Author: TNTP 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,

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,

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,

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,

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,

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,

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,