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Author: TNTP LAW

Commercial remedy: Suspension of performance of contracts

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

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

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

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,

Instructions for drafting basic content in loan contracts

A loan contract is an agreement between the parties, whereby a lender will give the borrower a sum of money. At the end of the loan term, the borrower must repay that sum with interest if the parties agree or so provided by law. Currently, disputes arising from loan contracts occur quite frequently. To limit risks when lending, the parties should make a written contract and agree on specific content. In this article, TNTP will present the basic contents that parties need to pay attention to when drafting a loan contract.

I. Information of the parties entering into the loan contract

The parties to the loan contract can be individuals and/or legal entities. If one or both parties are legal entities, the following basic information is required: Legal entity name, tax code, head office address, contact information (phone number/email), representative signing enter into the contract (usually a legal representative or authorized representative). In case the one person signing the contract is an authorized representative, written authorization is required.

If one or both parties are individuals, the contract must contain the following basic information: Full name, date of birth, identification card/passport or other equivalent legal documents, address, and information contact (phone number/email) of the individual.

II. Loan amount

Current law has no restrictions on the amount in the loan contract, so the parties can freely agree on this content. However, the parties should note that, if the loan transaction is in the territory of Vietnam, the object of the loan contract must be Vietnamese Dong (Article 3 of Circular 32/2013/TT-NHNN), except for special subjects according to the law. If the loan amount is in foreign currency, the contract violates legal prohibitions and may be declared invalid. At that time, the parties must repay each other what they have received, and the injured party has the right to request the other party to compensate for the damage.

III. Loan contract term

The loan contract shall stipulate the loan term, or in other words, the amount of time for the borrower to fulfil its debt repayment obligations. The time can be days, months, years, etc. If the borrower does not fully pay the lender, the borrower is determined to be in breach of the contract from the day following the end of the period. Late payment interest will also apply from the date on which the borrower violates its loan repayment obligation.

IV. Interest rates

In the loan contract, the parties shall determine the loan interest rate, interest rate for late payment of principal, and interest rate for late payment of interest. For these types of interest rates, the parties are free to agree, however, they must comply with the maximum levels provided by law, specifically as follows: For the rate of interest, according to the provisions of Clause 1, Article 468 of the Civil Code 2015, the loan interest may not exceed 20% per year, unless otherwise prescribed by law. For interest rates on late principal repayment, according to Point c, Clause 2, Article 5 of Resolution 01/2019/NQ-HDTP, the maximum interest rate is 30%/year. Regarding the interest rate for late payment of debt, according to the provisions of Point a, Clause 5, Article 466 of the Civil Code 2015, the maximum interest rate is 10%/year, in case other relevant laws stipulate otherwise.

V. Measures to secure loan contracts

To ensure that the borrower fulfils its payment obligation, the lender can apply one or more different security measures and stipulate these measures in the contract or make and enter into a separate contract. Security measures are frequently applied as follows: Mortgage of property, pledge of property, guarantee.

VI. Governing law and dispute resolution

Choosing the governing law and dispute resolution plays an important role in the loan contract. If the provisions are not agreed by the parties, it can lead to adverse legal consequences for one or more parties in the contract. In addition, determining the dispute resolution in the contract will also affect travel, litigation costs, and the cost of hiring a lawyer when initiating a lawsuit. Therefore, depending on which party’s rights are protected in the contract, the drafter needs to ensure that the contract has applicable legal provisions and a dispute resolution that is most beneficial to the customer.

It should be noted that, for the loan contract between a foreign borrower or lender or an enterprise with foreign capital, the parties can choose the governing law to be foreign law and the local dispute resolution foreign.

Above is the content of the article “Instructions for drafting basic contents in loan contracts” that TNTP sends to readers. If there are any problems, please contact us for the best support.

Sincerely,

Instructions for drafting the basic contents of a contract for gifts of property

Contract for a gift of property means an agreement between parties whereby the giver delivers its property and transfers its ownership rights to the recipient without requiring compensation and the recipient agrees to accept the gift. The parties are free to agree on the terms of the contract. In the article below, TNTP will provide some basic terms needed in a contract for gifts of property.

1. Information of the parties

The contract for gifts of property needs to stipulate the information of the parties, including the giver and the recipient. If one of the parties or all the parties is individual(s), the contact shall provide detailed information such as full name, citizen identification information, contact address, phone number, email, etc. If one of the parties or all parties is a legal entity, the contract shall provide the company name, head office, tax code, and information of the legal representative or authorized representative.

2. Subject matter of the contract

The parties shall stipulate the gifts of property, such as the property’s name, quantity, quality, original, value, etc. When gifting, the recipient needs to pay attention to the following conditions regarding the gifts of property: i) Property must be allowed to be traded; ii) The property must be owned by the person gifting the property; iii) The property is not in dispute over ownership; iv) Property is not being distrained for judgment enforcement.

3. Conditional gifts of property

The giver may require a recipient to perform one or several civil obligations prior to or after the giving of a gift. In the case of conditional gifts of property, these conditions need to be stipulated in the contract, including: what is the gift of property (the scope of work that the recipient needs to perform), the term of implementation (before or after receiving the gifts of property), in case the recipient does not comply, how to handle it, etc. The parties need to note that the conditions for giving a gift must not contravene the law or social morals.

4. Rights and obligations of the parties

The rights and obligations of the parties in the contract shall be agreed upon by the parties. The parties can refer to the regulations on the rights and obligations of the parties as follows:

(i) The giver has the rights and obligations as follows: (a) Request the recipient to perform one or more obligations before or after the donation; (b) Reclaim property and claim compensation for damages if the recipient fails to perform its obligations after the donation; (c) In cases where the recipient must perform its obligations before gifting if the recipient has fulfilled its obligations but the giver does not hand over the property, the giver must pay the obligations owed by the recipient made; (d) Deliver the property to the recipient on time and at the place agreed by the parties; and (e) Notify the recipient of defects in the gifts of property. If the giver reports that the property is defective without notifying it, he/she must be liable for compensating for any damage caused to the recipient.

(ii) The recipient has the rights and obligations as follows: (a) Receive the gifts of property; (b) Perform the conditional gifts of property; (c) Repay the property and compensate the giver for damage if the obligation is not fulfilled after the donation.

5. Time limit for delivery and transfer of ownership of donated property

The parties need to agree in the contract on the specific time for the giver to hand over the property to the recipient with the time to transfer ownership of the gifts of property. This provision is quite important because it is the basis for determining the effective date of the contract for gifts of property in some cases.

6. Location and method of transfer

The parties agree in the contract on the location and method of property transfer. Normally, the transfer method will be prescribed for the gifts of property that are movable property.

7. Provisions related to property registration

For property that must be registered for ownership, the parties should agree in the contract on the parties’ liability in registering the gifts of property at the competent authority, as well as the liability of the parties on taxes and fees related to gifting property.

8. Dispute resolution

In the contract, the parties need to agree on the method of resolution when a dispute occurs, such as negotiation, conciliation, or dispute resolution by arbitration or court. In addition, if the contact has foreign elements, the parties need to pay attention to further agreement on applicable law.

Above is the content of the article “Instructions for drafting the basic contents of the contacts for gifts of property”. Hope the above sharing is useful for those interested in this issue.

Best regards,

Loan contract – Basic contents you need to know

Borrowing money is a regular activity that takes place between subjects in life. When participating in borrowing activities, subjects often enter into loan contracts to determine the rights and obligations between the borrower and the lender. To help readers learn more about this common type of contract, in this article, TNTP will present the basic content you need to know about loan contracts.

1. What is a loan contract?

The law does not have specific regulations on loan contracts. According to Clause 1, Article 105 of the Civil Code 2015, money is also a type of property, thus, a loan contract can be considered a specific form of contract for a loan of property according to the provisions of Section 4, Chapter XVI Civil Code 2015.

Specifically, according to Article 463 of the Civil Code 2015, a contract for the loan of property means an agreement between parties whereby a lender delivers property to a borrower. When the loan falls due, the borrower must repay the lender property of the same type in accordance with the correct quantity and quality and must pay interest if so agreed or so provided by law.

Thus, it can be understood that the loan contract is a type of contract under which the lender will lend the borrower an amount of money; the borrower can use that money for purposes by the content agreed in the contract within a certain period. At the end of the loan term, the borrower must repay the money to the lender and also pay an interest rate to the lender if the parties agree.

2. Form of loan contract

The law does not stipulate that loan contracts must be made in writing. Therefore, a loan contract can be expressed verbally, in writing or through specific acts. However, to minimize the risk of disputes, the parties should still enter into a written contract.

In addition, the law does not require loan contracts to be notarised or authenticated. However, if the parties to the contract are individuals, the contract should be notarised or authenticated to make it easier to resolve disputes in a court of law.

3. Language of the loan contract

The loan contract can be written in Vietnamese, or Vietnamese and a foreign language. If it is a bilingual contract, the parties need to agree in the contract on the preferred language when there is a difference between the two languages for the following reasons:

– When carrying out administrative procedures and needing to submit a contract, the contract must be made in Vietnamese because the language used in Vietnam’s administrative procedure documents is required to be Vietnamese.

– When there is a dispute about contract performance and the parties request a Court or Arbitration in Vietnam to resolve it, the adjudicating agencies will require the parties to translate the contract into Vietnamese.

Above is the article “Loan contract – Basic contents you need to know” that TNTP sends to readers. If there is a problem that needs to be discussed, please contact TNTP for support.

Best regards,

Contracts for gifts of property – Basis contents you need to know

Gifting property is a common activity in daily life. In order to protect the legitimate rights and interests of the parties as well as limit disputes, anyone wishing to gift property should understand the legal provisions of this type of contract. In this article, TNTP will present the basic content you need to know about the contracts for gifts of property.

1. What is the contracts for gifts of property

Contract for gifts of property is one of the bases that gives rise to property ownership rights for the recipient. Current Vietnamese law regulates the concept of this contract in Article 457 of the Civil Code 2015.

Accordingly, a contracts for gifts of property means an agreement between parties whereby the giver delivers its property and transfers its ownership rights to the recipient without requiring compensation, and the recipient agrees to accept the gift.

2. Forms of contract for gifts of property

The form of the contracts for gifts of property will depend on the subject of the contracts. If the subject of the contract is immovable property, according to the provisions of Article 459 of the Civil Code 2015, the contract must be made in writing and notarized or certified and must be registered if the law on immovable property requires registration of ownership. The contract for a gift of immovable property shall take effect from the date of registration. In the case of immovable property for which no registration of ownership rights is required, the gift contract shall take effect from the date on which the property is delivered.

For instance, According to the provisions of Article 167 and Article 188 of the Land Law 2013, the contract for gifts of land use rights and land-attached assets (houses, construction works attached to land) must be notarized or certified, meanwhile, the donation must be registered the land registration agency and takes effect from the time of registration in the cadastral records.

If the subject of the contract for a gift is movable property, the law does not have mandatory regulations on the form of the contract. Thus, the contract can be expressed verbally, in writing or through specific acts. However, for a movable property that requires ownership registration, the contact must be made in writing and ownership registered according to the provisions of law. For movable property where the law requires registration of ownership, the contract takes effect from the date of registration.

For example, If the subject of the contract is a car, the contract must be made in writing and registration procedures must be carried out at the Vehicle registration authorities according to the provisions of Circular 24/2023/TT-BCA.

3. Legal characteristics of contract for gifts of property

Firstly, the subject of this contract is the property that is allowed to circulate. Prohibited objects in the contract are types of property whose transactions are prohibited by law. In general, the subject matter of the contract for gifts of property will include movable and immovable property.

Secondly, the contract for gifts of property is a contract without compensation and is a unilateral contract. Accordingly, one party (the giver) gives the other party (the recipient) a material benefit (gifts of property) without requiring the other party to give it another similar material benefit. The recipient does not have to pay any money or other material benefits. However, if the contract is conditional, this contract becomes a bilateral contract. The giver may require the recipient to perform one or more obligations before or after receiving of property. If the obligation must be performed after giving but the recipient fails to perform, the giver has the right to reclaim the property and request compensation for damages.

Thirdly, the contract for gifts of property is a real contract because the effective date of the contract is the time the recipient receives the property or from the time of registration if the property must be registered according to the provisions of law.

Above is the content of the article “Contracts for gifts of property – Basic contents you need to know”. Hope our sharing is useful for those interested in this issue.

Sincerely,

Resolving disputes in the field of business and commerce: Choosing Arbitration or Court?

In recent years, disputes in the line of business and commerce have been increasing. To minimize damage, the parties shall choose a dispute resolution suitable to their business and production situation. Accordingly, when a dispute occurs, the parties can choose the following resolution methods: Negotiation, conciliation, arbitration, or court. In case negotiation or conciliation is unsuccessful, the parties will have to consider resolving the dispute at an arbitration agency such as Arbitration or Court. In this article, TNTP will present some characteristics of these two methods so that the parties have more basis to choose the appropriate dispute resolution.

1. Dispute resolution in Court

Firstly, in nature, resolving disputes by the Court is through the operation of the judicial apparatus and on behalf of state power to issue judgments or decisions that force the parties to carry out their obligations, even by physical force. When a dispute occurs, one of the parties can sue in court to protect their legitimate rights and interests. However, before submitting a lawsuit in Court, the plaintiff needs to determine whether the Court has jurisdiction and whether the parties have an arbitration agreement or not. In case the parties have an arbitration agreement but still sue a lawsuit in Court, the Court will refuse to accept the case, unless the arbitration agreement is invalid or the arbitration agreement cannot be performed.

Secondly, dispute resolution by the Court shall follow the two-level adjudication regime (first instance, appeal,…). Accordingly, in case of disagreement with the judgment or decision of the first instance, each party has the right to appeal within the prescribed time limit

Thirdly, dispute resolution in Court must be carried out according to the principle of public trial. In special cases where it is necessary to keep State secrets, preserve the nation’s fine customs and practices, protect minors, or keep professional secrets, business secrets, and personal secrets of the involved parties at their legitimate claims, the Courts may conduct the trials behind closed doors (Article 15 of the Civil Procedure Code 2015).

2. Dispute resolution at Arbitration

Firstly, the Arbitration method allows parties to resolve disputes quickly, simply, conveniently, and in accordance with the psychology of businesses. However, Arbitration fees are often higher than court fees. In the case of reimbursement of arbitration fees, depending on the regulations of each Arbitration Center, the reimbursement fee may not be equal to the Court’s refund fee.

Secondly, the disputing parties have the right to choose an arbitration body. If initiating a lawsuit in Court, the plaintiff must submit a lawsuit at a Court with jurisdiction according to the provisions of the Civil Procedure Code 2015. For cases resolved in Arbitration, the parties can agree to any arbitration centre or arbitrator to resolve the dispute. For instance: The disputing parties all have their business headquarters in Hanoi city, so to facilitate dispute resolution, the parties agreed to choose an arbitration centre in Hanoi city to resolve the dispute.

Thirdly, regarding information confidentiality: Dispute resolution by Arbitration is carried out on the principle of non-publicity unless the parties agree otherwise. Therefore, a closed trial at Arbitration can minimize negative effects on the reputation and business activities of the disputing parties.

Fourthly, the trial at Commercial Arbitration only takes place at one level of trial, the arbitration award is final and binding on the parties. Thus, resolving disputes by Arbitration will save time and money for the parties as they do not have to continue resolving the dispute at the appellate level like in Court. However, the arbitration award can be annulled according to cassation procedures.

With the contents analyzed above, depending on the production and business situation, the parties should choose the method of dispute resolution by Court or Arbitration when there is a dispute in the field of business and commerce. However, the parties need to pay special attention and remember that the prerequisite for resolving disputes by commercial arbitration is that the parties must have an arbitration agreement, and must ensure that this agreement is legally valid and can be done.

Above is the content of the article “Resolving disputes in the field of business and commerce: Choosing Arbitration or Court?”. Hope the above article is useful for those interested in this issue.

Best regards,

What debts are easily recoverable in the field of construction?

Debt recovery is always an important issue for businesses to ensure financial stability. However, to improve the ability to collect debt, businesses need to have knowledge to know which debts are easy and difficult to have appropriate recovery plans. In the article below, TNTP’s lawyers will give opinions to advise businesses on how to identify easily recoverable debts in the construction sector.

1. Debts with Cooperative Debtors

The willingness of a debtor to cooperate and make payments is crucial for successful debt recovery. Identifying a cooperative debtor is relatively straightforward, as it often involves prompt payment when due. A debtor with a cooperative attitude will promptly initiate debt repayment. If immediate payment is not feasible, they will commit to a clear repayment plan.

However, it’s essential to note that debtors who willingly cooperate and pay promptly are relatively rare. This level of cooperation is typically achievable when the debtor possesses stable financial capabilities, ensuring quick debt settlement. Therefore, when identifying debts where the debtor is cooperative, businesses should focus on requesting payment as early as possible.

This article, by TNTP’s lawyer, provides insights into recognizing debts that are easy to recover in the construction industry. It aims to offer guidance to businesses in enhancing their debt recovery capabilities.

2. Stable Business Operations of the Debtor

A prerequisite for a debtor to have the ability to make prompt debt payments is to have good financial capabilities. In this regard, businesses need to determine the financial capacity of the debtor and concentrate on requesting payment. Typically, a debtor with stable business operations exhibits the following characteristics:

• The debtor enjoys a steady stream of income and regularly promotes business development.
• The debtor’s headquarters and factories operate stably, with a consistent number of employees.
• Few disputes related to debts arise in connection with the debtor.

In cases where it is confirmed that the debtor maintains stable business operations, businesses should proactively request payment. When the debtor continues to operate steadily, even if they are not cooperative in making payments, businesses can still initiate legal proceedings to compel the debtor to pay. With the debtor’s stable operations, relevant government agencies will easily carry out enforcement measures to recover the debt.

3. Debts That Have Been Reconciled

Reconciliation of debts is a document confirming and listing the debts between parties to determine the final amount that the debtor is obligated to pay, with confirmation from the debtor. This is an important document for debt recovery, as once a business has compelled the debtor to confirm, the debt recovery process becomes much smoother.

Debts that the debtor has confirmed in the reconciliation document are more likely to be recoverable. When the debtor acknowledges the value of the debt in the reconciliation document, the business has sufficient grounds to request payment based on the figures in the reconciliation document. Confirmation in the reconciliation document is evidenced by the signatures of the representatives of the parties and is stamped, making it clear proof of the debtor’s obligation to pay.

4. Newly Arising Debts

The period from 01 to 03 months from the time a debt is incurred is a golden opportunity for debt recovery. During this time, the process of taking debt recovery measures is simplified because the debtor usually hasn’t encountered issues in their business operations yet. Additionally, determining the value of the debt and collecting documents and evidence will be much easier compared to dealing with long-standing debts. Moreover, since newly incurred debts involve reconciling and confirming debts among parties, it is simpler because the accounting records have not been stagnant for too long, making it difficult to track and verify the debt. Therefore, newly arising debts are more favorable for the preparation and execution of debt recovery measures. Hence, businesses should prioritize the recovery of these new debts as early as possible to mitigate future risks.

This is the contribution of TNTP lawyers on the topic: ” What debts are easily recoverable in the field of construction?” We hope this article provides value to our readers.

Best Regard,

TNTP & ASSOCIATES INTERNATIONAL LAW FIRM

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