ensure that this measure is applied correctly according to legal regulations and protects the rights and interests of all parties involved, this article will present the fundamental information about the Pledge of property that all parties should be aware of.

1. What is Pledge of property?

Pledge of property means the delivery by one party (hereinafter referred to as the pledgor) of property under its ownership to another party (hereinafter referred to as the pledgee) as security for the performance of an obligation.

2. Effectiveness of Pledge of property

• Agreement on pledge of property shall take effect from the time of concluding unless otherwise agreed or prescribed by law.

• Pledge of property shall take effect against a third party from the time at which the pledgee keeps the pledged property.

• In the case of real estate being the subject of the pledge, the pledge of real estate becomes effective against third parties from the moment of registration, as stipulated by the law.

3. Obligations of the pledgor

• Transfer the pledged property to the pledgee in accordance with the agreement. The pledgor may deliver the pledged property to the pledgee or a third party for safekeeping, depending on the agreement between the parties. The pledgee may keep the pledged property at the location of the property or a location of their choosing.

• Inform the pledgee of any rights of third parties regarding the pledged property, if any; failure to do so gives the pledgee the right to terminate the pledge of property contract and seek compensation for damages or uphold the contract and accept the rights of third parties regarding the pledged property.

• Pay the pledgee reasonable expenses for preserving the pledged property, unless otherwise agreed upon.

4. Rights of the pledgor

• Request the pledgee to cease the use of the pledged property if the pledgee is leasing, lending, or utilizing the pledged property in a manner that could reduce their value.

• Request the pledgee to return the pledged property and related documents, if any, when the obligation secured by the pledge is terminated.

• Request compensation for any damages incurred regarding the pledged property.

• Sell, replace, exchange, or give the pledged property with the consent of the pledgee or as provided by the law.

5. Obligations of the Pledgee

• Take care of and preserve the pledged property; if the pledgee loses or damages the pledged property, the pledgee must compensate the pledgor for the damage.

• Do not sell, exchange, give or use the pledged property as security for the performance of another obligation.

• Do not lease, lend, or exploit the yield or income derived from, the pledged property, unless otherwise agreed.

• Return the pledged property and related documents upon fulfilment of the secured obligation or where the pledge is substituted with another security.

6. Rights of the Pledgee

• Demand that any party unlawfully possessing or using the pledged property return them.

• Manage the pledged property according to the agreed-upon method or as stipulated by the law.

• Lease, lend, utilize, derive benefits, or profit from the pledged property if agreed upon.

• Receive reasonable expenses for preserving the pledged property when returning it to the pledgor.

7. Termination of Pledge of Property

The pledge of property terminates in the following cases:

• When the obligation is secured by terminating the pledge of property.

• When the pledge of property is cancelled or replaced by other security measures.

• When the pledged property has been disposed of.

• By agreement of the parties.

8. Return of Pledged Property

When the pledge of property terminates due to the aforementioned reasons: termination of the secured obligation, cancellation of the pledge of property, replacement by other security measures, or by agreement of the parties, the pledged property and documents evidencing the ownership rights concerning the property shall be returned to the pledgor. Any yield and income derived from the pledged property shall also be returned to the pledgor unless otherwise agreed.

The above information covers the basic aspects that all parties should be familiar with when implementing the measure of the Pledge of property. If you have any issues or questions, please contact TNTP for timely assistance.

Sincerely,

Types of security for performance of obligations as stipulated by civil law

Written by TNTP LAW on 3 November, 2023. Posted in Legal newsletter.

Security measures for the fulfilment of civil obligations are understood as measures prescribed by the law to promote the complete fulfilment of obligations by parties and, in the event of a breach of obligations, the aggrieved party has the right to deal with the secured property or request the fulfilment of civil liability for the breach. In the following article, TNTP will provide an overview of 09 security measures as stipulated in the Civil Code 2015.

1. Pledge of property

A pledge of property means the delivery by one party (hereinafter referred to as the pledgor) of property under its ownership to another party (hereinafter referred to as the pledgee) as security for the performance of an obligation.

2. Mortgage of property

Mortgage of property means the use by one party (hereinafter referred to as the mortgagor) of property under the ownership of the obligor as security for the performance of an obligation to the other party (hereinafter referred to as the mortgagee) without transferring such property to the mortgagee. The mortgagor shall hold the mortgaged property. The parties may agree to deliver the mortgaged property to a third person to hold.

3. Deposit

A deposit is an act whereby one party (hereinafter referred to as the depositor) transfers to another party (hereinafter referred to as the depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract.

Upon a contract being entered into or performed, any deposited property shall be returned to the depositor, or deducted from the amount of an obligation to pay money. If the depositor refuses to enter into or perform the contract, the deposited property shall belong to the depositary. If the depositary refuses to enter into or perform the contract, it must return the deposited property and pay an amount equivalent to the value of the deposited property to the depositor, unless otherwise agreed.

4. Security collateral

Security collateral is an act whereby a lessee of a movable property transfers a sum of money or precious metals, gems or other valuable things (hereinafter referred to as security collateral property) to the lessor for a specified time limit to secure the return of the leased property.

In cases where the leased property is returned, the lessee shall be entitled to reclaim the security collateral property after paying the rental; if the lessee does not return the leased property, the lessor shall be entitled to reclaim the leased property; if the leased property is no longer available for the return, the security collateral property shall belong to the lessor.

5. Escrow deposit

Escrow deposit is an act whereby an obligor deposits a sum of money, precious metals, gems or valuable papers into an escrow account at a credit institution to secure the performance of an obligation.

In cases where the obligor has failed to perform or has improperly performed an obligation, the obligee shall be entitled to receive payment and compensation for damage caused by the obligor from the bank where the escrow deposit is affected, after deducting the bank service charges.

6. Title retention

In a sale contract, the ownership of the property of the seller may remain until the buyer pays the purchase price in full. Title retention must be made in a separate document or included in the sale contract. The title retention shall take effect against a third party from the time of registration.

7. Guarantee

Guarantee means an undertaking made by a third person (hereinafter referred to as the guarantor) to an obligee (hereinafter referred to as the creditor) to perform an obligation on behalf of an obligor (hereinafter referred to as the principal debtor) if the obligation falls due and the principal fails to perform or performs incorrectly the obligation.

The parties may agree that the guarantor shall only be obliged to perform the obligation if the principal debtor is incapable of performing it.

8. Fidelity guarantees

A socio-political organization at the grassroots level may provide a fidelity guarantee so that poor individuals and households can borrow sums from banks or other credit institutions for purposes of production, business or provision of services in accordance with the regulations of law.

A loan guaranteed by a fidelity guarantee must be made in writing with certification of a socio-political organization in terms of the conditions and circumstances of the borrower.

The agreement on fidelity guarantee must specify the loan amount, the purpose of the loan, the term of the loan, the interest rate, and the rights, obligations and responsibilities of the borrower, the lending bank or credit institution and the guarantor organization.

9. Lien on property

Lien on the property means that the obligee (hereinafter referred to as the lienor) who is legally possessing the property being an object of a bilateral contract is entitled to retain the property when the obligor fails to perform the obligations or has performed the obligations not strictly as agreed upon.

This article, “Types of security for performance of obligations as stipulated by civil law” is provided by TNTP for your reference. If you have any issues or questions, please contact TNTP for timely assistance.

Sincerely,

Commercial remedy: Suspension of performance of contracts

Written by TNTP LAW on 2 November, 2023. Posted in Contract Law.

Suspension of performance of contracts, as stipulated in the Commercial Law of 2005 (“CL”), is a commonly applied measure in trade. To apply this measure appropriately in accordance with the actual situation and to safeguard the legitimate interests of all parties involved, it is essential for parties to have a clear understanding of the legal provisions governing this measure. In this article, TNTP will present the key points that parties should consider regarding the suspension of performance of contracts.

1. Definition of Suspension of performance of contracts

In general terms, suspending performance means temporarily refraining from doing something, with the possibility of carrying it out at a later time.

Suspending contract performance, as per the CL, means that, upon the contract performance deadline, one party is temporarily relieved from fulfilling its contractual obligations. If it does proceed with performance, it will do so at a later time. In cases where the suspension of contract performance is carried out in accordance with legal regulations and the agreement of the parties, the party suspending performance is not subject to remedies. For example: A and B enter into a sales contract, where A is the seller and B is the buyer. The parties agree that B will make an advance payment to A three days before A delivers the goods. However, as B fails to make the advance payment to A on time, A does not deliver the goods to B. A’s failure to deliver the goods is understood as A applying the measure of suspending contract performance.

2. Cases for Suspension of performance of contracts

According to the provisions of the CL, except for cases of exemption specified in the CL, one of the parties has the right to suspend contract performance in the following cases:

• When a breach occurs as agreed upon as a condition for suspending the contract;

• When one party breaches a fundamental contractual obligation.

It can be observed that the CL provides only general guidance on cases where contract performance may be suspended, making its practical application challenging due to potential disagreements among the parties. To minimize risks and disputes when applying this measure, parties should include specific provisions in their commercial contracts regarding the following:

• A detailed list of specific cases in which each party may suspend contract performance;

• Obligations related to notifying the other party when suspending contract performance;

• Maximum duration for suspending contract performance;

• Legal consequences after the suspension period expires, including resumption, termination, or continuation of contract performance, etc.

3. Legal Consequences of Suspension of performance of contracts

Under the provisions of the CL, the legal consequences of suspending contract performance are as follows:

• When a contract is temporarily suspended, the contract remains valid.

• The aggrieved party has the right to claim compensation for damages according to the CL.

Therefore, when a contract is temporarily suspended, it still maintains legal validity and binds the parties. In such cases, contract performance is only temporarily interrupted, and if the breaching party rectifies the situation and fulfills its obligations, the contract may continue to be performed. However, the party suspending contract performance must promptly notify the other party of the suspension. Failure to provide immediate notice resulting in harm to the other party may require the party suspending contract performance to compensate for damages.

The above is the article “Commercial remedy: Suspension of performance of contracts” that TNTP has provided to readers. In case of any issues or need for further clarification, please contact TNTP for timely assistance.

Sincerely,

Commercial remedy: Stoppage of performance of contracts

Written by TNTP LAW on 1 November, 2023. Posted in Contract Law.

Suspension of performance of contracts, Stoppage of performance of contracts or Cancellation of contracts are strict measures applied to contract violations. When these remedies are applied by the aggrieved party, the violating party is not obligated to fulfill the contractual obligations. The party that has fulfilled its obligations has the right to demand payment or reciprocal performance from the other party.

1. Definition of “Stoppage of performance of contracts”

Stoppage of performance of contracts is the termination of one party’s performance of contractual obligations. Where a contract is stopped from performance, it shall be terminated from the date when one party receives the notice on stoppage. The parties are not required to continue fulfilling the contractual obligations. The party that has fulfilled its obligations has the right to request payment or reciprocal performance from the other party.

2. Basis for applying “Stoppage of performance of contracts”

Except for cases of exemption provided in Article 294 of the Commercial Law of 2005, contract performance may be stopped in the following cases:

• Upon commission of a breaching act which serves as a condition for stoppage of the performance of the contract as agreed upon by the parties;

For example, in a sales contract:

 The buyer may specify violations by the seller as conditions for stoppage of the contract performance, such as failure to deliver goods, incomplete delivery, late delivery, delivering the wrong type or quality of goods, etc.

 The seller may specify violations by the buyer as conditions for stoppage of the contract performance, such as failure to pay the full value of goods on time or refusal to accept the goods, etc.

• When one party breaches a fundamental contractual obligation. A fundamental breach is a breach of the contract by one party that causes significant harm to the other party, preventing the other party from achieving the purpose of entering into the contract. To safeguard interests and limit disputes arising from differences in interpretation, each party should list specific violations deemed as conditions for stoppage of the contract performance.

3. Legal consequences

• Where a contract is stopped from performance, it shall be terminated from the date when one party receives the notice on stoppage. The parties shall not have to further perform their contractual obligations. A party that has performed its contractual obligations may request the other party to pay or perform its reciprocal obligations.

Although the law does not specify the form of the notice on stoppage, it is advisable for the parties to provide notice in writing or via email. In cases where disputes are resolved in the jurisdiction, this notice will be considered as evidence that the parties need to submit to the jurisdiction.

• The aggrieved party may claim damages according to the provisions of the Commercial Law of 2005. An aggrieved party does not lose the right to claim compensation for losses resulting from the other party’s breach of contract when the stoppage of performance of contracts is applied.

4. Notification obligation when stoppage of performance of contracts

The party stopping contract performance must promptly notify the other party of the stoppage. In cases where failure to provide immediate notice causes harm to the other party, the party stopping contract performance is obligated to compensate for the damages.

The above is the article “Commercial remedy: Stoppage of performance of contracts” that TNTP has provided to readers. If you have any issues or need further clarification, please contact TNTP for timely support.

Sincerely,

Remedies for contract breaches in the commercial sector

Written by TNTP LAW on 31 October, 2023. Posted in Dispute Settlement.

During the execution of commercial contracts, one or more parties may engage in actions that breach their contractual obligations. To protect the legal rights and interests of the parties, as well as to prevent and limit contract violations, parties should establish remedies that the breaching party must bear. Furthermore, specifying the remedies in detail will serve as the basis for holding the breaching party accountable and compensating for the costs and losses resulting from the breach. In this article, TNTP will present some key information about various types of remedies for contract violations in the commercial sector.

1. Definition of “Remedies for commercial contract breaches”

Remedies for commercial contract breaches refer to the measures applied to entities engaged in actions that breach commercial contracts. Under these measures, the party committing the breach of a commercial contract will bear legal consequences for their actions.

2. Basis for applying “Remedies for commercial contract breaches”

First, the act of breaching the contract.

Breaching a contract includes non-performance or improper, incomplete fulfilment of contractual obligations in accordance with the contract and legal provisions. When determining whether an action constitutes a violation of a commercial contract, the parties must refer to the contract and relevant legal regulations.

Second, the fault of the parties.

The fault of the breaching party is a mandatory basis for all remedies for the violation of commercial contracts. According to the current Vietnamese commercial law, any breach of a contract is presumed to be a fault (except in cases where the breaching party can prove that they are not at fault). Therefore, when applying remedies against the breaching party, neither the aggrieved party nor the arbitration authority is required to prove the fault of the breaching party.

Third, other bases.

• Agreement of the parties: This is a mandatory basis for imposing penalties for contract violations. Additionally, the parties can agree on cases of contract violations that would trigger remedies such as suspension, termination, or cancellation of the contract, provided that these agreements do not contradict the fundamental principles of Vietnamese law and international treaties to which Vietnam is a member.

• Actual damages occurred: This is a mandatory basis for imposing compensation for damages.

• The act of breaching the contract as the direct cause of the damages: This is a mandatory basis for imposing compensation for damages.

3. Forms of Remedies for Addressing Contract Violations in Commercial Contracts

In accordance with Article 292 of the 2005 Commercial Law (“CL”), the types of remedies for violations of commercial contracts include:

• Specific performance of contracts.

• Fines for breaches.

• Forcible payment of damages.

• Suspension of performance of contracts.

• Stoppage of performance of contracts.

• Cancellation of contracts.

• Other remedies agreed upon by involved parties which are not contrary to the fundamental principles of Vietnamese law, treaties to which the Socialist Republic of Vietnam is a contracting party and international commercial practices.

Note: Unless otherwise agreed, the breaching party cannot apply suspension of performance of contracts, stoppage of performance of contracts, or cancellation of contracts. A fundamental violation is a breach of the contract by one party that causes significant harm to the other party, to the extent that the other party cannot achieve the purpose of entering into the contract.

4. Cases of Exemption from Liability for Contractual Violations

Exemption from liability for violations of commercial contracts refers to situations in which one or more parties in the contract engage in actions that breach the contract but do not bear adverse legal consequences. According to Article 1 of Article 294 of the CL, the breaching party is exempt from liability in the following cases:

• When an exemption from liability has been agreed upon by the parties;

• When a force majeure event occurs;

• When the breach of one party results entirely from the fault of the other party;

• When the breach of one party is a result of compliance with a decision by a competent state authority that the parties could not have known at the time of contract formation.

5. Obligations Regarding Notification and Confirmation of Exemption from Liability Cases

• The breaching party must promptly notify the other party in writing of the exemption from liability case and the potential consequences.

• When the exemption from liability case ends, the breaching party must promptly inform the other party. If the breaching party fails to notify or fails to notify in a timely manner, they must compensate for the damages.

• The breaching party has an obligation to prove to the other party the circumstances of their exemption from liability.

The above is the article “Remedies for contract breaches in the commercial sector” that TNTP has sent to its readers. In case you have any issues to discuss, please feel free to contact TNTP for timely assistance.

Sincerely,

Commercial remedy: Specific performance of contracts

Written by TNTP LAW on 30 October, 2023. Posted in Contract Law.

Specific performance of contracts is a commonly applied remedy when there is a breach of contract. The failure to perform, improper performance, or incomplete fulfilment of commitments in a contract, such as failure to deliver goods, or not ensuring the quantity and quality of the goods, serves as the basis for applying the commercial remedy: Specific performance of contracts. In this article, we will present the legal provisions related to this remedy.

1. Definition of “Specific performance of contracts”

Specific performance of a contract means a remedy whereby the aggrieved party requests the breaching party to properly perform the contract or apply other measures to cause the contract to be performed and the breaching party shall have to bear any costs incurred. The essence of this remedy is that the party in breach of the contract must continue to perform the contract as requested by the aggrieved party.

2. Content of “Specific performance of contracts”

i) Where the breaching party fails to deliver goods in full or provide services in accordance with the contract, it shall have to deliver goods in full or provide services in accordance with the contract. Where the breaching party delivers goods or provides services of inferior quality, it shall have to rectify defects of the goods or shortcomings of the services or to deliver other goods as substitutes or provide services in accordance with the contract. The breaching party must not use money or goods or services of other types as substitutes unless so consented by the aggrieved party.

ii) Where the breaching party fails to comply with the provisions mentioned in (i) above, the aggrieved party may purchase goods or receive services of the correct type as stated in the contract from another seller or provider for substitution and the breaching party must bear the price difference and relevant expenses, if any; or may rectify defects of the goods or shortcomings of the services by itself, and the breaching party must pay actual and reasonable expenses for the rectification.

The aggrieved party shall have to receive goods or services and make payments if the breaching party has fulfilled all obligations according to (i) above.

iii) Where the breaching party is the purchaser, the seller may request the purchaser to pay for and receive goods or fulfil other obligations stipulated in the contract and provided for in the 2005 Commercial Law.

3. Extension of time limit for performance of obligations

In case of specific performance of a contract, the aggrieved party may extend the time limit for a reasonable period for the breaching party to perform its contractual obligations.

4. Relationship between the remedy of specific performance of contracts and other remedies

• Unless otherwise agreed, during the period of application of the specific performance of a contract, the aggrieved party may claim for damages and fines to be paid but must not apply other remedies. Other remedies include Suspension of performance of contracts, Stoppage of performance of contracts, and Cancellation of contracts.

However, according to Article 51(3) of the 2005 Commercial Law, in cases where the seller has delivered goods that do not conform to the contract, the buyer has the right to temporarily suspend payment until the seller rectifies the non-conformity. The temporary suspension of payment by the buyer is considered a suspension of contract performance. Therefore, during the period in which the buyer enforces contractual performance obligations, the buyer still has the right to temporarily suspend contract performance if this suspension is carried out in accordance with the legal provisions or as stipulated by the parties in the contract.

• If the breaching party fails to carry out the remedy of the specific performance of a contract within the time limit set by the aggrieved party, the aggrieved party may apply other remedies to protect its legitimate rights.

5. Notes

Parties involved should note that when applying this remedy, the breaching party is not required to prove that actual damages have occurred; they only need to demonstrate the legitimate benefits they expected to gain from the contract that the obligated party failed to provide.

On the other hand, this remedy is not applicable in all cases, as the obligated party may not be able to fulfil the contract in reality or the law may prohibit it. For example, if the goods are no longer available for a sale and purchase contract, if the goods have been seized by the competent state authorities, etc.

The above is the article “Commercial remedy: Specific performance of contracts” that TNTP has sent to its readers. If you have any issues that require discussion, please contact TNTP for timely assistance.

Sincerely,

Author: TNTP LAW

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