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Evidence is required to prove that the employer has unlawfully terminated the labour contract

Evidence is required to prove that the employer has unlawfully terminated the labour contract

Written by TNTP LAW on . Posted in Labor Law.

Since the employee is unilaterally terminated from the labour contract, if the employee believes that such termination is unlawful, the employee needs to promptly gather relevant evidence regarding the incident. In the following article, TNTP will provide employees with essential evidence that needs to be collected to prove the employer’s unlawful unilateral termination of the labour contract.

1. Evidence showing the employment relationship

The first evidence that the employee needs to gather is the labour contract, as the labour contract demonstrates the employment relationship between the employee and the employer. However, in some cases, the employee and the employer may not sign a labour contract, or the contract might not be in written form. In such cases, the employee can collect other valid evidence, such as probationary contracts, job offer letters, job acceptance emails, work-related email exchanges within the enterprise, attendance records, documents indicating the enterprise’s salary payments to the employee, such as individual payroll records, salary transfer documents to the employee’s account, etc.

2. Evidence demonstrating the grounds for unilateral termination of the labour contract

When unilaterally terminating the labour contract with the employee, the employer will present the grounds or reasons for such termination, such as the employee’s consistent failure to complete assigned tasks, the employee’s voluntary resignation without valid reasons, etc. In this case, the employer may create documents that demonstrate the employee’s violations, such as meeting minutes, work records, incident reports, etc.

3. Evidence demonstrating the termination of the labour contract

When unilaterally terminating the labour contract, the employer may issue termination notices, termination decisions, etc. If the employer does not issue a termination decision, or the employer issues a decision but doesn’t provide it to the employee, or the employer issues a notice but unilaterally terminates the contract in practice, the employee needs to gather evidence showing the enterprise’s prevention of employee’s work rights, evidence demonstrating the enterprise’s obstruction of the employee’s work rights, etc.

4. Evidence demonstrating the labour-related benefits fulfilled and unfulfilled by the employer

When unilaterally terminating the labour contract with the employee, whether legally or unlawfully, the employer still has obligations towards the employee, such as paying all relevant sums related to the employee’s entitlements including salary, termination allowance, salary for unused annual leave days, etc. Evidence for these benefits includes payment documents, accounts receivable reconciliation records, social insurance records, etc.

5. Internal enterprise documents

As explained earlier, when unilaterally terminating the labour contract with the employee, the employer needs to justify the termination based on legally appropriate grounds. One of the bases that the employer often uses is the employee’s consistent failure to complete assigned tasks. The employer must establish the criteria for assessment of employees’ fulfilment of duties to terminate based on this ground. The employee should review the content of the criteria, and assess whether the procedure for implementing it complies with legal requirements.

The law does not specify the exact procedure that the employer must follow for unilaterally terminating labour contracts. Therefore, employees should research whether the procedure is outlined in the enterprise’s internal documents, to verify whether the enterprise has adhered to the provisions of these internal documents. Additionally, employees should gather information on the salary and bonus policies, as these documents will be applied to address the employee’s rights in cases where disputes arise over salary amounts, serving as a basis for resolving the consequences of the unlawful unilateral termination of the labour contract.

In cases where the enterprise has established labour agreements or internal regulations, employees should collect this information to seek relevant content related to the unilateral termination of labour contracts and the rights of employees when facing such unilateral termination.

6. Other relevant documents

Apart from the documents mentioned above, based on the actual situation, the employee should gather other documents relevant to the incident. For instance, if the received salary by the employee differs from the salary specified in the labour contract, the employee can collect evidence showing the actual salary paid to the employee, such as individual payroll records, salary transfer documents to the employee’s account, etc.

Collecting and compiling evidence will support the employee in proving the employer’s unlawful unilateral termination of the labour contract and establish the basis to protect the employee’s rights. In other words, thorough evidence collection will provide the employee with the necessary grounds to demonstrate that the employer’s unilateral termination was unlawful, and allow the employee to demand that the employer fulfil responsibilities.

The above is the article “Evidence is required to prove that the employer has unlawfully terminated the labour contract” that TNTP provides to the readers. For any issues requiring discussion, please contact TNTP for assistance.

Best regards,

Unilaterally terminating a labour contract against the law – Who is responsible for resolving it

Unilaterally terminating a labour contract against the law – Who is responsible for resolving it?

Written by TNTP LAW on . Posted in Labor Law.

If the employee faces unlawful unilateral termination of the labour contract, the employee has the right to request relevant individuals, organizations, and authorities to resolve the dispute on their behalf. In the following article, TNTP will present some individuals, organizations, and authorities that assist in resolving disputes for terminating a labour contract

1. Representative Organization of Employees

The representative organization of employees means an internal organization voluntarily established by employees of an employer which protects the employees’ legitimate rights and interests in labour relations through collective bargaining or other methods prescribed by labour laws. Representative organizations of employees include internal trade unions and internal employee organizations.

Therefore, it can be seen that the representative organization of employees is established to protect the legitimate rights of employees. When the employee’s rights are violated, the employee can request this organization to resolve disputes related to the employer’s unlawful unilateral termination of the labour contract.

2. Employer

When the employee believes that the employer has unlawfully terminated the labour contract and has evidence to support this claim, the employee should first engage in negotiations with the employer. Negotiations can be conducted through written communication, emails, online meetings, or in-person discussions. If the employer is cooperative, both parties can agree on a suitable resolution based on their mutual interests. If the employer maintains her/his opinion or refuses to engage, the employee can draft a formal complaint to submit to the employer. This serves as evidence that the employee has initiated the first complaint to the employer, after which the employee can proceed to file a second complaint with the Chief Inspector of the Department of Labour – Invalids and Social Affairs.

3. Chief Inspector of the Department of Labour – Invalids and Social Affairs

The Employee can request the Chief Inspector of the Department of Labour – Invalids and Social Affairs at the location where the enterprise is headquartered to handle the second complaint when the employee disagrees with the initial resolution by the employer or when the prescribed time limit for resolution has passed.

The time limit for resolving the initial complaint is no more than 30 days from the date of acceptance; for complex cases, the time limit is no more than 45 days from the date of acceptance. In remote or difficult-to-reach areas, the time limit is no more than 45 days from the date of acceptance; for complex cases in these areas, the time limit is no more than 60 days from the date of acceptance.

4. Labour Mediator

The employee can request a labour mediator to resolve the dispute with the employer. Labour mediators have the responsibility to guide and support the parties in negotiations to resolve.

5. Labour Arbitration Council

In cases where the employee and the employer agree to resolve the dispute through the Labour Arbitration Council, both parties have the right to request the Labour Arbitration Council to handle the dispute according to legal regulations.

6. Competent Court

After unsuccessful negotiations with the employer, most employees resort to litigation in the competent Court due to the effectiveness of this method.

Firstly, disputes regarding unlawful unilateral termination of the labour contract do not require mandatory mediation by a labour mediator. Therefore, employees can directly initiate legal proceedings in the competent Court.

Secondly, employees are exempt from paying advance court fees and court fees when initiating proceedings to resolve disputes related to unlawful termination of the labour contract. To be exempt from these fees, employees need to submit a request for exemption or reduction of court fees along with relevant documents and evidence of eligibility.

Thirdly, in cases where the Court issues a favourable judgment/decision for the employee, the employee has the right to request enforcement authorities to compel the employer to execute the Court’s judgment/decision. This is arguably the most effective approach to litigation, as in other resolution methods, even if both parties agree on terms favourable to the employee, the employer’s non-compliance would not allow the employee to enforce the terms. Therefore, the employee can continue to pursue litigation in the competent Court.

7. Other Individuals, Organizations, and Authorities

Employees can request other relevant organizations and authorities to safeguard their rights and interests. These include social insurance agencies (in cases involving disputes related to insurance contributions, failure to record social insurance, etc.), the Vietnam General Confederation of Labour, the Labor Union of the city where the employer is headquartered, etc.
Additionally, employees can consider engaging legal services from lawyers specializing in labour law. Lawyers can propose resolution strategies, draft necessary documents, provide advice, and represent employees in protecting their rights and interests.

The above is the article “Unilaterally terminating a labour contract against the law – Who is responsible for resolving it?” that TNTP presents to readers. Should there be any issues requiring discussion, please contact TNTP for assistance.

Sincerely,

Assessing the legality of the employer's unilateral termination of a labour contract

Assessing the legality of the employer’s unilateral termination of a labour contract

Written by TNTP LAW on . Posted in Contract Law.

The unlawful unilateral termination of a labour contract has a significant impact on the rights and livelihood of the employee. Therefore, when facing such termination, the employee needs to ascertain its legality to request relevant individuals, authorities, and organizations to safeguard their rights. To determine the legality of the employer’s unilateral termination of the labour contract, the employee should rely on legal provisions and legitimate internal documents of the enterprise.

1. Assessing the legality of the basis for unilateral termination used by the employer

The employee should evaluate whether the basis used by the employer for the unilateral termination complies with legal regulations. The employer is only entitled to unilaterally terminate a labour contract under the cases stipulated in Article 36(1) of the Labor Code 2019 (“LC”). If the employer’s unilateral termination does not meet the requirements of Article 36(1) LC, it can be considered an unlawful unilateral termination.

The situations in which the employer is entitled to unilaterally terminate the contract are as follows:

(a) The employee repeatedly fails to perform his/her work according to the criteria for assessment of employees’ fulfilment of duties established by the employer.

(b) The employee is sick or has an accident and remains unable to work after having received treatment for a period of 12 consecutive months in the case of an indefinite-term labour contract, for 06 consecutive months in the case of a labour contract with a fixed term of 12 – 36 months, or more than half the duration of the contract in case of a labour contract with a fixed term of fewer than 12 months.

(c) Due to natural disasters, fires, dangerous epidemics, hostility, relocation or downsizing requested by a competent authority, the employer has to lay off employees after all possibilities have been exhausted.

(d) The employee is not present at the workplace after the time limit specified in Article 31 LC (Within 15 days from the expiry of the suspension period of the labour contract, the employee shall be present at the workplace and the employer shall reinstate the employee under the labour contract if it is still unexpired unless otherwise agreed by both parties or prescribed by law).

(e) The employee reaches the retirement age specified in Article 169 LC unless otherwise agreed by the parties (Refer to Decree No. 135/2020/ND-CP on retirement age regulations).

(f) The employee is not present at work without acceptable excuses for at least 05 consecutive working days.

(g) The employee fails to provide truthful information during the conclusion of the labour contract in accordance with Article 16(2) LC in a manner that affects recruitment (The employee shall provide the employer with truthful information about his/her full name, date of birth, gender, residence, educational level, occupational skills and qualifications, health conditions and other issues directly related to the conclusion of the labour contract which are requested by the employer).

2. Assessing the legality of unilateral termination based on the enterprise’s internal documents

As the law does not specify the particular procedure that the employer needs to follow when unilaterally terminating a labour contract, the procedure can be stipulated within the enterprise’s internal documents.

The employee should delve into internal documents related to the employer’s unilateral termination of labour contracts, such as labour regulations, collective labour agreements, the criteria for assessment of employees’ fulfilment of duties, etc. This is to ascertain whether the enterprise has adhered to the correct procedure, whether any actions contrary to the provisions of these internal documents have been taken, and whether any employee rights have been omitted when unilaterally terminating labour contracts.

Currently, enterprises often unilaterally terminate labour contracts with the reason that the employee frequently fails to fulfil job duties as per the contract. However, for such cases, the employer needs to establish the criteria for assessment of employees’ fulfilment of duties in compliance with legal regulations. If the employer does not issue the criteria or issues it not in accordance with legal provisions, the employer cannot unilaterally terminate the labour contract based on the reason that the employee frequently fails to fulfil job duties. The law stipulates that these criteria issued by the employer must involve seeking the opinion of the employee representative organization at the workplace if such representation exists in the enterprise.

3. Assessing the legality of the employer’s prior notification of unilateral termination of the labour contract to the employee

The employee needs to determine whether the employer has provided prior notice of the unilateral termination of the labour contract to the employee in compliance with legal provisions. Notification requirements are stated in Clause 2 and Clause 3 Article 36 LC.

For unilateral termination under situations (a), (b), (c), (e), and (g) mentioned in Part 1 of this article, the employer must notify the employee as follows:

(i) At least 45 days for indefinite-term contracts.

(ii) At least 30 days for fixed-term contracts with a term of 12 to 36 months.

(iii) At least 03 working days for fixed-term contracts with a term of fewer than 12 months and the situation described in (b) in Part 1 of this article.

(iv) In some specific industries, trades, or jobs, the notification period complies with Government regulations (Refer to Article 7 of Decree No. 145/2020/ND-CP detailing and guiding the implementation of certain provisions of the Labor Code regarding labour conditions and labour relations).

For unilateral termination under situations (d) and (f) mentioned in Part 1, the employer is not required to provide prior notice to the employee.

Above is the article “Assessing the legality of the employer’s unilateral termination of a labour contract” sent by TNTP to the readers. In case of any inquiries, please contact TNTP for assistance.

Best regards,

Responsibilities of the employer when unilaterally terminating a labour contract against the law

Responsibilities of the employer when unilaterally terminating a labour contract against the law

Written by TNTP LAW on . Posted in Labor Law.

The employer is responsible for providing work and paying salary to the employee, ensuring a safe working environment, complying with legal regulations, and respecting the rights of the employee. However, many employers have failed to fulfil their responsibilities, unilaterally terminating labour contracts unlawfully, significantly affecting the employee’s rights. Thus, in cases of unlawful unilateral termination of labour contracts by the employer, what responsibilities can the employee demand from the employer? In the following article, TNTP will detail the responsibilities the employer must bear when unilaterally terminating labour contracts against the law.

1. Responsibilities of the employer when unilaterally terminating labour contracts

According to Article 46, Article 48, Clause 3 of Article 113 of the 2019 Labor Code (“LC”), when unilaterally terminating the labour contract with the employee by or against the law, the employer still has the following responsibilities towards the employee:

(i) Fully settle all relevant amounts related to the employee’s entitlements (salary, termination allowance, salary for unused annual leave days, etc.) within 14 working days from the date of labour contract termination. However, this period may extend, but not exceed 30 days, in the following cases:

a) The employer is not an individual terminating activities;

b) The employer changes the structure, technology, or for economic reasons of the enterprise;

c) Division, separation, merger, amalgamation; sale, lease, conversion of the enterprise type; transfer of ownership rights, use rights to the assets of the enterprise or cooperative;

d) Due to natural disasters, fires, enemy actions, or dangerous epidemics.

(ii) Complete the procedures for confirming the period of social insurance, and unemployment insurance, and return the original copies of other documents held by the employer;

(iii) Provide copies of relevant documents regarding the employee’s work process if requested. Costs of copying and sending documents are borne by the employer.

The employee should note the following: In cases where annual leave has not been taken or not all annual leave days have been used, the employer must pay salary for the remaining unused leave days; the employer must provide termination allowance for the employee who has worked regularly for the employer for at least 12 months, receiving half a month’s salary for each year worked, except in cases where the conditions for receiving retirement benefits are met according to the regulations of social insurance, or the employee voluntarily resigns without valid reasons for five consecutive working days or more.

Depending on the enterprise’s internal documents and agreements between the employee and the employer, the employer may also have additional responsibilities when terminating labour contracts, such as paying support amounts. Therefore, when faced with unilateral labour contract termination by the employer, the employee should rely on legal provisions, internal regulations of the enterprise, and agreements between the parties to determine the responsibilities that the employer must fulfil. If the employer fails to comply or incompletely complies, the employee has the right to demand that the employer fulfil all the responsibilities.

2. Responsibilities of the employer when unilaterally terminating labour contracts unlawfully

When unilaterally terminating the labour contract unlawfully, in addition to fulfilling the responsibilities defined in the first part of the article, the employer must also bear the responsibilities stipulated in Article 41 of the LC, which include:

(i) The employer must reinstate the employee to work according to the labour contract that was concluded, pay salary, contribute social insurance, health insurance, and unemployment insurance for the days the employee was not able to work and pay an additional amount to the employee of at least two months’ salary according to the labour contract.

(ii) In case of violating the notice period requirement, the employer must pay an amount corresponding to the salary according to the labour contract for the days without prior notice.

(iii) If the originally assigned position or work in the labour contract is no longer available, and the employee still wants to work, both parties must agree to amend or supplement the labour contract.

(iv) In cases where the employee does not wish to continue working, in addition to the mentioned payment, the employer must provide a termination allowance to end the labour contract.

(v) If the employer does not want to re-employ the employee and the employee agrees, in addition to the mentioned payment and termination allowance, the parties must agree on additional compensation for the employee, but at least equivalent to two months’ salary according to the labour contract to terminate the labour contract.

The employee should note the following: After being re-employed, the employee must reimburse the termination allowance, and unemployment allowance if received from the employer.

Thus, when unlawfully unilaterally terminating the labour contract, the employee can request the employer to undertake the responsibilities according to legal regulations.

The above is the article “Responsibilities of the employer when unilaterally terminating a labour contract against the law” that TNTP sends to the readers. In case of issues requiring discussion, please contact TNTP for assistance.

Best regards,

Evidence is required to prove that the employer has unlawfully terminated the labour contract

Evidence is required to prove that the employer has unlawfully terminated the labour contract

Written by TNTP LAW on . Posted in Labor Law.

Since the employee is unilaterally terminated from the labour contract, if the employee believes that such termination is unlawful, the employee needs to promptly gather relevant evidence regarding the incident. In the following article, TNTP will provide employees with essential evidence that needs to be collected to prove the employer’s unlawful unilateral termination of the labour contract.

1. Evidence showing the employment relationship

The first evidence that the employee needs to gather is the labour contract, as the labour contract demonstrates the employment relationship between the employee and the employer. However, in some cases, the employee and the employer may not sign a labour contract, or the contract might not be in written form. In such cases, the employee can collect other valid evidence, such as probationary contracts, job offer letters, job acceptance emails, work-related email exchanges within the enterprise, attendance records, documents indicating the enterprise’s salary payments to the employee, such as individual payroll records, salary transfer documents to the employee’s account, etc.

2. Evidence demonstrating the grounds for unilateral termination of the labour contract

When unilaterally terminating the labour contract with the employee, the employer will present the grounds or reasons for such termination, such as the employee’s consistent failure to complete assigned tasks, the employee’s voluntary resignation without valid reasons, etc. In this case, the employer may create documents that demonstrate the employee’s violations, such as meeting minutes, work records, incident reports, etc.

3. Evidence demonstrating the termination of the labour contract

When unilaterally terminating the labour contract, the employer may issue termination notices, termination decisions, etc. If the employer does not issue a termination decision, or the employer issues a decision but doesn’t provide it to the employee, or the employer issues a notice but unilaterally terminates the contract in practice, the employee needs to gather evidence showing the enterprise’s prevention of employee’s work rights, evidence demonstrating the enterprise’s obstruction of the employee’s work rights, etc.

4. Evidence demonstrating the labour-related benefits fulfilled and unfulfilled by the employer

When unilaterally terminating the labour contract with the employee, whether legally or unlawfully, the employer still has obligations towards the employee, such as paying all relevant sums related to the employee’s entitlements including salary, termination allowance, salary for unused annual leave days, etc. Evidence for these benefits includes payment documents, accounts receivable reconciliation records, social insurance records, etc.

5. Internal enterprise documents

As explained earlier, when unilaterally terminating the labour contract with the employee, the employer needs to justify the termination based on legally appropriate grounds. One of the bases that the employer often uses is the employee’s consistent failure to complete assigned tasks. The employer must establish the criteria for assessment of employees’ fulfilment of duties to terminate based on this ground. The employee should review the content of the criteria, and assess whether the procedure for implementing it complies with legal requirements.

The law does not specify the exact procedure that the employer must follow for unilaterally terminating labour contracts. Therefore, employees should research whether the procedure is outlined in the enterprise’s internal documents, to verify whether the enterprise has adhered to the provisions of these internal documents. Additionally, employees should gather information on the salary and bonus policies, as these documents will be applied to address the employee’s rights in cases where disputes arise over salary amounts, serving as a basis for resolving the consequences of the unlawful unilateral termination of the labour contract.

In cases where the enterprise has established labour agreements or internal regulations, employees should collect this information to seek relevant content related to the unilateral termination of labour contracts and the rights of employees when facing such unilateral termination.

6. Other relevant documents

Apart from the documents mentioned above, based on the actual situation, the employee should gather other documents relevant to the incident. For instance, if the received salary by the employee differs from the salary specified in the labour contract, the employee can collect evidence showing the actual salary paid to the employee, such as individual payroll records, salary transfer documents to the employee’s account, etc.

Collecting and compiling evidence will support the employee in proving the employer’s unlawful unilateral termination of the labour contract and establish the basis to protect the employee’s rights. In other words, thorough evidence collection will provide the employee with the necessary grounds to demonstrate that the employer’s unilateral termination was unlawful, and allow the employee to demand that the employer fulfil responsibilities.

The above is the article “Evidence is required to prove that the employer has unlawfully terminated the labour contract” that TNTP provides to the readers. For any issues requiring discussion, please contact TNTP for assistance.

Best regards,

 

Penalties for Violation and Compensation for Damages in Construction Contracts

Penalties for Violation and Compensation for Damages in Construction Contracts

Written by TNTP LAW on . Posted in Contract Law.

To ensure the effective completion of a project, the parties must conscientiously comply with the provisions of the construction contract. However, during the contract execution, one or both parties may engage in violations that cause damage to the other party. In such cases, the aggrieved party can apply penalties for the violation (if stipulated in the contract) and seek compensation for damages to remedy the consequences of the violation and compensate for economic losses or damages incurred. In the following article, TNTP will present these two measures for parties involved in construction contracts to refer to and apply.

1. Penalties for violation

Based on Article 146(2) of the Construction Law 2014, amended in 2020 (“Construction Law”), for construction projects using public investment funds, and non-public investment state funds, the penalty for a contract violation shall not exceed 12% of the value of the violated contract.

Therefore, for construction projects without public investment funds, and non-public investment state funds (referred to as “state funds”), the Construction Law does not specify the level of penalties for violations. Since the Construction Law does not provide regulations in this regard, there are different opinions on whether the provisions on penalties in the Civil Code 2015 (“Civil Code”) or the Commercial Law 2005 (“Commercial Law”) should be applied to determine the penalty level for construction projects without state funds between two enterprises.

Article 418(2) of the Civil Code allows parties to freely agree on the level of penalties without any limitation, except in cases where specialized laws provide otherwise. Meanwhile, Article 301 of the Commercial Law specifies that the penalty for a violation shall not exceed 8% of the value of the violated contract (except for penalties due to incorrect appraisal). Therefore, if the Civil Code is applied, there is no limitation on the penalty level, whereas if the Commercial Law is applied, the penalty is limited to 8% of the value of the violated contract.

According to the writer’s viewpoint, since a construction contract is a civil contract (Article 138(1) of the Construction Law), when the Construction Law does not provide regulations, the Civil Code should be applied to determine the penalty level for construction projects without state funds between two enterprises. Therefore, the parties can freely agree on the level of penalties without limitations. Businesses should take note of this to assess the risks associated with penalty enforcement.

2. Compensation for damages

2.1. General provisions

+ In addition to the agreed penalties, the violating party must compensate for damages suffered by the other party and third parties (if any), as regulated by the Construction Law and other relevant laws.

+ In cases where one party fails to fulfil contractual obligations or performs obligations that do not comply with the provisions, after fulfilling the obligations or implementing corrective measures, the party is still responsible for compensating for damages if the other party suffers further losses. The compensation for damages must be equivalent to the losses incurred by the other party.

+ In cases where a contract violation infringes upon the person, rights, and assets of the other party, the injured party has the right to demand that the violating party bear responsibility for the contract violation, as agreed upon in the contract and stipulated by relevant laws.

+ In cases where one party violates the contract due to the actions of a third party, the violating party is held responsible for the contract violation with the other party. Disputes between the violating party and the third party are resolved according to the provisions of the law.

2.2. Cases where the Contractor must compensate the Principal for damages

+ The quality of the work does not meet the agreed-upon terms in the contract, or the completion deadline is extended due to the fault of the Contractor;

+ Damage to individuals and property within the warranty period due to the fault of the Contractor.

2.3. Cases where the Principal must compensate the Contractor

+ Interruptions, delays, risks, coordination of machinery, equipment, materials, and stockpile components for the Contractor caused by the fault of the Principal as specified in the contract;

+ The Principal provides documents and necessary conditions for the work that do not comply with the agreements in the contract, leading to the need for the Contractor to redo, suspend, or modify the work;

+ In construction contracts where the Principal is responsible for providing materials, equipment, and other requirements if the provision is not made within the stipulated time and requirements;

+ The Principal delays payment as agreed in the contract.

The above is the article “Penalties for Violation and Compensation for Damages in Construction Contracts” that TNTP provides to readers. If you have any issues for discussion, please contact TNTP for assistance.

Sincerely,

Instruction for drafting an exchange of property contract

Instruction for drafting an exchange of property contract

Written by TNTP LAW on . Posted in Contract Law.

Contract for the exchange of property is one of the popular contracts in the civil field. Accordingly, the parties deliver the property and transfer ownership thereto to each other. In the following article, TNTP will analyze the fundamental contents and instruct to draft this type of contract.

1. What is the contract for the exchange of property?

According to Article 455 of the Civil Code 2015, a contract for the exchange of property means an agreement between parties whereby they deliver property and transfer the ownership rights thereto to each other.

In nature, the contract for the exchange of property is a type of mixed contract containing the content of two different sale contracts, in which each party is the seller of its own property and the buyer with the property of the other party. Thus, the provisions on the sale contract of property are also applied to the contract for the exchange of property, including Provisions on the sale contract of property from Article 430 to Article 439, from Article 441 to Articles 449 and Article 454 of the Civil Code 2015. Merely the following provisions of sales contracts but do not apply to the contract for the exchange of property, including Article 440 on Obligation to make payment, Article 450 on Sale of property rights, Article 451 on Auctions, Article 452 on Purchases after trial use and Article 453 on Purchases by deferred payment or payment in instalments.

2. Legal features of the contract for the exchange of property

Firstly, the contract for the exchange of property has the purpose of transferring ownership rights to each other. Typically, the sale contract is to use money to purchase something; the contract for the exchange of property is to use an object in change for an object. The object is usually distinctive objects. In addition, the subject matter of this contract usually cannot be money. Because money is always considered a valuation tool for other types of property, money often appears in sale contracts. Money is only the subject of the contract for exchange of property if the property exchanged by the parties is all money, for example, exchanging Vietnamese currency for US dollars.

Secondly, the contract for the exchange of property is a bilateral, compensatory contract. The bilateral nature of this contract is reflected in the fact that the parties have obligations to each other. Meanwhile, this is a compensatory contract because both parties have material benefits arising from the contract.

Thirdly, the form of the contract depends on the agreement of the parties or prescribed by law. Accordingly, the contract can be expressed verbally, in writing, or through specific acts. Nevertheless, where the law requires that the contract shall be made in writing, notarized or certified, or registered, this contract must comply with that form. For example, according to Articles 121 and 122 of the Law on Housing 2014, the contract for the exchange of property with the object of housing is required to be made in writing, most of which must be notarized or authenticated, except the case specified in Clause 2, Article 122 of the Law on Housing 2014. The contract notarization shall be carried out by a notary; the contract authentication must be carried out at the People’s Committee of the commune where the house is located. The effective date of the contract shall be the date on which the contract is notarized or authenticated.

Fourthly, the person exchanging the property must be the owner or another person entitled to make the exchange for the property as a person authorized by the owner. Where one party exchanges with another party property which it does not own or property in respect of which it has no authorization from the owner, the other party may cancel the contract and demand compensation for damage.

Fifthly, in essence, the contract for the exchange of property is a double-sale contract. Each party is deemed to be the seller for the property delivered to the other party and the buyer for the property received.

3. Content of the contract for the exchange of property

When drafting the contract, the drafter should pay attention to the major contents as follows:

• Information about the parties to the contract.

• Subject matter of the contract: The parties should agree on the contents related to the exchanged property, including the name of the exchanged property, the original property, quantity, quality, dossiers, and accompanying documents (if any).

• Method and term of payment of the difference in value: In order to determine the value of the exchanged property, the property will be valued in cash. In case the value of the property is equivalent, the parties only need to exchange their property with each other. However, where exchanged property differs in value, the property of the party with the lowest value must pay the difference to the other party, unless otherwise agreed by the parties or provided for by law. Thus, the parties should agree on this content, including the method and term of payment if the exchanged property differs in value.

• Time, place, and method of contract performance: Accordingly, the parties agree on the time, place, and method to exchange property with each other.

• Rights and obligations of the parties: As aforementioned, the contract for the exchange of property is a bilateral contract, both parties have obligations to each other. Therefore, the parties should agree on this content in the contract.

• Term of contract and termination of contract: These contents are freely agreed upon by the parties.

• In addition to the terms aforementioned, the parties may agree with further contents as long as it is not contrary to the provisions of law and is not contrary to social ethics. In the event that the parties do not have an agreement or the agreement is unclear, these contents will be governed by the provisions of law. However, the parties should agree on all the contents of the contract so that the parties do not face difficulties in the performance of the contract and also limit possible disputes.

Above is the content of the article “Instruction for drafting an exchange of property contract”. Hope the above information is useful to readers who are interested in this issue.

Best regards,

TNTP & ASSOCIATES INTERNATIONAL LAW FIRM

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