Contract for the exchange of property is one of the popular contracts in the civil field. Accordingly, the parties deliver the property and transfer ownership thereto to each other. In the following article, TNTP will analyze the fundamental contents and instruct to draft this type of contract.
1. What is the contract for the exchange of property?
According to Article 455 of the Civil Code 2015, a contract for the exchange of property means an agreement between parties whereby they deliver property and transfer the ownership rights thereto to each other.
In nature, the contract for the exchange of property is a type of mixed contract containing the content of two different sale contracts, in which each party is the seller of its own property and the buyer with the property of the other party. Thus, the provisions on the sale contract of property are also applied to the contract for the exchange of property, including Provisions on the sale contract of property from Article 430 to Article 439, from Article 441 to Articles 449 and Article 454 of the Civil Code 2015. Merely the following provisions of sales contracts but do not apply to the contract for the exchange of property, including Article 440 on Obligation to make payment, Article 450 on Sale of property rights, Article 451 on Auctions, Article 452 on Purchases after trial use and Article 453 on Purchases by deferred payment or payment in instalments.
2. Legal features of the contract for the exchange of property
Firstly, the contract for the exchange of property has the purpose of transferring ownership rights to each other. Typically, the sale contract is to use money to purchase something; the contract for the exchange of property is to use an object in change for an object. The object is usually distinctive objects. In addition, the subject matter of this contract usually cannot be money. Because money is always considered a valuation tool for other types of property, money often appears in sale contracts. Money is only the subject of the contract for exchange of property if the property exchanged by the parties is all money, for example, exchanging Vietnamese currency for US dollars.
Secondly, the contract for the exchange of property is a bilateral, compensatory contract. The bilateral nature of this contract is reflected in the fact that the parties have obligations to each other. Meanwhile, this is a compensatory contract because both parties have material benefits arising from the contract.
Thirdly, the form of the contract depends on the agreement of the parties or prescribed by law. Accordingly, the contract can be expressed verbally, in writing, or through specific acts. Nevertheless, where the law requires that the contract shall be made in writing, notarized or certified, or registered, this contract must comply with that form. For example, according to Articles 121 and 122 of the Law on Housing 2014, the contract for the exchange of property with the object of housing is required to be made in writing, most of which must be notarized or authenticated, except the case specified in Clause 2, Article 122 of the Law on Housing 2014. The contract notarization shall be carried out by a notary; the contract authentication must be carried out at the People’s Committee of the commune where the house is located. The effective date of the contract shall be the date on which the contract is notarized or authenticated.
Fourthly, the person exchanging the property must be the owner or another person entitled to make the exchange for the property as a person authorized by the owner. Where one party exchanges with another party property which it does not own or property in respect of which it has no authorization from the owner, the other party may cancel the contract and demand compensation for damage.
Fifthly, in essence, the contract for the exchange of property is a double-sale contract. Each party is deemed to be the seller for the property delivered to the other party and the buyer for the property received.
3. Content of the contract for the exchange of property
When drafting the contract, the drafter should pay attention to the major contents as follows:
• Information about the parties to the contract.
• Subject matter of the contract: The parties should agree on the contents related to the exchanged property, including the name of the exchanged property, the original property, quantity, quality, dossiers, and accompanying documents (if any).
• Method and term of payment of the difference in value: In order to determine the value of the exchanged property, the property will be valued in cash. In case the value of the property is equivalent, the parties only need to exchange their property with each other. However, where exchanged property differs in value, the property of the party with the lowest value must pay the difference to the other party, unless otherwise agreed by the parties or provided for by law. Thus, the parties should agree on this content, including the method and term of payment if the exchanged property differs in value.
• Time, place, and method of contract performance: Accordingly, the parties agree on the time, place, and method to exchange property with each other.
• Rights and obligations of the parties: As aforementioned, the contract for the exchange of property is a bilateral contract, both parties have obligations to each other. Therefore, the parties should agree on this content in the contract.
• Term of contract and termination of contract: These contents are freely agreed upon by the parties.
• In addition to the terms aforementioned, the parties may agree with further contents as long as it is not contrary to the provisions of law and is not contrary to social ethics. In the event that the parties do not have an agreement or the agreement is unclear, these contents will be governed by the provisions of law. However, the parties should agree on all the contents of the contract so that the parties do not face difficulties in the performance of the contract and also limit possible disputes.
Above is the content of the article “Instruction for drafting an exchange of property contract”. Hope the above information is useful to readers who are interested in this issue.