In civil law, Conditional Contracts are understood as contracts in which, when entered into, the parties agree to determine an event that when that event occurs, the contract will arise, be performed, or be terminated. From a dispute that arises when the seller receives money but the conditions of the contract do not occur, the buyer requests the seller to refund the money and requests the court not to recognize the contract, Case Law No. 39/2020/AL has provided an opinion to resolve disputes arising related to this type of conditional transaction. In this article, TNTP’s lawyers will analyze the content of Case Law No. 39/2020/AL.
1. Summary of the case
a) In 1982, the family of Mr. Nguyen Viet L (died in 1985) and Ms. Tran Van C (died in 2011) and their 03 children, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2, were granted permission by the State Bank of Vietnam to use the ground floor in front of the house No. 182, Street A, Ward B, District D, Ho Chi Minh City.
b) In May 1989, Ms. C rented a part of the house with an area of 50.85m2, located on the corner of 02 fronts of A – D streets, to the Branch of T Tourism Company to open a general service store. At that time, Ms. C1 took the position of store manager, and with her husband, Mr. Nguyen Cong H, directly conducted business and represented the Branch of T Tourism Company to pay the rent in June 1989 of 2.3 maces of 24K gold and the next rental payment from July 1989 to December 1992 was 75 maces of 24K gold, the first payment on July 10, 1989 was 35 maces of 24K gold, the second payment of 40 maces of gold on September 1, 1989. In total, Ms. C received 7.5 taels of 24K gold.
c) In December 1989, the Branch of T Tourism Company was not doing business effectively, so it was assigned to Ms. C1 to continue doing business and pay rent until the end of February 2002. Since March 2002 until now, Ms. C1 and Mr. H have still lived in this area and have not paid rent. A part of the house is currently used by Ms. T1, another part is used by Ms. K.
d) During the process of Ms. C1 and Mr. H using the house, there was construction and repair, so the disputed area’s value according to the valuation minutes dated January 22, 2014 is 1,427,421,900 VND. Regarding the Association Contract No. 05 signed on May 20, 1989 with the Branch of T Tourism Company, the plaintiff did not request settlement and withdrew the request to force T Tourism One Member Limited Liability Company to pay 1.48 taels of 24K gold for rent.
e) Because the two parties have no business buying or selling the house and no longer have a rental relationship, the plaintiff requests the Court to cancel the commitment made and signed by Ms. Tran Van C and Ms. Tran Thi C1 on July 10, 1989; force Ms. C1 and Mr. H to immediately pay for the part of the house that they are staying in; agree to pay Ms. C1 and Mr. H the cost of repairing the house of 64,105,000 VND.
f) The Defendants are Mr. Nguyen Cong H and Ms. Tran Thi C1 presented:
• In 1989, Mr. H and Ms. C1 transferred an area of about more than 40m2 located in the house 182 A Street, District D of Mr. Tran Van C for 7.5 taels of 24K gold. Both sides wrote a handwritten paper to sell the house. On July 10, 1989, Mr. H and Ms. C1 delivered this amount of gold to Mr. C, then added 05 maces, the total selling price was 08 taels of 24K gold. The transferred area is located at the corner of 2 frontages of streets A – D. At that time, Ms. C was renting the above house from the State Bank of Vietnam, so she had not yet been granted ownership of the house, so the two parties only wrote the handwritten paper and could not sign a sales contract.
• After that, Mr. H and Ms. C1 transferred to Ms. Tran Thi Kim T1 a part of the house with an area of about 16m2. The transfer with Ms. T1 was only agreed verbally.
• Around 2005, Mr. H and Ms. C1 had a business cooperation with Ms. Luong Thi K in the above area.
• According to the commitment between the two parties in the handwritten paper dated July 10, 1989, when the State allows Ms. C buy the house price, Mr. H and Ms. C1 must pay the price of the transferred area and Mr. C is responsible for completing the procedures to transfer ownership of the transferred area to Mr. H and Ms. C1. At the same time, based on the Land Law 2003, Mr. H and Ms. C1 have used the house and land for over 25 years, so their land and house use rights must be recognized, so they request recognition of the house transfer according to the commitment dated July 10, 1989 because this is a conditional civil transaction.
• Those who inherit the rights and obligations of Ms. C that request for a house to stay in is unfounded because according to the Certificate of House Ownership, Mr. C only has ownership of 167m2 and the above area Mr. C has no ownership rights, so he has no right to sue, Mr. H and Ms. C1 do not accept. Because the prescriptive period for initiating legal action for the dispute that arose in 1989 had expired, the case was requested to be suspended.
• The transfer of part of the area to Ms. T1 and the business cooperation with Ms. K do not require settlement. During the period of using Mr. H and Ms. C1, the house was repaired with the repair cost calculated according to the calculation minutes of 64,105,000 VND. In case the Court does not recognize the house transfer, this repaired amount must be returned.
g) The person with related interests and obligations is Ms. Tran Thi Kim T1 presented:
• Ms. T1 transferred from Ms. C1 a part of the house No. 182, Street A, Ward B, District D, Ho Chi Minh City with an area of about 16m2 in 1989, for 04 taels of gold, the transfer was without paperwork. Now, Ms. T1 requests Ms. C to be responsible for carrying out procedures to transfer ownership rights to Mr. H and Ms. C1. The transfer between Ms. T1 and Mr. H and Ms. C1 is not requested to be solved by the Court.
• At the same time, according to Ms. T1, the area the parties are disputing is the common use of the households in the house on 182 Street A, Ward B, District D, Ho Chi Minh City. Ms. C has no ownership rights, so Mr. C has no right to sue.
h) The person with related rights and obligations is N Housing Business Management Company represented by Ms. Pham Thuy H1 presented:
N Housing Business Management Company sold the house on No. 182, Street A, Ward B, District D, Ho Chi Minh City in 2001. Before selling, they made a minutes to check the area used by each household. According to the content of the minutes, the area of houses and land in dispute between the parties is located within the boundary of the owner’s right of use (Ms. C – died) until the State collects it to implement the road widening project. The fact that Ms. C allowed them to stay, rent, or transfer was against the regulations, so N Housing Management Company did not agree and requested a trial according to the provisions of the law.
i) In First Instance Civil Judgment No. 28/DS-ST dated July 27, 2006, the People’s Court of District 3, Ho Chi Minh City decided:
• Cancel the commitment dated July 10, 1989 between Ms. C and Mr. H and Ms. C1.
• Mr. H, Ms. C1, Ms. T1, Ms. K are obligated to deliver to Mr. C a part of the ground floor of house 182, Street A, Ward B, District D, Ho Chi Minh City with an area of 50.85m2.
• Ms. C paid Mr. H and Ms. C1: 08 taels of gold received + 27.49 taels of gold for damage + 64,105,000 VND for repairs. The total amount is 35.49 taels of gold and 64,105,000 VND.
j) The plaintiff and defendant both filed an appeal.
k) In Civil Appeal Judgment No. 188/2007/DS-PT dated February 7, 2007, the People’s Court of Ho Chi Minh City decided:
Partially amending the First Instance Judgment:
• Recognize the house purchase contract between Ms. Tran Van C and Mr. Nguyen Cong H and Ms. Tran Thi C1 according to the commitment dated July 10, 1989.
• Ms. C is responsible for transferring ownership of the house to Mr. H and Ms. C1.
• Mr. H and Ms. C1 paid Ms. C the house price of 169,432,000 VND.
l) In Decision No. 138/QD-KNGDT-V5 dated November 13, 2007, the Director of the Supreme People’s Procuracy protested the above civil appeal judgment.
m) In Decision No. 01/2008/DS-GDT dated January 25, 2008, the Civil Court of the Supreme People’s Court decided: Annul the First Instance Civil Judgment No. 28/DS-ST dated January 27 – July 2006 of the People’s Court of District 3 and annul the Civil Appeal Judgment No. 188/2007/DS-PT dated February 7, 2007 of the People’s Court of Ho Chi Minh City; deliver the case file to the People’s Court of District 3 for trial according to first instance procedures.
n) In First Instance Civil Judgment No. 12/2014/DS-ST dated April 16, 2014, the People’s Court of District 3, Ho Chi Minh City decided: Partially accept the request of the heirs’ rights and obligations of Ms. Tran Van C.
• Declare the commitment on transferring the right to use part of the house No. 182, Street A, Ward B, District D, Ho Chi Minh City signed on July 10, 1989 between Ms. Tran Van C and Ms. Tran Thi C1 is null and void.
• Force the heirs of Ms. Tran Van C’s rights and obligations, Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2, to repay Mr. Nguyen Cong H and Ms. Tran Thi C1 the amount of gold received is 08 taels of 24k gold = 276,320,000 VND.
• Force the heirs of Ms. Tran Van C’s rights and obligations, Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2, to repay Mr. Nguyen Cong H and Ms. Tran Thi C1 house construction and repair costs are 64,105,000 VND.
• Force the heirs of Ms. Tran Van C’s rights and obligations, Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2, to compensate for damages to Mr. Nguyen Cong H, Ms. Tran Thi C1 amount is 575,550,950 VND.
• Force Mr. Nguyen Cong H, Ms. Tran Thi C1, Ms. Tran Thi Kim T1, Ms. Luong Thi K to be responsible to return to the heirs of Ms. Tran Van C’s rights and obligations, Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2, the area of house and land in the house No. 182, Street A, Ward B, District D, Ho Chi Minh City includes: Area of house and land in the main house with the first floor, suitable for planning is 8.11m2 + house and land area within the road is 42.74m2.
o) The first instance court also decided on court fees and the litigants’ right to appeal.
p) On April 24, 2014, Mr. Nguyen Cong H, Ms. Tran Thi C1, and Ms. Tran Thi Kim T1 filed an appeal.
q) On April 28, 2014, Ms. Le Thi Minh C2 filed an appeal.
r) In Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014, the People’s Court of Ho Chi Minh City decided: Not accepting the appeal of Ms. Le Thi Minh C2, Ms. Tran Thi C1, Mr. Nguyen Cong H and Ms. Tran Thi Kim T1, withhold the first instance civil judgment.
s) After the appeal trial, the defendant Mr. Nguyen Cong H and Ms. Tran Thi C1 filed a request for review according to cassation procedures for the Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014.
t) In Appeal Decision No. 38/KNGDT-VC3-V2 dated March 21, 2016, the Director of the High People’s Procuracy in Ho Chi Minh City appealed against Civil Appeal Judgment No. 1515/2014/ DS-PT dated December 1, 2014 of the People’s Court of Ho Chi Minh City; request the Committee of Judges of the High People’s Court in Ho Chi Minh City to conduct a cassation trial to annul the above-mentioned Civil Appeal Judgment and First Instance Civil Judgment No. 12/2014/DS-ST dated April 16, 2014. of the People’s Court District 3, Ho Chi Minh City; deliver the case file to the Court of First Instance for re-trial.
u) In Decision No. 234/2016/DS-GĐT dated September 9, 2016, the Committee of Judges of the High People’s Court in Ho Chi Minh City decided: Not accepting Protest No. 38/KNGDT-VC3-V2 dated March 21, 2016 of the Director of the High People’s Procuracy in Ho Chi Minh City; uphold the Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014 of the People’s Court of Ho Chi Minh City.
v) On January 21, 2017, Mr. Nguyen Cong H, Ms. Tran Thi C1, Ms. Tran Thi Kim T1 submitted a request for review according to cassation procedures for cassation decision No. 234/2016/DS- GĐT dated September 9, 2016 mentioned above.
w) In Decision No. 56/2019/KN-DS dated August 5, 2019, the Chief Justice of the Supreme People’s Court appealed Decision No. 234/2016/DS-GDT dated September 9, 2016 of the Committee of Judges of the High People’s Court in Ho Chi Minh City; request the Council of Judges of the Supreme People’s Court to conduct a cassation trial to cancel the Decision No. 234/2016/DS-GDT dated September 9, 2016 of the Judges’ Committee of the High People’s Court in Ho Chi Minh City. Ho Chi Minh City, canceling Civil Court of Appeal No. 1515/2014/DS-PT dated December 1, 2014 of the People’s Court of Ho Chi Minh City and First Instance Civil Judgment No. 12/2014/DS- ST dated April 16, 2014 of the People’s Court of District 3, Ho Chi Minh City; deliver the case file to the People’s Court of District 3, Ho Chi Minh City for re-trial in accordance with the law.
x) At the cassation trial, the representative of the Supreme People’s Procuracy agreed with the appeal decision of the Chief Justice of the Supreme People’s Court.
2. Comments of the Court:
2.1. Case files and evidence show that on July 10, 1989, Ms. Tran Van C and Ms. Tran Thi C1 signed a Commitment and Receipt with the content: Ms. C received 75 gold taels from Ms. C1, giving Ms. C1 and her husband have full rights to use the area of 45m2 at house number 182, Street A, Ward B, District D, Ho Chi Minh City; Ms. C never asked for his house back, nor did Ms. C1 and her husband ask for their gold back; when the State allows Ms. C to buy the house, Ms. C1 must pay the price for the area being used and Ms. C is responsible for carrying out procedures to transfer ownership of the transferred area to Mr. H and Ms. C1.
[Content of case law] Thus, there is a basis to determine that Ms. C has agreed to sell part of the house No. 182, Street A, which is being rented from the State to Ms. C1 under the condition that when Ms. C is valued by the State, or in other words, the transaction between Ms. C and Ms. C1 is a conditional civil transaction. When Ms. C is sold by the State for the house price, the transaction becomes effective. Article 23 of the 1991 Ordinance on Civil Contracts stipulates: “Where the parties agree on a condition precedent for the performance or termination of a contract, the contract shall be performed or terminated upon such condition occurring”. Although the conditions agreed in the contract do not violate legal prohibitions or are not contrary to social ethics, the part of the house and land that Ms. C agreed to transfer to Ms. C1 has an area of 42.74 m2 located within the road, the State do not price and recognize Ms. C’s home ownership and land use rights, so most of those conditions do not occur. Therefore, the agreement between Ms. C and Ms. C1 is not taking legal effect, and the Court of First Instance and Appeal declared it null and void is appropriate.
2.2. According to the provisions of Article 21 of the Housing Law 2005, point h, Clause 1, Article 10 of the Housing Law 2014, and Article 256 of the Civil Code 2005, owners and subjects with other property rights have the right to reclaim property from the possessor, user of the property, or person benefiting from the property without legal basis. Because the disputed portion of land with an area of 42.74 square meters is located within the right of way, the State does not price it, and does not recognize home ownership or land use rights for Ms. C, Ms. C, and Ms. C’s heirs. have no right to sue for that area.
The first instance and appellate courts forced Mr. H, Ms. C1, Ms. T1, and Ms. K to be responsible for returning to the heirs of Ms. C’s legal rights and obligations to the house and land area within the right of way, The state does not recognize home ownership or land use rights as unfounded. The cassation decision of the Committee of Judges of the High People’s Court in Ho Chi Minh City did not recognize the errors of the Court of First Instance and the Court of Appeal, thereby not accepting the appeal of the Institute. Head of the High People’s Procuracy in Ho Chi Minh City, maintaining the appeal judgment is inconsistent with the provisions of Clause 2, Article 345 of the 2015 Civil Procedure Code.
3. Comment on Case law
• In Clause 6, Article 402 of the Civil Code 2015, it is stipulated that “A conditional contract is a contract the performance of which depends on the occurrence, modification or termination of a specified event.”
For better understanding, this type of contract is characterized by a contract formed based on certain conditions (for example, arising conditions, performance conditions, contract cancellation conditions). If this condition occurs, the obligation to perform the contract of one party or parties will arise.
Compared with the case of this Case law, the agreement in the Commitment dated July 10, 1989 of Ms. C with Ms. C1 and Mr. H has content consistent with the nature of a conditional contract, that is, when the land plot is valued by the State, the parties will proceed with the purchase, sale and transfer procedures.
• In the judgment of the Court, it was noted that “there is a basis to determine that Ms. C has agreed to sell part of the house No. 182, Street A, which is being rented from the State to Ms. C1 under the condition that when Ms. C is valued by the State, or in other words, the transaction between Ms. C and Ms. C1 is a conditional civil transaction. When Ms. C is sold by the State for the house price, the transaction becomes effective” clearly stated the conditions in the house purchase contract. Although the contract has not yet taken effect, the parties have agreed on the conditions for implementation. The court determined that this was a conditional transaction.
Therefore, the Court’s judgment that “a civil transaction has conditions but is voided because the contract conditions cannot occur” is reasonable because the object of the transaction is a house that has not yet been priced. From the time the parties conduct the transaction, the seller is only renting the house, which is still owned by the State. As long as the house has not been priced, the seller has not been granted ownership of the house. The fact that the buyer is transferred ownership of the area agreed to be transferred after the seller is granted the right is only an uncertain future condition that may occur. The reality of the case shows that the State did not conduct an appraisal and did not recognize ownership of the house, thus the conditions for the validity of the transaction did not occur and therefore the agreement between the buyer and the seller is disabled.
Above is TNTP’s article on “Case law No. 39/2020/al regarding the determination of civil transactions due to invalid conditions”. We hope this article will be helpful to readers.
Sincerely,
