Author: TNTP LAW

Franchising – Matters needing attention

Written by TNTP LAW on 15 February, 2023. Posted in Legal newsletter.

Currently, enterprises in the world and Vietnam especially prefer the form of investment and franchise business to be able to quickly increase coverage, dominate market share, and create value for corporate brands. Accordingly, in the article below, TNTP will help readers understand matters needing attention before franchising or receiving a franchise.

I. What is a franchise?

Pursuant to Article 284 of the 2005 Commercial Law, Commercial franchise means a commercial activity whereby franchisors permit and require franchisees to undertake by themselves to purchase or sell goods or provide services on the following conditions:

“The purchase or sale of goods or provision of services shall be conducted in accordance with methods of business organization prescribed by franchisors and associated with the franchisors’ trademarks, trade names, business know-how, business slogans, business logos, and advertisements;

Franchisors shall be entitled to supervise and assist franchisees in conducting their business activities.”

II. Conditions and registration of the franchise

1. Conditions for the franchisor

Pursuant to Article 8 of Decree No. 08/2018/ND-CP effective from 15/01/2018 amending Article 5 of Decree No. 35/2006/ND-CP detailing the implementation of Commercial Law 2005 regarding franchising: “Traders are allowed to grant franchise rights when the business system intended to be used for franchising has been operating for at least 01 years”.

Currently, in Vietnam, there is no legal document guiding and explaining “the business system intended to be used for franchising has been operating for at least 01 years”.

Referring to the views of the Ministry of Industry and Trade on answering the problem of Feddy Co., Ltd. published in the Government e-newspaper on 05/03/2019 for the content of asking “the timeline for the start of operation of the franchise intended system is from the date of issuance of the certificate of registration of enterprises with wholesale lines, suitable retail, or is the date of issuance of the certificate of business location registration of a Vietnamese enterprise?”, the Ministry of Industry and Trade replied:

According to the provisions of Article 8 of Decree No. 08/2018 /ND-CP dated January 15, 2018, the conditions for franchising are as follows: “Traders are allowed to grant franchise rights when the business system intended to be used for franchising has been operating for at least 01 years”. Conditions “has been in operation for at least 01 year” applies to the business system intended to be franchised, not to traders. Therefore, 01 year is the time calculated from the date of issuance of the certificate of the business location of the first store belonging to the trader’s business system, and the store and that business system must implement real business activities in practice.

2. Franchise Registration

Pursuant to Article 3 of Decree No. 120/2011/ND-CP effective from February 1, 2012, regulations on franchising have been added, in cases where franchise registration is not required, including Franchises in the territory of Vietnam and commercial rights from Vietnam to foreign countries; for cases where franchise registration is not required then it is only necessary to implement the reporting regime for the Department of Industry and Trade.

In addition to the cases that are not required to register the franchise mentioned above, when conducting a franchise, traders who are expected to franchise (including foreign traders who are expected to franchise) must register their franchise activities with the competent authority as prescribed in Decree No. 35/2006/ND-CP detailing the implementation of Commercial Law 2005 regarding franchising.

III. Responsibility to provide information about the parties in the franchise

1. The franchisor’s responsibility to supply information

Pursuant to Article 8 NĐ 35/2006/ND-CP, the franchisor shall have to supply copies of the franchising contract form and the written introduction of its franchising to the intended franchisee at least 15 working days before signing the franchising contract, unless otherwise agreed by the parties. Compulsory contents of the written introduction of franchising shall be specified and promulgated by the Ministry of Trade.

In addition, The franchisor shall have to promptly notify all franchisees of all important changes in the franchising system, which may affect the latter’s business activities by mode of franchising.

If the franchise is a general franchise, in addition to providing information according to the above, the Secondary Franchisor must also provide the intended franchisee in writing with the following contents: Information on the franchisor that has granted commercial rights to it and the handling of secondary franchise contracts in the event of termination of a joint franchise contract.

2. The intended franchisee’s responsibility to supply information

The legislation does not specify the contents that the proposed franchisor must send to the franchisor for the intended franchisee. The intended franchisee must, however, present the franchisor with the information reasonably requested by the franchisor in order for the franchisor to decide whether or not to grant the franchise to the intended franchisor.

Above are some legal contents related to franchise issues to note, TNTP hopes that the above article will bring readers useful information.

Sincerely,

Regulations on penalty for behind schedule in construction contracts

Written by TNTP LAW on 6 February, 2023. Posted in Legal newsletter.

The construction contract is one of the types of contract characterized by technical factors, product characteristics, subject capacity, and responsibilities of the parties involved in the contract. When participating in the contractual relationship in general, and the construction contract relationship in particular, the parties are obliged to strictly comply with the agreements in the contract. However, during the performance of construction contracts, the contractor may violate the construction schedule. In case the contractor is behind schedule, how will the contractor be penalized? Please follow our analysis below to better understand this issue.

1. General provisions on construction contracts

The subject: The subject of a construction contract includes the principal and the contractor. The principal can be any individual, enterprise, state agency, social organization or people’s armed forces unit, etc., who have construction needs. The contractor is a construction enterprise that has registered for construction business and must have professional, technical, experience, and financial capacity.
Rights and obligations of the parties: The rights and obligations of the parties are agreed upon by the parties in the contract, which can include the following basic rights and obligations: The contractor is obliged to perform and hand over part or the whole construction work in accordance with the requirements of the principal within a certain time limit; The principal is obliged to hand over to the contractor data, documents, requirements on the survey, design, construction ground, construction materials, and investment capital on schedule, and have the obligation to accept the test of the project and pay when the work is partially or fully completed.
In terms of form: The construction contract must be signed in writing with basic contents such as: implementing object; time limit; rights and obligations of the parties; penalties for violations; compensation for damage;
Regarding types of contracts: Construction contracts shall be categorized according to the characteristics and contents of work to be performed and applied contract prices, which can be mentioned as package contracts, adjustable unit price-based contracts, etc.

2. Schedule, behind schedule in construction contracts

Schedule is understood as the agreement of the parties on the milestones of completion and handover of major works and products.
Behind schedule means that the contractor has not properly implemented the time in the work or project as agreed by the parties.

3. Penalty for behind schedule in construction contract

On the basis of arising: As stipulated in Article 146 of the Law on Construction 2014, amended and supplemented in 2020, the penalty for behind schedule must be agreed upon by the parties and stated in the contracts. Where the parties do not agree and do not state in the contract; or there is an agreement but only expressed verbally and not stated in the contract, the breached party will not be able to apply penalties for violations against the violating party;
Regarding the level of penalties for violations: For works using state funds, the penalty level must not exceed 12% of the value of the violated contract. Thus, the parties will be able to agree on a penalty, but this penalty must not exceed 12% of the value of the violated contract. In case the parties agree on a penalty with an excess of 12% of the value of the violated contract, the excess shall not be applied, unless the violating party voluntarily bears a penalty and there is no dispute between the parties about the penalty level;

For works not using state funds, the penalty level for violation will be determined based on the provisions of the 2015 Civil Code. Article 138 of the 2014 Law on Construction, amended and supplemented in 2020, has determined that a construction contract is a civil contract, so the penalty for violations, in this case, shall comply with the provisions of the 2015 Civil Code. The penalty shall be agreed upon by the parties without limitation, however, this agreement must not be contrary to the provisions of law and social ethics.

Above is the article “Regulations on penalty for behind schedule in construction contracts”. We hope this article was useful to you.

Why is banks’ credit activities potential risk of bad debt

Written by TNTP LAW on 2 February, 2023. Posted in Legal newsletter.

Following the current trend of globalization, many forms of lending by banks have become easier for customers. With only some basic personal documents, an individual customer is also eligible to be granted a credit card with a limit of up to tens to hundreds of millions of VND. Consumer lending has become too easy, creating conditions for consumers to actively shop, creating growth momentum for the economy. However, opening a bank’s credit card becoming too easily also poses a risk of bad debt to society. What is the reason for this problem? Let’s find out with TNTP in the following article.

1. Credit lending activities of banks with individual customers

Currently, it is extremely easy to get a consumer loan and open a credit card at banks, with just a Citizen ID with a screenshot of the operation at the bank, or even just a simple operation through the app, the borrower is fully eligible to open a credit card with a limit of tens or even hundreds of millions of dong.

The more convenient the credit card opening service, the easier it is to meet the loan conditions, and the quick loan procedures have brought the bank more customers and also directly contributed to the development of the purchasing power and consumption activities of society. When buyers do not have enough financial capacity but have a need to buy products or use services, banks act as financial intermediaries between buyers and sellers. The bank will use its own money to lend to the buyer at an interest rate proportional to the loan the buyer uses to pay for its products and services.

2. Risks of personal credit lending

The ease of obtaining credit has attracted many customers, most of whom are young people – the generation heavily influenced by consumerism and the increasingly luxurious lifestyle promoted by mass media.

After losing the ability to control desires and being willing to pay tens of millions for expensive items, luxury items because the loan amount is easily obtained with the winged exhortation: “Spend first – pay later” from banks, new borrowers are really startled because the principal amount plus interest has gone beyond their ability to pay. At that time, borrowers will have to face debt recovery measures, along with increasing interest over time of late payment. Unplanned spending and excessive spending will directly lead to bad debt risk.

After taking credit, the borrower will be classified into debt groups, and depending on the amount of debt and the delay time, the borrower’s reputation with the bank will decrease. At that time, it will be difficult for the borrower to access the loan services of other banks, because when a borrower has a low credit rating, it will be difficult for the bank to recover the money.

In addition, not to mention the subjective factors from the borrowers themselves when they turn themselves into debtors when they are unable to pay, paying via credit card without entering the PIN code also makes the loss of money. card seriously affects customers. When a stranger owns a customer’s credit card, they can completely process the payment with only the information available on the card without having to perform any other authentication. Therefore, in case the credit card is lost but the owner does not perform an emergency card lock, the user is completely at risk.

Once you have become a creditor, the bank will take the necessary debt collection measures to request repayment, from contacting, and reminding payment by phone, or email to legal measures. like filing a lawsuit in court. These will be measures to ensure that borrowers will have to fulfill their debt repayment obligations whether they like it or not.

Above is an article about the potential risks of bad debt from credit lending activities of banks. Hope this article is useful to the readers.

Cases the Arbitration Agreement is invalid

Written by TNTP LAW on 13 January, 2023. Posted in Dispute Settlement, Giải quyết tranh chấp.

In Sale and Purchase Contracts, Principal Contracts, etc., the dispute settlement clause can be stated as “in case the dispute cannot be resolved by negotiation, one of the parties can settle the dispute at Arbitration”. This Agreement is known as the Arbitration Agreement. Currently, many enterprises have chosen to settle disputes by arbitration because of its efficiency, flexibility, and time-saving method. However, due to negligence in the drafting process and the enterprise’s failure to check the legal validity of the Arbitration Agreement, the Arbitration Agreement may be invalid. In this article, we would like to mention and analyze more clearly the null and void Arbitration Agreement.

1. What is an Arbitration Agreement?

According to the provisions of Clause 2, Article 3 of the Law on Commercial Arbitration 2010, an Arbitration Agreement is an agreement between the parties on the settlement by arbitration of a dispute that may arise or has arisen. Thus, commercial disputes can only be resolved by arbitration only when there is an Arbitration Agreement between the disputing parties. The Arbitration Agreement may be made before, during or after a dispute occurs.
The Arbitration Agreement is made in writing expressing the will of the parties in dispute settlement.
The Arbitration Agreement may be represented by an arbitration clause in the contract establishing commercial relations between the parties or in the form of a separate agreement and shall be considered attached to the main contract or evidence determining the will of the parties to settle the dispute by arbitration.

2. When is the Arbitration Agreement invalid?

The Arbitration Agreement will be invalid in the following cases:

Disputes arising in areas not under the authority of the Arbitration

In order for a dispute to be resolved by Commercial Arbitration and the Arbitration Agreement not to be invalid, the arising dispute must fall within the field of arbitration, including:

– Disputes between parties arising from commercial activities;

– Disputes arising between parties in which at least one party has commercial activities;

– Other disputes between the parties as provided for by law shall be resolved by arbitration.

The person establishing the Arbitration Agreement has no authority under the law

Normally, the signing of an Arbitration Agreement or Contract will be performed by the legal representative of the enterprise or the authorized representative.

In principle, if an Arbitral Agreement is made by an unauthorized person, such Arbitration Agreement is invalid. In case the Arbitration Agreement is entered into by an unauthorized person, but during the establishment and performance of the Arbitration Agreement or in the arbitration proceedings, the person competent to enter into the Arbitration Agreement has accepted or known it without objection, the Arbitration Agreement is not invalid.

The person establishing the Arbitration Agreement does not have civil act capacity according to the provisions of the Civil Code

Civil act capacity is understood as the ability of an individual to establish and perform civil rights and obligations by his/her actions. The person establishing the Arbitration Agreement without civil act capacity includes:

Juvenile.
Loss of civil act capacity.
People with difficulty in cognition and behavior control.
Limited capacity for civil acts.

In this case, the Court needs to collect evidence to prove that the person who established the Arbitration Agreement does not have civil act capacity. It must have documents proving the date of birth or the conclusion of a competent authority or the decision of a competent Court determining or declaring that person has lost his/her civil act capacity or has restricted his/her civil act capacity.

The form of the Arbitration Agreement is not consistent with the provisions

According to Article 16 of the Law on Commercial Arbitration 2010, the Arbitration Agreement can be established in the form of an arbitration clause in the contract or in the form of a separate agreement. Either way, the Arbitration Agreement must be in writing. The following forms of agreement are also considered to be established in writing:

a) The agreement is established through exchanges between the parties by telegram, fax, telex, email and other forms as prescribed by law;

b) The agreement is established through the exchange of written information between the parties;

c) The agreement is recorded in writing by a lawyer, notary public or a competent organization at the request of the parties;

d) In the transaction, the parties refer to a document showing the arbitral agreement such as a contract, documents, charter of the company and other similar documents;

d) Through an exchange of claims and defenses in which the existence of an agreement is made by one party and not denied by the other.

One of the parties is deceived, threatened or coerced during the establishment of the arbitral agreement and requests to declare the Arbitration Agreement invalid

This is considered as one of the grounds for the Court to declare the Arbitration Agreement invalid. In civil relations, the parties must be goodwill and honest in establishing and performing civil rights and obligations; neither party may deceive, threaten or coerce the other.

Deception is understood as the intentional act of one party or a third party to mislead the other party about the subject and nature of the Arbitration Agreement, so the Arbitration Agreement has been established.

Threat and coercion are understood as the intentional act of one party or a third person to force the other party to sign the Arbitration Agreement in order to avoid damage to life, health, honor, reputation and dignity, the property of his/her relatives.

The Arbitration Agreement violates the prohibitions of the law

Prohibitions of the law are provisions of the law that do not allow subjects to perform certain acts.

Above is TNTP’s article on Case of invalid Arbitration Agreement, hope this article is useful for enterprises and readers.

Sincerely,

Distinguishing the relationship between fines for violations and compensations for damages in the 2015 Civil Code and the 2005 Commercial Law

Written by TNTP LAW on 10 January, 2023. Posted in Dispute Settlement, Giải quyết tranh chấp.

Fines for violations and compensations for damages are two sanctions mainly applied to the violating party. Due to the different application subjects, there are some differences between fines for violations and compensations for damages in the 2015 Civil Code (“CC”) and the 2005 Commercial Law (“CL”). Please review the following article to have a better understanding of this difference.

1. Regulations on fines for violations and compensations for damages in the CC 2015

Fines for violation are regarded as an agreement between the contracting parties, accordingly, the violating party must pay a fine to the aggrieved party. Fines for violations are a specific civil remedy, in which the penalty will be only applied by the aggrieved party when there has been an agreement on the fines for violations in the contract;
Regarding compensations for damages, individuals and legal entities whose civil rights have been infringed shall be compensated for all damages, unless otherwise agreed by the parties or otherwise regulated by law. The infringed party can request for compensation for benefits that he or she would otherwise have enjoyed under the contract. This party may also require the obligor to pay expenses incurred due to the non-fulfillment of the contractual obligations that do not overlap with the level of compensation for the benefits brought by the contract.

2. Regulations on fines for violations and compensations for damages in the CL 2005

Fines for violation are regarded as a remedy whereby the aggrieved party requests the breaching party to pay a fine amount for its breach of the contract, if so agreed in the contract, except for the following cases: (i) a case of liability exemption agreed upon by the parties occurs; (ii) a force majeure event occurs; (iii) a breach by one party is entirely attributable to the other party’s fault; (iv) a breach is committed by one party as a result of the execution of a decision of a competent state management agency which the party cannot know, at the time the contract is entered into;
Basically, the compensations for damages regulated in the CL are similar to those in the CC. Except for the cases of exemption from liability, compensations for damages arise when the following factors are fully met: There is a breach of contract; There are material losses; The breach of contract is the direct cause of the loss. The breaching party shall indemnify the aggrieved party for the losses caused by the contractual breach, including the actual and direct loss value suffered by the aggrieved party caused by the breaching party and the profit directly to which the aggrieved party would have earned if the such breach had not been committed.

3. The relationship between fines for violations and compensations for damages in the Civil Code 2015

According to Article 418 of the CC, the parties can agree that the breaching party only has to pay fines for the violation but not the compensation for damages, or being responsible for both amounts. In case the parties previously agreed on fines for violations but did not reach an agreement on both penalties, the breaching party will only have to pay the fines for violations.

4. The relationship between fines for violations and compensation for damages in the Commercial Law 2015

According to Article 307 of the CL, where the parties do not agree upon fines for breaches, the aggrieved party shall only be entitled to claim damages, unless otherwise provided for by this Law. Where the parties agree upon fines for breaches, the aggrieved party shall be entitled to apply both remedies of fines and compensations for damages, unless otherwise provided for by this Law.

5. Distinguishing the relationship between fines for violations and compensations for damages in the Civil Code 2015 and the Commercial Law 2005 (referred to as the “relationship between FFV and CFD in the CC and CL”)

When entering into a contractual relationship, there are definite obligations to be performed. To ensure that the parties properly and fully perform their obligations, the parties can agree on a sole provision that the breaching party must bear a certain fine for the breach and must compensate for damages corresponding to the breach, or the parties may agree on different penalty levels and compensation for each particular violation.

Common points of the relationship between FFV and CFD in CC and CL:

– The aggrieved party can only apply fines for violations when the parties have an agreement on fines for violations. In case a mutual agreement on fines for violation is not available, the aggrieved party can only request damage compensation. Please note that the fine for breach is a sanction applied based on the parties’ agreement, while the compensation for damage is the mechanism applied based on the damage caused by the breach of contract.

– The parties can agree that the breaching party must be responsible for both fines for the breach and compensations for damages, hence, when breaching the obligation, the violating party must both pay a fine for the violation and a damage compensation as well.

Differences in the relationship between FFV and CFD in CC and CL:

– In the CC, the parties can agree that the violating one will only pay a fine for the violation without having to make compensation for damages. However, in CL, such an agreement is considered void, even if the parties agree as above. When there are sufficient legal grounds, the aggrieved party can still claim compensation and fines for violations from the violating party (if there is an agreement on fines for violations).

– In the CC, in case the parties have an agreement on the fines for violations but not on both fines for violations and compensations for damages, the violating party shall only have to pay fines for the violation. Meanwhile, in the CL, although the parties only reach an agreement on fines for violations, not on both fines for violation and compensation for damage, both remedies can be applied by the aggrieved party.

The difference in the relationship between FFV and CFD in the CC and CL can be summarized in the following table:

Fines for violation (“FFV”)	Compensation for damage (“CFD”)	Applicable remedies under the CC	Applicable remedies under the CL
Unavailable	Unavailable	CFD	CFD
Unavailable	Available	CFD	CFD
Available	Unavailable	FFV	FFV, CFD
Available	Available	FFV, CFD	FFV, CFD

(Unavailable, available status should be understood as unavailable, available in the contract)

Above is the article “Distinguishing the relationship between fines for violations and compensations for damages in the 2015 Civil Code and the 2005 Commercial Law”. We hope this article is useful to you.

Sincerely,

Some issues with the prenuptial agreement (part 2)

Written by TNTP LAW on 9 January, 2023. Posted in Legal newsletter.

III. Basic content of the prenuptial agreement

Terms on conditions, procedures, and principles of division upon termination of the prenuptial agreement
This is also the content established based on the volition of the parties. The prenuptial agreement can terminate at any time when the husband and wife agree or the husband/wife dies or is declared dead by the Court, or the husband and wife divorce, or the prenuptial agreement is declared void.
The fact that the parties agree on specific conditions, procedures, and principles for asset division upon termination of the agreement will limit disputes and also saves time and costs for the parties when dividing assets.

Terms on amendments and supplements to the prenuptial agreement

The issue of amending and supplementing the content of the agreement is specified in Article 49 of the Law on Marriage and Family 2014, detailed guidance in Article 17 of Decree 126/2014/ND-CP. Accordingly, husband and wife can modify part or all of the content of the agreement, or change from the agreed property regime to the statutory property regime. The amendment and supplement to the content of the agreement must be made in writing, which is notarized or authenticated. The amended and supplemented agreement takes effect from the date on which it is notarized or authenticated.
When amending and supplementing the content of the agreement, the husband and wife must still provide information related to the spouse’s property to the third party. If the husband or wife violates this obligation, the third party is considered to be in good faith and has their interests protected according to the provisions of the Civil Code.

Terms on legal consequences of terminating the agreed property regime

In the first case, because one of the husband/ wife has died or is declared dead by the Court: Clause 2, Article 66 of the Law on Marriage and Family 2014 stipulates “When there is a request for division of the estate unless the couple has reached agreement on the property regime, community property of husband and wife shall be divided into two. The property portion of the spouse who is dead or declared to be dead by a court shall be divided in accordance with the inheritance law”. According to the above provisions, in case the husband and wife have a prenuptial agreement, the division of the estate will apply according to the established agreement. Consequently, the parties need to stipulate the division of property upon termination of the prenuptial agreement.
In the second case, due to divorce: In case the prenuptial agreement contains provisions on property division after divorce and the prenuptial agreement is not invalid, these contents shall apply to divide the property of husband and wife upon divorce. In case the prenuptial agreement does not have provisions on property division after divorce or the prenuptial agreement is declared entirely invalid by the Court or the terms on property division after divorce is declared invalid by the Court, the regime as prescribed by law shall be applied to divide the property of husband and wife upon divorce. For matters that are not agreed upon by husband and wife, or that the agreement is unclear or partially invalid, Articles 59 and Articles 61 to 64 of the Law on Marriage and Family shall be applied for settlement.
The third case, due to the invalid of the prenuptial agreement: Article 6 of the Joint Circular No. 01/2016/TTLT-TANDTC-VKSNDTC-BTP stipulates that: i) In case the prenuptial agreement is declared entirely invalid by the Court, the statutory property regime shall be applied; ii) In case the prenuptial agreement is declared partially invalid, the contents that are not invalidated shall still be applied; for the invalid content, the corresponding provisions on the statutory property regime shall be applied.

IV. Terms on the invalid prenuptial agreement

Cases about the invalid prenuptial agreement are specified in Article 50 of the Law on Marriage and Family 2014.

The first case: “It fails to meet the conditions on the effect of transactions prescribed by the Civil Code and other relevant laws”. Accordingly, compared with Article 117 of the 2015 Civil Code, the valid conditions for a civil transaction include that the husband and wife must be completely voluntary when agreeing; the agreement is by the will of the parties, the parties are not deceived, coerced, threatened, confused; the purpose and content of the agreement do not violate the prohibition of the law and social morality.
The second case: “It violates Article 29, 30, 31 or 32 of the Law on Marriage and Family”. Accordingly, the content of the pre-marital property agreement must not violate: General principles of the property regime between husband and wife; Rights and obligations of husband and wife in meeting the essential needs of the family; Transactions related to the house as the sole residence of the husband and wife; Transactions with third parties in good faith related to bank accounts, securities accounts and other movable assets not required by law to be registered for ownership and use.
The third case: “Its contents seriously infringe upon the rights to be supported and inherit and other lawful rights and interests of parents, children and other family members”. This regulation is intended to protect the legitimate rights and interests of other family members. Where an agreement is reached to evade the support obligation specified in Articles 110 to 115 of the Law on Marriage and Family or to deprive the heirs of the inheritance rights regardless of the content of the will under the provisions of the Civil Code or violates the lawful rights and interests of parents, children and other family members as provided for by the Marriage and Family Law and other relevant laws, this agreement shall be considered invalid.

Above is the post: “Some issues with the prenuptial agreement (Part 2)”. We hope this post was useful to you.

Best regards,

Some issues with the prenuptial agreement (part 1)

Written by TNTP LAW on 9 January, 2023. Posted in Legal newsletter.

The agreed marital property regime allows husband and wife to freely dispose of each individual’s property while ensuring the common interests of the family. Depending on the customs, practices, and laws of each country, the agreement on the property pre-marriage regime of husband and wife is called by many different terms, but the most common is “The Prenuptial Agreement”. In recent years in Vietnam, this agreement has an increasing need for access. Therefore, within the scope of this article, we mention and analyze some issues about the prenups to improve its effectiveness.

I. The definition of the prenups

Currently, the Vietnamese legal system does not have specific provisions on the definition of a prenuptial agreement. The law on marriage and family has only provided several provisions, but not enough, on the right to choose to apply the property regime as agreed upon by the husband and wife (Clause 1, Article 28 of the Law on Marriage and Family 2014).

According to the opinion of some jurisprudence researchers, the prenups is a written agreement made before marriage about the property ownership relationship of husband and wife including the origin of establishing community and separate property and principles of property division of husband and wife.

II. Regulations on the basis for establishing and raising effect to the prenuptial agreement

According to Article 47 of the Law on Marriage and Family 2014, the conditions for husband and wife to choose and apply a prenuptial agreement include:

Firstly, in terms of time, a prenuptial agreement must be made before marriage. This provision is also applied by many countries with an agreed property regime. The prenuptial agreement cannot be established after the time of marriage registration.
Secondly, the prenuptial agreement takes effect from the date of marriage registration. In other words, marriage registration is a mandatory condition if the parties want to choose this mode. Cases of illegal marriage or marriage registration at an improper agency, in principle, will not be able to apply the prenups, even though a written agreement has been established in advance.
Thirdly, the prenuptial agreement must be made in writing and notarized, and authenticated. The process and procedures for signing the prenuptial agreement are carried out by the Law on Notarization 2014 and regulations of competent state agencies.

III. Basic content of the prenuptial agreement

Article 48 of the Law on Marriage and Family 2014 stipulates the basic contents of a prenuptial agreement, including:

Terms on determining community property and separate property of husband and wife

This content is important because determining the rights of husband and wife to each specific type of property is the basis for property division after the termination of the prenuptial agreemeninv. The determination of community property and separate property of husband and wife is guided in detail in Article 15 of Decree No. 126/2014/ND-CP detailing several articles and measures to implement the Law on Marriage and Family (“Decree No. 126/2014/ND-CP”). Specifically, husband and wife may agree on property determination according to one of the following contents:

a) Matrimonial property includes community property and separate property of husband and wife;

b) Husband and wife have no separate property and all property a spouse has before marriage or during the marriage period is community property;

c) Husband and wife have no community property and all property a spouse has before marriage and during the marriage period is separate property of that spouse;

d) Property is determined as otherwise agreed by husband and wife.

Therefore, the parties can freely agree on any method of determining community property or separate property, as long as such agreement is not contrary to the provisions of law and customs. In case some issues have not been agreed upon by the spouses or are unclear, these issues will be applied similarly to the property regime according to law.

Terms on rights and obligations of husband and wife toward community property, separate property, and related transactions; property to meet the family’s essential needs

For this clause, the parties can freely agree, however, the content of the agreement must be consistent with the provisions of law and ensure the fulfillment of obligations and responsibilities of the husband and wife.
Husband and wife must ensure conditions to meet the family’s essential needs (Essential needs means ordinary needs for food, clothing, accommodation, learning, medical care, and other ordinary needs which are indispensable in the life of each person and family). If the prenuptial agreement violates this content, it may be declared invalid. Therefore, the parties need to agree on the property to ensure the essential needs of family members, especially in cases where the parties agree to only have separate property, no community property.
When husband and wife agree on the determination of rights and obligations concerning property, property relations with related third parties must be based on and implemented by such agreement. When establishing and performing property transactions with a third party, husband and wife are obliged to provide this person with relevant property information; if the husband or wife violates this obligation, the third party is considered to be in good faith and has their interests protected according to the provisions of the Civil Code.

Above is the post: “Some issues with the prenuptial agreement (Part 1)”. We hope this post was useful to you.

Best regards,

Average time for debt collection

Written by TNTP LAW on 4 January, 2023. Posted in Thu hồi nợ, Thu Hồi Nợ.

“How long does it take to recover the debt?”, this is the question that many individuals or organizations ask when having difficulty because the debtor does not pay. It is not easy to give an exact answer about the guaranteed time to fully recover a debt. However, in the following article, TNTP will give the average time to debt collection based on our experience in debt collection.

1. Debts which are recoverable under 1 year

The condition for a debt to be recoverable in one year is that it must be a debt that the debtor is able to pay and has a good faith to pay. This is extremely important, because the debt collection process can only be done quickly when the debtor is willing to pay the debt and has enough assets to make this payment.

The debtor’s solvency depends on their financial situation, in case the debtor has good financial capacity but has too many debts to pay at once, usually the creditor having a stronger impact will be “priority” to be paid by the debtor.

However, to ensure that the debt can be recovered in a short time, as soon as it is determined that the debtor still has assets, or is currently able to pay, the creditors should immediately take measures to recover the debt. such as calling, sending official letters, or meeting in person to discuss and request the debtor to fulfill the debt payment obligation. If the creditor does not influence the debtor at these “golden” times, the debt collection period may be prolonged or the debtor is no longer able to pay, leading to the debt becoming more difficult to recover.

2. Debts with a recovery period of 3 to 5 years

These are difficult for debt collection when the debtor is almost unable to immediately pay the entire debt. The reason is usually due to the current debtor’s financial capacity which is no longer able to pay the creditor, or the debtor has too many debts and no longer has enough money to pay the creditor. In addition, it is possible that the creditor’s debt has generated interest, but the debtor has not fully paid the principal, leading to the prolonged interest.

In these cases, the solution for this case is to file a lawsuit with a competent agency such as a Court or an Arbitration Center to be able to use the power of the state to force the debtor to perform its payment obligations. The process from filing a lawsuit to enforcement can take anywhere from 3 to 5 years depending on the value of the debt, financial resources, or remaining assets of the debtor.

3. The debtor is unable to pay the debt.

This is the worst-case scenario that creditors never want, when the debtor is insolvent, meaning the debt will never be able to be paid in full, or not be paid, leading to the creditor will lose his loan forever. Usually this happens when the debtor’s finances are no longer available to pay, or the debtor has gone bankrupt, dissolved, suspended operations, and do not generate any additional revenue or assets to pay the debt.

However, the debtor’s insolvency usually does not occur in the first time when lending, the debtor’s insolvency usually occurs only when the creditor does not take measures to collect the debt, not long-term contact with the debtor. Therefore, if the creditor regularly takes measures to monitor and understand the financial capacity of the debtor, as well as regularly reminds the debtor to make debt payment, it is completely possible to take necessary measures. to avoid the situation where it is too late when the debtor becomes insolvent and has no assets to repay the debt.

In case the creditor has sufficient grounds to determine that the debtor is still able to pay but deliberately fails to make the payment, or intentionally evades to not pay the debt, the creditor has the right to make a criminal denunciation about the crime of “abuse of trust to appropriate property” to the competent investigating police agency. At that time, the investigating police agency will take professional measures to determine the debtor’s illegal behavior in case the investigating police agency determines that the debtor has committed the act that a violation the law and infringing upon the interests of creditors.

The debtor will be prosecuted and tried in accordance with the Criminal Procedure Code. At that time, the debtor will be forced to fulfill the obligation to pay the debt to the creditor along with the sanctions in accordance with the provisions of the Penal Code.

Above are the sharing of TNTP about the average time to collect debts. Hope this article is useful to the readers.

Best regards.

What is the debt collection service?

Written by TNTP LAW on 2 January, 2023. Posted in Thu hồi nợ, Thu Hồi Nợ.

Bad debts greatly affect the company’s financial resources. These debts can be in form of the payment that the purchasing partner does not make in due course, or the money to perform the service under the contract, etc., and when the partner refuses to make the payment, it will cause the company’s cash flow to be in deficit, which even directly affects the company’s business strategy. Therefore, the debt collection service is a solution to solve the above problem.

1. Reasons why many companies cannot resolve bad debts – debt collection by themselves

In fact, many companies encounter the bad debts situation but fail to solve this problem due to the lack of experience and professional debt collection methods. Some “traditional” debt collection methods are: Making a written request to debtors for payment; sending an employee or an accountant to negotiate and request payment on behalf of the company; Requesting the competent authority to resolve the problem, etc.

In general, without professional skills, the debt collection’s results are rather unsatisfactory, leading to the prolonged debts because:

Unprofessional debt handling staff
Lack of skills to prepare and complete debt collection documents in favor of companies
Debt collectors do not have experience in communicating, handling and negotiating with debtors
Lack of legal understanding and understandings of regulations in debt collection to acknowledge and secure the company’s rights.

2. What is the debt collection service?

The debt collection service means a service where a third party takes on requesting the debtor to pay the creditor for due/overdue amounts and other assets under the signed contract or upon the agreement between the creditor and the debtor or under a decision of a competent State agency.

Debts may inevitably arise in the course of business operations of each company. In fact, when having outstanding debts, companies have to carry out the procedures through arbitration and court, which take a long time and high costs. Only 36% of the cases are received, which is rather low based on the total number of cases. Moreover, even if the effective judgment is issued, the execution in reality is rather challenging, etc. Therefore, the debt collection service is often used by many companies and individuals thanks to its convenience, efficiency and reasonable cost.

3. Debt collection stages

a) Debt collection via negotiation

It is a form of debt collection by influencing debtors psychologically and emotionally but still ensures a good relationship with customers at the same time.

This is the first step of debt collection, whereby companies rely on the contract/agreement terms signed between the parties to force the debtor to fulfill the debt repayment obligation. Negotiation is primarily proceeded by the company employees, accounting or corporate legal departments. If such negotiation is not effective, company can use the debt collection services provided by law firms.

b) Debt collection via dispute settlement agencies

In case the debtor is not willing to pay the debt, companies may base on the content of the contract/agreement to select an appropriate dispute settlement agency. Dispute settlement agencies include: Courts and Commercial Arbitration.

The settlement at a dispute settlement agency often comes with costs in accordance with the law and requires careful preparation of records, documents and evidence to prove that the companies’ claim is grounded. In addition, depending on the complexity of the debt-related transaction, the time for debt collection may vary from a few months to many years.

While debt collection through dispute resolution agencies can be costly and time consuming, it is guaranteed by state authority. If the judgment takes into effect, it will force the debtor to make the payment. If the debtor is uncooperative, the competent judgment enforcement agency will use the state power to take appropriate legal measures to force the debtor to pay the debt, even to coerce or freeze the debtor’s assets and accounts to force the debtor to perform their obligation.

Debt collection is very important, not only to ensure the financial health and profits of organizations, individuals, and companies, but also to determine the survival of the business. After the economy has just gone through a difficult time due to the prolonged impact of the Covid pandemic, the debt collection matter becomes more urgent for companies and individuals when the cash flow is becoming exhausted and can even cause the companies to go bankrupt. Therefore, the debt collection service is now an extremely important and necessary solution to solve the debt problem.

Above is an analysis article about the debt collection service of TNTP, hope this article is useful to readers.

Sincerely,

Author: TNTP LAW

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Distinguishing the relationship between fines for violations and compensations for damages in the 2015 Civil Code and the 2005 Commercial Law

1. Regulations on fines for violations and compensations for damages in the CC 2015

2. Regulations on fines for violations and compensations for damages in the CL 2005

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4. The relationship between fines for violations and compensation for damages in the Commercial Law 2015

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Average time for debt collection

1. Debts which are recoverable under 1 year

2. Debts with a recovery period of 3 to 5 years

3. The debtor is unable to pay the debt.

What is the debt collection service?

1. Reasons why many companies cannot resolve bad debts – debt collection by themselves

2. What is the debt collection service?

3. Debt collection stages

a) Debt collection via negotiation

b) Debt collection via dispute settlement agencies

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