The occurrence of the Covid-19 pandemic has significantly affected the operations, as well as finances of the partners and the parties that are obliged to repay the debts to Clients. Therefore, Clients should pay attention to prevent the risk arising from debts at this time when performing the transactions under the Contract, in particular:
Before entering into a Contract
- Carefully find out, collect the information and the business situation of the partner as the basis for signing the contract and creating necessary provisions of the contract;
- Pay special attention to the partners whose businesses are directly affected by social distancing due to the pandemic under Prime Minister’s Directive. These are subjects that suffer heavy losses from the suspension of operation due to the pandemic, so the financial capacity is reduced and the ability to incur debts is visible; and
- Pay attention when signing a contract with new partners, need to find out the information and business situation in the last six (06) months of these partners. In case these new partners change the supplier because the previous suppliers no longer accept the debt, it should be carefully considered before signing contracts with these partners. Base on practical experience, we recommend that Clients do not sign a contract with partners who have been burdened with debts as well as have no commitment to pay debts to avoid the risk arising from debts in the future.
While entering into a Contract
- Pay attention to the authority to sign a contract of the partner. The competent individual who signs the contract is the legal representative. In case the legal representative authorizes another person to sign a contract, it is necessary to request the Power Of Attorney for this authorization;
- Pay attention to require partners to deposit and/or add terms of payment guarantee in the contract;
- Pay attention to the provision of suspension of goods when the partners have not completed payment of due debts; and
- Request partners to pay via bank transfer due to the advantages of management, storage of documents and Banks may support the extraction of documents as evidence in case of a dispute.
During the performance of the Contract
- Comply and supervise the Contract compliance of partners; and
- The delivery documents, debt reconciliation minutes, discussion dispatches between the parties should be signed and sealed by each Party.
After the debt arises
- In case the partner breaches the payment obligation, it is necessary to send a request for payment as soon as possible after the expiration of the payment duration under the Contract. The content of the request for payment at all times should be inscribed with a specific and reasonable payment period. The dispatches regarding the debt sent to the partner should have the advice of delivery report to facilitate tracking the receipt of the mail of the partner and as a basis for the partner to respond;
- Request the partner to respond to the debt in writing, accordingly, it must show the payment schedule and the partner’s payment commitment under the payment schedule;
- Follow and remind the partner to pay according to the committed schedule; and
- Aggregate and prepare necessary documents for the negotiation and litigation to settle disputes at the Court in the future.
Hope these legal warnings of TNTP are useful to Clients in the upcoming business activities.
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TNTP & Associates International Law Firm
Address: 4th Floor, 200 Nguyen Luong Bang Street, Quang Trung Ward, Dong Da District, Ha Noi