Under the provisions of law and practice, each type of Contract will have different nature, content. However, no matter what type of Contract is drafted and reviewed, the basic rules will not change. Therefore, enterprises, organizations and individuals should note and keep in mind some basic rules so that they can sign the Contract and also protect their legal rights and interests in the performance of the Contract. Accordingly, TNTP will provide basic rules when drafting and reviewing Contracts. Enterprises can refer, follow these rules to draft and review Contract by themselves or use legal services of professional law firms and lawyers to get the best result.
1. The information of the parties in Contract must be correct
When signing Contract, the parties are often unwary and do not anticipate risks if a dispute occurs. The parties only write the information in a general way, write the registered office address but do not write the actual operation address or actual contact address, do not write phone number, email, representative’s name, person in-charge, … As a result, when arising dispute, the aggrieved party cannot find the actual address of the breaching party to directly work and negotiate; unable to contact the breaching party; the litigation and dispute settlement face difficulties because the breaching party does not operate at the registered address; …
To avoid the above risk, writing information such as company name, tax code, registered office address, legal representative is not enough because these information can be easily searched on the National Business Registration Portal https://dangkykinhdoanh.gov.vn/en/Pages/default.aspx or Website of General Department of Taxation http://tracuunnt.gdt.gov.vn/tcnnt/mstdn.jsp. These information cannot show fully actual information of the parties when signing. Thus, enterprises should request clients, partners to write their phone number, email, actual contact address (if any) and verify the accuracy of these information.
Enterprises are also be noted that: The verification and receiving these information is not required to be done before signing the Contract. If the parties have signed the Contract, enterprise still can verify the information during the performance of the Contract to ensure that the enterprise always know the actual address and contact information of clients and partners.
2. Know the position of the parties in the transaction
When signing Contract, each party always wants to ensure their rights and interests. However, if enterprise adds provisions to protect their rights and interests, it means that the rights and interests of clients, partners in the Contract will be reduced. Not all clients, partners agree with this. In the worst situation, the signing of the Contract may not be performed because the parties cannot agree on the limits of the rights and interests of each party in the Contract.
Therefore, the second rules when drafting, reviewing contracts, enterprises need to know clearly the position of the parties in the transaction to balance the interests of both parties. Enterprises can note terms, contents that enterprises can make concessions and terms, contents that enterprises must have, whereby enterprises will have a plan to negotiate and reach an agreement with clients, partners to sign the Contract.
3. Know clearly provisions of laws about the type of Contract which the parties supposed to sign
In principle, the law respects agreement of the parties. However, for some types of Contract, the law also has provisions and frameworks that the parties must follow, for example, for sub-contractor contracts using state budget, the transfer rate must be less than 10%. In this case, if the Contract specify a transfer rate of more than 10%, it will be invalid due to a violation of the prohibition of the law.
The legal validity of Contracts is very important. It records the Contract’s performance of the parties is legally effective. Therefore, the parties should learn the provisions of laws on the type of contract that the parties are about to sign, then review terms to amend, or remove the term that violates the law, ensure that the signed Contract is valid.
4. The level of detail of the Contract is proportional to the scale and value of the Contract
If the Contract has small value of a few million dong to several tens of million dong, enterprise can specify a brief Contract, including only basic terms. However, if the Contract has a large value from hundreds million to several tens of billion dong, enterprise needs to consider the detail level of the Contract.
If the Contract has a larger value, any small risk can bring great damage to the enterprise. Therefore, the Contract needs to be specified in detail and anticipate risks as much as possible.
Above are basic rules when drafting, reviewing Contracts. TNTP hope this article is useful for you.
Best regards.
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TNTP & Associates International Law Firm
Lawyer Nguyen Thanh Ha
Email: ha.nguyen@tntplaw.com
