A contract is declared invalid when it fails to meet the conditions for validity required by contract law or in cases where the law provides otherwise. The circumstances leading to the declaration of a contract as void are diverse, specified not only in the Civil Code of 2015 but also in discrete laws. Parties should pay attention to the statute of limitations and the subjects have the right to request competent authorities to declare a contract invalid to protect their legal rights and interests.
1. The statute of limitations for requesting competent authorities to declare a contract invalid
Depending on the specific circumstances of invalid contracts, the statute of limitations for requesting the declaration of the contract invalid may vary and can be categorized into the following three groups:
Group 1: Contracts declared invalid due to violation of statutory prohibitions, against societal ethics; contracts declared invalid due to fraud; contracts declared invalid due to having an impossible subject matter.
The statute of limitations for requesting competent authorities to declare a contract invalid is not restricted. Therefore, the parties entitled to request the declaration of a contract invalid can do so at any time.
Group 2: Contracts declared invalid due to minors, persons lack of legal capacity, persons with limited cognition or behaviour control, persons with limited legal capacity act capacity to establish or execute contracts; contracts declared invalid due to mistake; contracts declared invalid due to fraud, coercion, or duress; contracts declared invalid due to the incapacitated understanding and control of their actions by the establishing party; contracts declared invalid due to non-compliance with formal requirements.
The statute of limitations for requesting competent authorities to declare a contract invalid for cases in this group is 02 years from the date:
• For the representative of minors, persons who lack legal capacity, persons with limited cognition or behaviour control, and persons with limited legal capacity who know or should know that the person being represented can establish and execute contracts themselves;
• For individuals who are mistaken or deceived know or must know that the contract was established due to a mistake or deception;
• For individuals subjected to coercion or duress, if they cease the coercion or duress;
• For individuals who do not understand and control their actions in establishing contracts;
• For contracts established in cases where the contract does not comply with formal requirements.
If the prescribed statute of limitations passes without a request to declare the contract invalid, the contract remains valid.
Group 3: Contracts declared invalid according to discrete laws
In addition to the Civil Code of 2015 regulating cases of invalid civil contracts, discrete laws also have their provisions regarding invalid contracts. The contract governed by a discrete law will apply that law to resolve the declaration of the contract invalid.
2. The subjects have the right to request and declare the contract invalid
(a) The subjects have the right to request
Fundamentally, the subjects that have the right to request the declaration of a contract invalid are the parties involved in the contract relationship, entities with rights and interests related to the contract. In the case of a contract being declared invalid due to minors, persons lacking legal capacity, persons with limited cognition or behaviour control, persons with limited legal capacity act capacity to establish or execute contracts, the person entitled to request the declaration of the contract invalid is the representative of these individuals. However, in cases where the contract is declared invalid due to violations of prohibitions, contravention of social ethics, or fictitious, anyone with the right to request the declaration of the contract invalid.
(b) The subjects have the right to declare
The entities with the authority to declare a contract invalid are Court or Arbitration. Arbitrations have jurisdiction to settle disputes arising from: Disputes between parties arising from commercial activities; disputes arising between parties, with at least one engaged in commercial activities; and other disputes between parties that the law stipulates must be settled by Arbitration.
In practice, in some legal relationships, Arbitration has no competence to declare certain contracts invalid. For example, in labour legal relationships, only the Court has the competence to declare employment contracts or collective bargaining agreements invalid.
Therefore, for a contract to be considered invalid, it requires a judgment, decision, or arbitration award declaring the contract invalid. In the absence of such, the contract shall retain its validity.
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Best regard,
