Author: TNTP LAW

The contract for the transport of property is one of the common civil contracts, commonly used today. This type of contract also has common characteristics like many other types of contract, the main difference lies in the object of this contract which is movable property. In the following article, TNTP will analyze some basic content about this contract.

I. The concept of the property transportation contract

Article 530 of the Civil Code 2015 stipulates that a contract for the transportation of property is an agreement between the parties, whereby the carrier has the obligation to transport property to an agreed destination and to deliver it to the authorized recipient, and the charterer has the obligation to pay the freight charges.

From the above concept, it can be seen that the property transportation contract also has the characteristics of other common civil contracts which are the voluntary, free, and equal participation of the parties in establishing a civil transaction.

II. Legal characteristics of the transport of property contract

First, the property transportation contract has an object of work, specifically, the transportation of goods. The parties aim to perform activities related to the property, not directly focusing on the transported property. Accordingly, the parties aim at the purpose of “deliver the property to the designated location”, or in other words, the work of moving the property from one location to another as requested by the client. Additionally, since it is a service-oriented work, the standards and quality of the service provided often do not have specific measurements. Typically, the value of the work will be calculated based on the property, distance, and type of vehicle.

Second, the property transportation contract is bilateral and compensatory. Both parties in the contract, including the carrier and the charterer, have corresponding obligations. Accordingly, the carrier has the obligation to transport the property to the agreed-upon location and properly handle the property according to the instructions. The charterer has the obligation to pay the freight charges and receive the property or designate a third party to receive the property within the agreed-upon timeframe and location. The freight charges paid by the charterer to the carrier constitute the amount that the carrier is compensated for when performing the transportation work.

Third, the property transportation contract is a contract that does not increase the quantity or alter the nature of the transported property. It does not change the ownership rights of the property but only changes the location of the property. Therefore, the property transportation contract can be understood as a type of service contract, where the object of the contract is the activity of transporting goods from one location to another.

Fourth, about the subject of the contract: the property transportation contract is entered into between the carrier and the charterer or called the consignor. The carrier is understood as the person who personally or authorizes another person to enter into a transportation contract with the charterer. Thus, the carrier may perform all or part of the property transportation, or delegate the task to another person who is then referred to as the actual carrier.

The charterer is the person who personally or authorizes another person to enter into a property transportation contract with the carrier. In the case of a transportation contract based on transport documents, the person who hires the carriage is called the consignor. In different types of transportation contracts, the charterer is identified with different names. These entities can themselves or authorize others to perform the delivery obligation and have the right to receive the goods.

III. The form of the transport of property contract

According to the provisions of Article 531 of the Civil Code 2015, the property transportation contract may be entered into orally or in writing or a specific act. In addition, the Civil Code 2015 further stipulates a type of document that is considered evidence of entering into a contract between the parties, which is the “bill of lading” or “transportation document”, specifically: “A bill of lading or equivalent source document of transport shall be evidence of the entering into of a contract by the parties.”

However, for specific types of the property transportation contract, this form of contract must comply with specialized laws, which can include the following two examples:

The contract for the carriage of goods by sea is governed by the Maritime Code 2015. Accordingly, the bill of lading contract shall be concluded in the form agreed upon between parties; the voyage charter-party must be concluded in writing. Bill of lading contract refers to a contract for carriage of goods by sea concluded to include terms and conditions whereby the carrier is not bound to provide the whole or a specified part of a ship for the shipper but relies on the nature, quantity, size or weight of goods for carriage purposes. Voyage charter-party refers to a contract for carriage of goods by sea concluded to include terms and conditions whereby the carrier is bound to provide the whole or a specified part of a ship for the shipper with the purpose to carry goods on a voyage.

The form of a contract for the carriage of goods by air is the air waybill or the cargo receipt. These documents are considered the first evidence of the conclusion of the contract for the carriage of goods by air, the acceptance of the goods for carriage and the conditions of carriage. According to this content, Clause 1, Article 129 of the Law on Civil Aviation of Vietnam 2006 stipulates: “Air waybill is a document of cargo carriage by air and constitutes evidence of the conclusion of the contract, the receipt of the cargo and the acceptance of the conditions stated in the contract.”

Above is the content of the article “Contracts For The Transport Of Property: Basic Content You Need To Know” that TNTP sent to readers. If there is any problem that needs support, please contact TNTP for the best support.

Best regards,

When drafting the contracts for the transport of property, depending on the parties’ positions within the contract, they will choose provisions that are beneficial and ensure their interests. Some of the provisions include rights and obligations of the parties, force majeure, penalties for violations, and compensation for damages. In this article, TNTP will analyze the contents that the parties need to consider when drafting the contracts for the transport of property for the above terms.

1. Rights and obligations of the parties

The parties shall agree in the contract regarding the rights and obligations of each party based on legal regulations. The parties can refer to the rights and obligations of the carrier, the customer, and the recipient of property as follows:

1.1. Rights and obligations of the carrier

• Rights: Check the authenticity of the property and the bill of lading or equivalent source document of transport; Refuse to transport property which is different from that agreed in the contract; Demand the full and timely payment of the freight charges by the customer; Refuse to transport property if the carrier knows or should know that the transacting of such property is prohibited or the property is of a dangerous or toxic nature.

• Obligations: Transport the property in its entirety and safely to the agreed destination at the agreed time; Deliver the property to the person entitled to receive it; Bear all costs related to the transport of the property; Purchase civil liability insurance as required by law; Compensate the customer for damage where the loss of or damage to the property is caused by the fault of the carrier.

1.2. Rights and obligations of the customer

• Rights: Demand the carrier to transport the property to the agreed destination at the agreed time; Receive directly the property which has been transported, or appoint a third person to receive it.

The customer needs to agree on whether the carrier shall transport directly the property or may delegate the transportation to a third party. This is of significant importance because if the carrier delegates the transportation to a third party, and that third party delegates it to another party, the transportation time is affected, and the property may be damaged as it passes through multiple transportation entities. Particularly, when issues arise related to the property such as damage, the customer will face difficulties in holding the carrier accountable due to the involvement of multiple carriers and the complexity of determining the specific faults of each party involved.

• Obligations: Pay in full the freight charges to the carrier, at the time and by the method of payment as agreed; Provide necessary information related to the transported property to ensure its safety; Take care of the property during transport if so agreed. Where the customer takes care of the property and it is lost or damaged, the customer shall not be entitled to compensation.

1.3. Rights and obligations of recipients of property

• Rights: Verify the quantity and quality of the delivered property; Receive the delivered property; Require the carrier to reimburse reasonable costs incurred due to any delay by the carrier in delivering the property; Require the carrier to compensate for the loss of or damage to the property.

• Obligations: Produce to the carrier the bill of lading or other equivalent source documents of transport, and receive the property at the agreed time and place; Bear the costs for loading and unloading the transported property, unless otherwise agreed or otherwise provided by law; Reimburse the carrier for reasonable costs incurred due to late acceptance of the property; Notify the customer of the acceptance of the property and provide other necessary information required by the customer if the recipient is a third party appointed by the customer.

2. Force majeure

According to the provisions of Clause 1, Article 156 of the Civil Code 2015, force majeure is an event which occurs in an objective manner which is not able to be foreseen and which is not able to be remedied by all possible necessary and admissible measures being taken. According to Clause 2, Article 351 of the Civil Code 2015, where an obligor is not able to perform a civil obligation due to the event of force majeure, it shall not have civil liability, unless otherwise agreed or otherwise provided by law.

On the other hand, according to Article 294 of the Commercial Law 2005, force majeure is one of the cases where liability for contractual breaches is exempted. However, the party in breach must promptly notify in writing the aggrieved party. The breaching party must pay damages if it fails to notify or notifies the other party not in a prompt manner.

In practice, the smoothness of property transportation depends on various factors. Sometimes, due to the occurrence of force majeure, the parties are unable to fulfil their obligations. And force majeure is one of the cases where liability is exempted for contractual breaches. However, the parties should stipulate the force majeure in the contract. They can even agree on sharing the risks among the parties in the event of the force majeure occurrence, rather than completely exempting the carrier from all responsibilities.

3. Penalties for violations 

Penalties for violations are an agreement between the parties in the contract, whereby the violating party is obliged to pay a fine to the aggrieved party (Clause 1 Article 418 of the Civil Code 2015). On the other hand, according to Article 300 of the Commercial Law, a penalty for violation means a remedy whereby the aggrieved party requests the breaching party to pay an amount of fine for its breach of a contract if so agreed in the contract, except for cases of liability exemption under the provisions of the Law.

Penalties for violations will only be applicable when agreed upon by the parties. Therefore, the parties should stipulate this term in the contract if necessary, such as fines for delivery of property on time, late payment, etc.

4. Liability to compensate for damages

The customer shall pay special attention to and stipulate this provision in the contract to ensure the interest when the carrier loses or damages the property. Specifically, the customer shall provide in detail the transported property, the value, and the compensation level in case of loss or damage to the property. It should also specify the method of determining the extent of damage to the property, the payment of compensation, etc. For example, in the case of lost property, compensation should be based on the value of the property specified in the contract; for damaged property, compensation should be based on the difference between the value of the property specified in the contract and the remaining value of the property.

The carrier should agree that the customer must compensate for damages to the carrier and third parties for damages caused by dangerous properties that were not properly packaged or ensured during the transportation process.

In addition to the aforesaid clauses, when drafting the contracts for the transport of property, the parties may agree on additional provisions regarding the transportation method, unilateral termination of the contract, dispute resolution, etc.

It can be seen that during the drafting the contracts for the transport of property, the parties need to pay attention to and consider various aspects. The above is the content of the article “Drafting terms of penalties for violations and compensation for damages in the contracts for the transport of property” sent to readers by TNTP. If any issues require assistance, please do not hesitate to contact TNTP for the best support.

Sincerely,

In Vietnam, goods processing activities are increasingly expanding and developing in many fields, ranging from processing consumer goods such as processing clothes, shoes, etc. to high-tech product processing such as electronic component manufacturing and automotive processing. Typically, processing contracts are signed between enterprises. Therefore, understanding and flexibly applying legal regulations on processing is considered a key factor to ensure the interests of each party when the parties agree, negotiate and sign the processing contract. Therefore, in the following article, TNTP will present the basic contents that the parties can consider and apply it in the process of negotiating and signing processing contracts.

I. The concept of the processing contract

According to the provisions of Article 542 of the Civil Code 2015, a processing contract is an agreement between parties whereby a processor carries out work to create products at the request of a supplier, and the supplier receives the products and pays fees.

In addition, the Commercial Law 2005 also stipulates that a processing contract is an agreement between parties whereby a processor uses part or whole of raw materials and materials supplied by the supplier to perform one or several stages of the production process at the latter’s request in order to receive remuneration.

Thus, a processing contract can be understood as an agreement between the parties, whereby the processor uses its own materials or materials provided by the supplier to perform activities aimed at producing finished or semi-finished products according to the specifications requested by the supplier, with the purpose of receiving remuneration. The supplier receives the products and pays remuneration to the processor.

Regarding the subject matter in a processing contract, the subject matter is an object that does not exist when the parties enter into the contract but this object is only defined based on a specific model or standard, and the processor has an obligation to produce the processed product according to the agreed-upon model or legal requirements. Normally, if the law has regulations on standards, those standards are often related to ensuring the safety of the end-users and environmental protection for the processed products.

Some common types of processing contracts are mechanical processing contracts, goods processing contracts, garment processing contracts, software processing contracts, etc.

II. The form of the processing contract

According to the provisions of the Civil Code 2015, processing contracts can be expressed verbally, in writing or established by actual acts.

For all kinds of processing contracts that must be made in writing by specialized laws, such provisions must be complied with. For example, a commercial processing contract must be made in writing or another form with equivalent legal validity (Article 179 of the Commercial Law 2005). Forms of equivalent legal validity here include telegraph, telex, fax, data messages and other forms as prescribed by law (Clause 15, Article 3 of the Commercial Law 2005), or in other words, the other is a contract signed in the form of an electronic contract (Article 33 of the Law on Electronic Transactions 2005). Although an electronic contract is very convenient, the parties should also note that when entering into an electronic contract, the parties may face many risks, both technical, commercial or legal risks.

III. Basic contents of the processing contract

When drafting and reviewing a processing contract, the parties need to ensure that the contract has the following basic contents:

– Information about the parties to the contract;
– The subject of the contract;
– Product processing fee;
– Method and time limit for payment of processing fee;
– Rights and obligations of the parties;
– Liquidation of raw materials when the contract terminates;
– Responsibilities of the parties in case of delay in delivery or receipt of processed products;
– Liability to bear risks in the contract;
– Unilaterally terminate the contract;
– Penalties for violations and compensation for damage;
– Applicable law and dispute resolution.

Above is the content of the article “Processing Contracts: Basic Content You Need to Know” that TNTP sent to readers. If any issues need clarification, please contact TNTP for the best support.

Best regards,

In order to support readers have more useful information regarding drafting service contract, TNTP will analyze several terms that the parties should pay attention to when drafting service contract, including the time limit for service completion, rights and obligations of the parties, continue to perform the contract and unilaterally termination of the contract performance.

1. The time limit for service completion

The parties shall specify the time limit for completion of the work since this will be the basis for determining whether the service provider has breached the contract or not. If there is no specific agreement, the service provider must complete the service within a reasonable timeframe. This timeframe is determined based on the conditions and circumstances known to the service provider at the time of contract formation, including any relevant time requirements from the client regarding service completion.

In case the work can only be completed when certain conditions are met by the client or another service provider, that service provider has no obligation to complete its service until such conditions are met. Therefore, the parties should agree on the conditions that the client or another service provider needs to meet.

2. Rights and obligations of the parties

A service contract is a bilateral contract. Therefore, the parties have rights and obligations towards each other. Based on the actual situation, the parties themselves agree on their rights and obligations. The parties can refer to some basic contents regarding the rights and obligations as follows:

2.1. Rights and obligations of the client

● Rights: i) Require the service provider to perform the act strictly in accordance with the agreement on quality, quantity, time, and location as agreed; ii) Unilaterally terminate contract performance and demand compensation for damage if the service provider seriously breaches obligations agreed upon in the contract. The client should agree on specific cases where it is considered that the service provider seriously breaches obligations as a basis for requesting the breaching party to pay a penalty for the violation.

● Obligations: i) Pay the service fee to the service provider as agreed; ii) Provide sufficient information and documentation related to the service for the service contract that requires for the performance of the work.

2.2. Rights and obligations of the service provider

● Rights: i) Require the client to pay the fee; ii) Require the client to provide information, documents, and facilities; iii) Amend the terms of service in the interests of the client without necessarily asking for the opinion of the client where waiting for such opinion would cause damage to the client provided that the service provider promptly informs the client thereof; iv) Require the client to provide licenses for performing service; v) Be alerted to unusual events from the client.

● Obligations: i) Perform the work strictly in accordance with the agreement on quality, quantity, time and location and other matters; ii) Do not assign the work to another person for performance on its behalf without the consent of the client; iii) Take care of, and to return to the client after completion of the work, the documents and facilities provided to it; iv) Notify the client promptly of any inadequacy in the information or documents and any failure of the facilities to satisfy the quality required for the completion of the work; v) Keep confidential any information of which it has known during the period of providing the service as agreed or as provided by law; vi) Compensate the client for damage where the service provider causes any loss of or damage to the documents or facilities supplied or discloses confidential information; vii) Warn possible risks in the process of performing work for the client; viii) Develop service implementation plans; ix) Adjust the negotiated content in case the contract has any changes; x) Gather information before doing the work.

3. Continuation of the service contract

Article 521 of the Civil Code 2015 provides that, “If, after the expiry of the agreed period for the provision of services, the work has not been completed and the service provider continues its performance and the client is aware of this but does not object, the performance of the service contract shall automatically be deemed to continue in accordance with the agreed terms until the act is completed”. Therefore, the client shall consider whether there is a provision in the contract that the service provider is obligated to continue performing the work if the work is not completed and the period for the performance of the work is over. In case the client does not agree to let the service provider continue to perform the contract, the client shall specify this in the contract.

4. Unilateral termination of performance of the service contract

The parties shall consider and agree on specific cases of unilateral termination of contract performance. The parties can refer to the provisions of Article 520 of the Civil Code 2015, “Where the continued provision of services does not benefit the client, the client has the right to terminate unilaterally the contract performance but must provide reasonable prior notice to the service provider, in which case the client must pay a fee according to the portion of services already provided and must compensate for damage. Where the client seriously breaches obligations, the service provider has the right to terminate unilaterally the contract performance and demand compensation for damage.”

In addition to the terms above, the parties may further agree in the contract on the terms of force majeure; dispute settlement; terms of penalties for violations and compensation for damages; etc.

Above is the content of the article “The fundamental terms in the service contract” that TNTP sent to readers. If you have any questions, please contact TNTP for the best support.

Sincerely,