Cô Nguyễn Thị Quỳnh Yến: yenntq@ftu.edu.

vn
Mid-term exam + Final exam: written form
● T/F explanation
● Case study

Course Outline:
1. Introduction to law and legal systems
2. International contract of sale
3. Law on Enterprises
4. International dispute settlement

MỤC LỤC
1 INTRODUCTION TO LAW AND LEGAL SYSTEMS.................................................3

1.1 What is law?...............................................................................................................3

1.2 Classification of law...................................................................................................4

1.2.1 Public Law and Private Law (Luật công và Tư pháp)..........................................4

1.2.2 Common Law (Anglo-American) and Civil Law (Continental/Statute Law) (2

principal legal systems in the world)................................................................................5

1.2.3 Civil Law and Criminal Law (2 branches in one legal system)............................7

1.2.4 Substantive Law and Procedural Law (Luật Nội dung và Luật Hình thức)........10

2 INTERNATIONAL SALE CONTRACT......................................................................11

2.1 Sources of law governing the contract......................................................................11

2.1.1 International Convention/Treaty........................................................................13

2.1.2 National Law......................................................................................................15

2.1.3 Choice of law clause..........................................................................................15

2.1.4 Customary Law/Commercial practices (tập quán).............................................15

2.2 Formation of contract (giao kết hợp đồng)...............................................................16

2.2.1 Fundamental principles of entering into contract...............................................16

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 2.2.2 Offer (đề nghị giao kết hợp đồng/chào hàng) and acceptance (chấp nhận đề nghị
giao kết hợp đồng/chào hàng) in formation of contract..................................................17

2.2.3 Acceptance.........................................................................................................19

2.3 Essential elements of validity of contract.................................................................21

2.3.1 Capacity of the parties to contract......................................................................21

2.3.2 Contents of contract...........................................................................................22

2.3.3 Forms of contract (depends on the applicable law)............................................22

2.3.4 Principles of complete voluntariness..................................................................22

3 Performance of contracts................................................................................................24

4 Liability for breach of contract.......................................................................................24

4.1 Basis of liability (Yếu tố cấu thành trách nhiệm do vi phạm HĐ)............................24

4.1.1 Breach the contract............................................................................................24

4.1.2 Damage suffered by the non-breaching party.....................................................24

4.1.3 Proximate casue between breach and damage....................................................25

5 Remedies for breach of contract (Chế tài do vi phạm HĐ)............................................29

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 1 INTRODUCTION TO LAW AND LEGAL SYSTEMS

1.1 What is law?

General terminologies:
● Rules
● Law

Rules Law

Amendment flexible and quick take time and consideration

Consequence of serious: fine, penalty, sentences

not serious
breaking them imprisonment, etc.

universal among:
Establishment situational
nations/continents/unions/globe

enforceable in a specific
enforceable everywhere
place

by leader/head of
by government/international
organization

● Custom:
○ based on a common consensus how things should be done properly
○ People not complying with not be regarded as bad people but they will be perceived as
odd, uneducated and awkward
○ Law >< Custom: It's not enforceable
● Morality:
○ good vs evil, right and wrong, justice, virtue, etc. Besides the visual behavior it also
address intention and stance/attitude
○ People complying with moral rules are regarded as good, just, people of virtue

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Differentiation exercise:
a. Santa Clause is visiting the children every year on Dec 24th ⇒ Custom
b. In Germany, when pedestrians wait in front of a crosswalk, car drivers have to stop ⇒
Law/Morality
c. During Mid Autumn Fest, people eat moon cake ⇒ Custom
d. If you build a house in Canada, you have to be compliant with certain energy
efficiency requirements ⇒ Law (of Construction)
e. When a person is dying, he will be accompanied by his family members ⇒ Custom
f. On urban streets in Vietnam, there’s speed limit of 40km/h ⇒ Law
g. In VN, old people are taken care by their children ⇒ Morality
1.2 Classification of law
There are many ways to classify law:
1.2.1 Public Law and Private Law (Luật công và Tư pháp)
 Public law concerns the relationships within governments and those between
governments and individuals
o Example:
 Administrative Law (Luật Hành chính)
 Managerial relationship???
 Constitutional Law (Hiến pháp)
 Criminal Law
 State imposement
 Private law concerns relationships that people have with one another and the rules that
determine their legal rights and duties among themselves
o Example:
 Contract law
 state the rights and duties of both parties when entering the contract
 Tort law (luật bồi thường thiệt hại ngoài HĐ)
 Property law
 Succession law (Luật thừa kế)
 etc.

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1.2.2 Common Law (Anglo-American) and Civil Law (Continental/Statute Law) (2
principal legal systems in the world)

Civil Law (hệ thống dân luật/hệ thống

Common Law
pl châu Âu lục địa)

Derived from the English common law and Derived from Roman law and is found in
found in many parts of English speaking much of continental Europe and parts of
world: Australia, USA, Canada, Wales, Asia
British colonies

A collection of principles and rules based The law system is “code based” or
on the decisions of the judges, referred to as “statute-based” - written law
case law or precedent (án lệ)
(courts and judges created case law)

Doctrine of precedent: the court must ● The law-making body seeks to

follow the principles laid down in previous address specific areas of law
cases through statute or codified rules
⇒ 2 requirements when applying (example: Civil Code, Criminal
precedents Code, Administrative Law, Law on
● similar facts Enterprises,etc.)
● decisions of upper courts: court of ● When a case comes before a court,
appeal (party disagrees with the the judiciary is charged with
judgements ⇒ appeal in the court of interpreting statute law when
appeal) and supreme court applying those law to the facts of the
(Court Hierarchy: supreme court ⇒ court of case.
appeal ⇒ trial court)
● Precedent = ratio decidendi + obiter
dicta
○ Ratio decidendi is the essential part
of the judgment as it lays out the

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 reasoning behind a judge’s ruling
○ Obiter dicta is an opinion or
examples made by a judge which
does not form a necessary part of the
court’s decision
● When courts follow a precedent, they
only apply its key reasons for decision-
ratio decidendi
● Example: Donoghue v Stevenson
(1932): The ratio decidendi is the
neighbor principle.

Statutory Law: prevail over case law

How to apply case law:

Principle of Stare Decisis: Similar cases
should be treated alike
● R v E. Manley
● R v Jones
Principle of Distinction: to find out
differences between the current case with
previous precedents
● Donoghue v Stevenson
● Grant v Australian Knitting Mills

Equity Law (Lệ công bằng/công bình)

● Equity is all about the idea of fairness,
flexibility and natural justice
● Sometimes, common law is very rigid
● Equity is developed to fill the loopholes
in the common law as it provides a
more appropriate and effective remedy

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 where common law could not
● Where common law and equity conflict
equity should prevail.

Adversarial procedure (tố tụng tranh Inquisitorial Procedure (tố tụng thẩm
tụng) vấn)
● This procedure is used in common law ● This procedure is adopted primarily
countries where two advocates in civil law countries where the
represent their parties’ case before the Court is actively involved in
Court investigating the facts of the case by
● Judges play the role of impartial questioning defense lawyers,
referees who do not take an active role prosecutors, and witnesses.
in discovering the truth ● Advocates or parties play passive
● The court decides only on the basis of roles since they are required merely
the evidence and argument presented to respond to directions and inquiries of
the court by the parties the Court

1.2.3 Civil Law and Criminal Law (2 branches in one legal system)
 Civil law deals with duties between private parties; and any violation of it is a wrong
between the parties, not a wrong against the whole community
 Criminal law is concerned with forbidding and punishing certains forms of wrongful
conducts wrongs committed against the whole community
 Questions:
o What does it concern?
 Criminal law:
 deals with behavior that is or can be construed as an offense against the public,
society, or the state—even if the immediate victim is an individual.
 relates to the offenses that negatively affect society as a whole, rather than just one
person.
 is put in place by Parliament to prevent breaches of conduct which they deem as
harmful towards the whole of society
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  Civil law:
 deals with behavior that constitutes an injury to an individual or other private party,
such as a corporation.
 more concerned with cases between individual people where one person commits an
offense which is harmful towards another person, their rights or their property.
 settles disputes between individuals and organizations.
o What are the parties in criminal and civil cases?
 In criminal cases, for example, only the federal or a state government (the
prosecution) may initiate a case; cases are almost always decided by a jury.
Prosecutor prosecutes the defendant.
 In civil cases, by contrast, cases are initiated (suits are filed) by a private party (the
plaintiff); cases are usually decided by a judge (though significant cases may
involve juries). Plaintiff/claimant sues defendant.
o Where is the action heard?
 A trial is where two or more parties present evidence and information to a court of
law. Trials are held in courtrooms for both civil and criminal cases.
 A criminal case occurs when charges are brought against a person by the government.
Heard in criminal court
 A civil case takes place to settle claims or lawsuits as a person or multiple people. In a
civil case, there is a plaintiff and a defendant. Heard in civil court
 During a courtroom trial, there are several people present including the judge,
lawyers, defendant, court reporter, and others.
o What are the sanctions/remedies?
 In criminal law, a sanction is the punishment for a criminal offense. The criminal
sanction for a criminal defendant varies according to the crime and includes such
measures as death, incarceration, probation, community service, and monetary
fines.
 In civil law, a sanction is that part of a law that assigns a penalty for violation of
the law's provisions. The most common civil sanction is monetary damages (bồi
thường thiệt hại), but other types of sanctions exist. Depending on the case, a
sanction may be specific performance, contract cancellation, suspension or
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 revocation of a business, professional, or hobby license, or a court order
commanding a person to do or refrain from doing something.
o Example
 Criminal: murder, assault, theft, and drunken driving.
 Civil: defamation (including libel and slander), breach of contract, negligence
resulting in injury or death, and property damage
o Exercise: Differentiation
 Armed team broke into the bank ⇒ CRIMINAL
 A works for a confectionery company and the company failed to pay him for 2
months ⇒ CIVIL (Labor law)
 A killed B for money ⇒ CRIMINAL LAW
 While driving the car beyond speed limits. A crashed into B and made him injured
⇒ CIVIL or CRIMINAL (based on the consequence)
 (Driving beyond speed limit ⇒ administrative violation/vi phạm hành chính)
 Seller fails to deliver goods on time to buyer ⇒ CIVIL (CONTRACT LAW)
 A customer got poisoned after lunch in a restaurant ⇒ Depend on the consequence
 Disagreeing with each other on how to share property by the father, two sons
fought each other till death ⇒ CIVIL (disagree with each other) and CRIMINAL
(fought till death)
 Being much impressed by huge profit, A involved in trafficking heroine ⇒
CRIMINAL
 A involved in trafficking newly born babies abroad ⇒ CRIMINAL
 A company makes his beverages labeled that are easily confused with Pepsi. ⇒
Civil (Intellectual Property Law)

1.2.4 Substantive Law and Procedural Law (Luật Nội dung và Luật Hình thức)
 A substantive law is a law that creates and controls the rights and duties of parties
o Example: law of contract, company law, labor law, etc.
 Procedure law is a law that creates and controls the process by which a case might be
brought before a court and how the case is tried/heard, the process of setting disputes

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 o Example: Civil procedure code (rule on how to plead in court, how to provide
evidence, etc.)
 Example: Vietnam Criminal Law or Criminal Procedure Law?
o How can I know the punishment of a crime?: Vietnamese Criminal Law
o How can I know which court will hear the case and which evidence do I need?
Procedure Law

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 2 INTERNATIONAL SALE CONTRACT
References
UN Convention on Contracts for International Sale of Goods 1980
Vietnam Commercial Law 2005
Vietnam Civil Code 2015

2.1 Sources of law governing the contract

International sales Domestic sales

Parties to the contract Between parties with Between parties with the
different nationalities same nationalities

Language in the sale Using foreign language Using the local language
contract (except countries using
the same language)

Movement of goods Goods will move outside Goods will move in the
the country border same territory

Currency Foreign currency (except Domestic currency

countries using the same
currency)

Governing laws of the Law can be, depending National Law:

sale contract on the agreement ● Vietnam Commercial
between the parties: Law
● National law of the ● Vietnam Civil Code
seller/buyer/3rd
country
● Treaties or
Conventions: CISG.
EFTA

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 ● Customary law

Dispute settlement Based on Agreement

between two parties
example: Court of
arbitration from the
foreign country

Rules Law

Amendment flexible and quick take time and consideration

Consequence of not serious serious: fine, penalty,

breaking them sentences imprisonment,
etc.

Establishment situational universal among:

nations/continents/unions/
globe

enforceable in a specific place enforceable everywhere

by leader/head of organization by
government/international
org

● Custom:
○ based on a common consensus how things should be done properly
○ People not complying with not be regarded as bad people but they will be perceived as
odd, uneducated and awkward
○ Law >< Custom: It's not enforceable
● Morality:

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○ good vs evil, right and wrong, justice, virtue, etc. Besides the visual behavior it also
address intention and stance/attitude
○ People complying with moral rules are regarded as good, just, people of virtue

2.1.1 International Convention/Treaty

○ Definition: An agreement between countries governing a particular matter
○ Bilateral Treaty/ Multilateral Treaty

Bilateral Multilateral

signed between 2 countries signed among more than 2

Binding to the parties to the contract:

● Contracting members of a treaty
● Not Contracting members of a treaty

○ United Nation Convention on Contracts for the International Sale of Goods 1980
■ CISG 1980 (Vienna Convention) - 101 Articles in 4 Parts:
● only deal with
➢ The formation of the contract
➢ The remedies available to the buyer and seller
● exclude questions about
➢ the validity of the contract
➢ the capacity of the contract

➢ the rights of 3rd parties

➢ liability for death and personal injury
● application:
➢ Article 1: applies to contracts between parties whose places of business are in
different States
■ when the States are Contracting States

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  A State which has consented to be bound by a Convention, whether or not that
Convention has entered into force for that State
■ when the rules of private international law (the choice of law) lead to the application
of the law of a Contracting State
● UNCITRAL (United Nation Commission on International Trade Law)
● More than 90 contracting members
● More than 2500 cases
● QUESTION:
A contract is signed between Seller (A) and Buyer (B)
Will the CISG apply to the contract if?
➢ Both country A & B are member states of the CISG - CISG applied
➢ Neither countries is member state of the CISG - CISG applied when chosen by both
parties
➢ Country A is a member state whereas B is not - The choice of law - quy tắc chọn lọc
của tòa án (nếu tòa chọn giải quyết xung đột bằng luật áp dụng nước A ⇒ CISG applied)

○ When a treaty will apply

● when both parties come from contracting states of the treaty
● chosen by both parties
● when parties agree to choose the law of a contracting state of the treaty to be
the applicable law
● chosen by court/arbitration
○ How to apply treaty?
● for treaties that a State has signed or ratified but has not reserved, it is obliged
to abide by all provisions of the treaty
● for treaties that a State has not signed, only chapters or articles which are not
contrary to State’s law will be applied (chapters or articles which are contrary to law
of the State, the State can reserve the right not to apply)

2.1.2 National Law

○ When will national law apply?
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■ Chosen by the parties
● By the terms of the contract
● By an appendix attached to the contract
■ A treaty or convention leads to the application of local law
■ Chosen by courts or arbitration panels
● Laws of the most related or closely connected country
○ How to apply national law?
■ Rules on application of national law
● Specific law (Luật Chuyên ngành) >< General law (Luật Chung): ưu tiên
specific law - specific law shall be prevailed if conflict arises between specific law and
general law
● Example: An international contract of sale stipulated that “This contract and
any other matters arising out of this contract shall be governed by Vietnamese law”
2.1.3 Choice of law clause
○ This contract, and all questions relating to its formation, validity, interpretation of
performance shall be governed by the law of
2.1.4 Customary Law/Commercial practices (tập quán)
○ Requirements of a commercial practice
■ An established and repeated practice
■ Widely recognised in a region or worldwide
■ Identifying the rights or obligations of the parties
○ When will the customs apply
■ Chosen by the parties
■ Governing convention leads to the application of customs
■ Where the matters in questions are not
○ How to choose applicable law
■ Law that is closely related to the contract
■ Choose the law that protects your rights
■ Choose the law that you know better
■ Choose the law usually applied in business lines

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Example: If a Singaporean company and a Vietnamese company sign a contract, the
governing law to be chosen must be agreed between both parties. If they don't mention the
governing law in the contract, the law will be chosen by the court/arbitration.
They are members of international treaty ⇒ CISG should be applied

2.2 Formation of contract (giao kết hợp đồng)

2.2.1 Fundamental principles of entering into contract
● Freedom of contract:
○ parties are free
■ to choose the partner,
■ to negotiate the terms and conditions,
■ to choose the product for trade if they are legal
● Voluntary agreement:
○ willing to enter the contract without any force
● Equality:
○ have equal rights and power
● Honesty and good-faith:
○ honesty: contract must display true information related to the affair, if not ⇒ invalid
contract
○ good-faith: two parties must support each other and not cause any difficulties when
negotiating the contract
2.2.2 Offer (đề nghị giao kết hợp đồng/chào hàng) and acceptance (chấp nhận đề nghị
giao kết hợp đồng/chào hàng) in formation of contract
● Definition - Art 386 CC 2015: Offer to enter into a contract means a clear expression
by the offeror of its intention to enter into a contract and to be bound by such offer made to
another specific party or the public
● An offer must be clear
○ Example: A-state agency announces a tender for the installation of a new telephone
network
■ Case 1: A requires contractors to develop a technical and financial proposal for
the project

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⇒ A’s intention is not clear. It doesn't mention any requirements
■ Case 2: A specifies the technical proposal and states that it will accept a tender
that meet the technical requirements at the lowest price
⇒ Choose case 2
● Invitation to treat (lời mời chào hàng)
○ The display of goods with a price tag attached in a shop window or on a
supermarket shelf ⇒ if we customer decide to purchase a product, we make an offer
⇒ the shop will not be bound by any offer
○ Advertisements, catalogs and brochures
○ Company prospectuses (bản mời chào bán chứng khoán - Bản cáo bạch chính)
○ Auctions
■ Acceptance occurs when the offer with highest price is made
○ Tenders
● Time-limit for effectiveness of offers (thời hạn hiệu lực của chào hàng)
○ The period of time within which the offeror is bound by his offer
○ The time-limit specified in the offer:
■ This offer is valid till xx and binding till xx
■ This offer is valid in 30 days ince the date of signature
■ This offer is binding within 30 days
○ No specified time-limit: should be bound within a reasonable time
○ If the last day of the period falls on an officials holiday ⇒ the time-limit period
should be extended till the next working day (article 20 CISG)
○ Case: A sent an offer to sell 1000 MT steel to B, C, D. The offer is opened for
7 days
■ After 9 days, B accepted the offer
■ After 5 days, C accepted the offer
■ After 3 days, D accepted the offer
Which contract has been established?
⇒ Acceptance sent within the time-limit period will lead to a contract
⇒ The contract between A&C and A&D are valid:

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 ■ If A signs the contract with D ⇒ C can sue A to have compensation for the lack
of goods for its partner (if C sells steel to partner E)
■ Withdraw the offers with B and C
Withdraw/revoke an offer
 An Offer can be withdrawn prior to its reaching the offeree (Art 15 CISG, Art 389 CC
2015)
 An Offer can be revoked anytime before acceptance (Art 16 CISG, Art 390 CC)
1st March 2018: A sent B an offer
7th March: B received the offer ⇒ withdraw before this date
14th March: B wrote and sent the letter of acceptance to A ⇒ revoke before this date
Irevocable offers (Art 16 CISG)
Termination of offers (Art 391 CC 2015, Art 17 CISG):
 By acceptance
 By rejection
 By modification, withdrawal/revocation
 If the time limit of the offer has expired
Eg: On May 1 seller delivered to buyer an offer that stated: “I will hold this offer open till
June 1”. On May 7, buyer delivered to seller the following: “I cannot accept your offer since
the price is too high”,ut on May 10 he delivered to seller the following: “I hereby accept your
offer of May 1”. Is there a contract between them?
=> No contract, because the buyer has terminated the offer at first.
2.2.3 Acceptance
 Definition: Art 393, CC 2015 and Art 18, CISG
 A contract comes into existence at the time the offer is accepted
 Form of acceptance:
o Vietnamese Commercial law 2005: In writing (Art 27)
o CISG: Any form (Art 18)
o Does silence amount to acceptance? – No, silence or inactivity does not in itself
amount to acceptance. (Art 18 CISG, Art 393 CC 2015)
 Silence?

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 o The notification of receiveing the offer is not sufficient to constitute an acceptance.
o Silence or inaction is not acceptance.
o Never state in the offer that if the offeree does not reply, it shall be considered as
acceptance.
 Acceptance must be unconditional.
o Mirror approach (CC 2015): Accept the entire/the whole content of the offer
without any modification.
o Non-material modification approach (Art 19 – sub-art 3, CISG): Allow
modifications if they are non-material modifications.
 Acceptance must be received within the time period specified in the offer (within the
time limit for acceptance).
Eg:

1. Acceptance is valid, because the modifications are non-material.

2. Not valid, the modifications are material - the settlement of dispute.
3. Acceptance with this condition is not valid, because the Board of Directors are the people,
who make decision to accept or not.
Eg2:

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Question: Can Co. A refuse to sell the cargo for $11000?
o June 6 to Jnue 7: B decline the offer of $12000 -> no acceptance or contract.
o June 8: A release new offer of $11000. June 9: B request a new price -> a material
modification.
o June 27: A decline -> No contract.
o June 28: B make new offer of $11000
=> A can refuse
Question: Petrolex and PMI case
 If the parties did not choose the governing the law for the contract, which law
would be applicable law?
o CISG can be applied, because according to Art 1 (Sub-art 1) CISG, both Vietnam
and Singapore are member of CISG.
 ii. Under the above law, did the contract come into existence?
o Offer from Petrolex is valid because it’s clear…
o Revocation from Petrolex is not valid (Art 16, CISG) => The offer is still valid.
o Acceptance from PMI sent on May 16, which is within the time-limit. However,
the content of the acceptance is not unconditional. According to Art 19 (sub-art 3),
it affects the place and time of delivery, and the other party’s liability => this
acceptance from PMI is invalid.

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=> There is no contract between PMI and Petrolex.
2.3 Essential elements of validity of contract
2.3.1 Capacity of the parties to contract
i. If parties are individuals/natural persons (Art 16 – 23 Civil Code 2015)
 Legal capacity: a person’s capacity to have civil rights and civil obligations.
o All individuals shall have the same legal capacity.
o The legal capacity of a person commences ar birth and terminates at death.
 Capacity for civil conducts: a person’s capability to establish and exercise civil rights
and perform civil obligations through his/her acts.
o Depends on age/mental status.
o Adults (over 18 years old) shall have full capacity for civil conducts.
ii. If parties are legal entities
 Legal entities must register their businesses and be granted business registration
certificates.
 The person who sign the contract must have the authority to do so.
o Legal representative: Art 137 CC 2015: The person appointed by the judicial
person according to its charter.
o Authorized representative: Art 138, 139 CC 2015: The principal may authorized
another person to sign and perform contracts.
2.3.2 Contents of contract
 The goods are not banned from importing and exporting in both the export and import
countries.
 Contract must be included fundamental terms.
Eg:
o US, UK: object of the contract
o France, Germany: object and price
o CISG: object, quantity and price
o Vietnam: no requirement on fundamental terms of the contract
2.3.3 Forms of contract (depends on the applicable law)
 In writing

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  Verbally
 By conducts
o CISG (Art 18): any forms
o Vietnam Commercial Law 2005 (Art 27): In writing
2.3.4 Principles of complete voluntariness
 Fraud: Art 127 CC 2015:

 Threat: Art 127 CC 2015:

 Mistake: Art 126 CC 2015:

Legal concequences of invalid contract:

 The parties are released from the rights and obligations of the contract from the time
the contract is entered into
 The parties shall return to each other what they have received under the contract
 The party at fault must pay the compensation for any loss

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 3 Performance of contracts

4 Liability for breach of contract

4.1 Basis of liability (Yếu tố cấu thành trách nhiệm do vi phạm HĐ)
4.1.1 Breach the contract
 Non-performance
 Improper performance
o Who shall prove? – The damage (non-breaching)
o How to prove? – Use contract, Bill of Lading OR Contract, Quality certificate.
4.1.2 Damage suffered by the non-breaching party
 Physical damage >< spiritual damage
 Direct damage >< indirect damage
o Direct damage: direct consequence of the breach of the contract suffered by
non breaching party.

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 o Only physical and direct damage are recoverable and compensable.
 Which loss can be recoverable? Art 302 Commercial Law 2005 and Art 74 CISG

4.1.3 Proximate casue between breach and damage

Loss must be proximately caused by the wrongful conduct of the defendant.

1. Direct cost, because it’s the direct damage caused by the late receipt of the buyer. The
buyer has to pay this amount. Therefore, this cost is recoverable.

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2. Indirect cost: It’s the seller’s responsibility to keep the goods in safe condition, the buyer
just pays the cost of warehouse. But the rain damages the goods due to the carelessness of the
seller.
3. Indirect cost: It’s also the seller’s responsibility to protect the goods. However, this is an
unexpected event, so the seller has to bear the cost.
Basis of liability
Fault: “the rule on presumption of fault” (Suy đoán lỗi)
Where one party breached any of its obligations under the contract, he shall be presumed
guilty, and the breaching party shall bear the liability for breach of contract.
If the breaching party does not want to bear the liability, he must prove that he is innocent or
he isn’t at fault.
Excuses for breach the contract (Trường hợp miễn trách)
 Force majeure (Art 156 CC 2105, Art 79 CISG)
Force majeure: An event of force majeure is an event which occurs in an objective manner
which cannot be foreseen and which cannot be remedied by all possible necessary and
admissible measures being taken.
o Occurring in an objective manner (khách quan)
o Can’t be foreseen
o The consequences of the event must have been unpreventable
=> Obligations of the breaching party in the event of force majeure:
o Giving notice to the other party
o Providing the certification of the force majeure event and proving the causation
 Dirty hand (entire fault of the non-breaching party)
Fault of the non breaching party
The non-breaching party commited a fault before the breaching party breaches the contract.
Eg: The seller sells the product to the buyer. The seller is not allowed to sell his packaging
but has to use those of the buyer. If the buyer was late in providing the packages to the seller,
leading to the seller’s late delivery of the goods, the seller’s breach of contract is entirely the
fault of the buyer.
 A third party at fault

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3rd party: shipper, carrier, forwarder, insurance company, bank, manufacturer…
Art 79, sub-art 2 CISG

Non-delievery of the supplier is a force majeure to the seller and he does not have any other
way to perform the delivery.
The manufacturer is also exempted from liability to the seller because he involves in the
force majeure event. (Nếu supplier phải chịu trách nhiệm với người bán thì chứng tỏ người
bán đã lường trước được sự kiện này và nó không còn là bất khả kháng nữa. Khi đó người
bán lại phải chịu trách nhiệm với người mua)

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Eg:

Can the seller be exempt from liability to the buyer?

- Seller could not obtain another supplier and by the time sign the contract with buyer, seller
did not know the supplier breach the contract -> can be exempt from the liability.
- 3rd party: The supplier mismanaged the production - electron is at fault - 3rd party not
encounter in force majeure in event - seller can not be exempt from liability to buyer.
-> not satisfy 2 conditions according to the Art 79, sub-art 2 CISG.
-> seller cannot be exempt from liability from buyer
 If factory got fire - force majeure -> electron encounter force majeure -> can be
exempt

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 5 Remedies for breach of contract (Chế tài do vi phạm HĐ)
 Specific performance of contracts
 Penalty
 Damages
 Suspension of performance of contracts
 Stoppage of performance of contracts
 Cancellation of contracts
(Art 292 – Commercial Law 2015)
List 5 remedies in CISG and compare with CL 2015

No. CISG 1980 Vietnam Commercial Law 2005

1 Specific performance of contract: Specific performance of contract:

Article 46. (3) If the goods do not Art 297: 
conform with the contract, the buyer 1. Specific performance of a contract means
may require the seller to remedy the a remedy whereby the aggrieved party
lack of conformity by repair, unless requests the breaching party to properly
this is unreasonable having regard to perform the contract or apply other measures
all the circumstances. A request for to cause the contract to be performed and the
repair must be made either in breaching party shall have to bear any costs
conjunction with notice given under incurred.
article 39 or within a reasonable time
thereafter. 2. Where the breaching party fails to deliver
  goods in full or provide services in
=> Only allow the buyer to apply accordance with the contract, it shall have to
remedies of specific performance, in deliver goods in full or provide services in
case they deliver non conforming accordance with the contract. Where the
goods. breaching party delivers goods or provides
=> CISG requires fundamental breach services of inferior quality, it shall have to
while VN Commercial Law doesn’t. rectify defects of the goods or shortcomings
of the services or to deliver other goods as

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substitutes or provide services in accordance
with the contract. The breaching party must
not use money or goods or services of other
types as substitutes unless so consented by
the aggrieved party.

3. Where the breaching party fails to comply

with Clause 2 of this Article, the aggrieved
party may purchase goods or receive
services of correct type as stated in the
contract from another seller or provider for
substitution and the breaching party must
bear the price difference and relevant
expenses, if any; or may rectify defects of
the goods or shortcomings of the services by
itself, and the breaching party must pay
actual and reasonable expenses for the
rectification.

4. The aggrieved party shall have to receive

goods or services and make payments
therefore if the breaching party has fulfilled
all obligations according to Clause 2 of this
Article.

5. Where the breaching party is the

purchaser, the seller may request the
purchaser to pay for and receive goods or
fulfill other obligations stipulated in the
contract and provided for in this Law.

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2 Fines for breaches
CISG doesn’t have fines for breaches.
Fines for breaches
Art 300. Fine for breach means a remedy
whereby the aggrieved party requests the
breaching party to pay an amount of fine for
its breach of a contract, if so agreed in the
contract, except for cases of liability
exemption specified in Article 294 of this
Law.
Art 301. Fine level
The fine level for a breach of a contractual
obligation or the aggregate fine level for
more than one breach shall be agreed upon
in the contract by the parties but must not
exceed 8% of the value of the breached
contractual obligation portion, except for
cases specified in Article 266 of this Law.
=> Where applicable: when the contract or
the law stipulates.
Applies only to a specific violation.
The aggrieved party does not have to prove
damages, even if there is no damage.
The aggrieved party only needs to prove the
other party's breach of contract.
This sanction is often applied to violations
that are difficult to calculate and prove
damages.
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(slow performance, failure to fulfill
obligations)
To apply this sanction, the parties must
agree on a penalty clause in the contract.
Note: the maximum penalty is 8% of the
value of the breached obligation (Art 301.
Vietnam CL 2005)

=> Function of penalty clause:

Prevention of violations
Predetermining compensation for a specific
breach.

=> Types of penalties:

Penalty for breach of contract: “If the seller
fails to deliver the goods within 2 months
from the expiration of the delivery period,
the buyer has the right to cancel the contract
and demand a fine of 7% of the contract
value from the seller.”
Applicable when the contract is not
performed
High level of punishment, meaning
punishment
The penalty is usually a contract cancellation

Penalty: “If the seller delivers the goods late,

a fine of 0.5% of the value of the goods is
delayed for the first 10 days, an additional
0.5% for each of the next 10 days, but the
total fine does not exceed 5 % of contract

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 value.”
Applied when the contract performance is
late
Penalty rate depends on the delay time
The penalty is usually light, with maximum
rate control
Purpose: speed up the contract execution
process

Actual fines and damages: According to

Vietnamese law: Art 307 Vietnam CL 2005
Do not consider punishment as
“punishment”: the maximum is 8%
If the fine is low: both fines and damages
can be applied at the same time.

3 Forcible payment of damages Forcible payment of damages

Art 74 - 77. Art 302. Damages
=> CISG relies on the foresee while 1. Damages means a remedy whereby the
Vietnam Commercial Law relies on breaching party pays compensation for the
direct loss. loss caused by a contract-breaching act to
the aggrieved party.
2. The value of damages covers the value of
the material and direct loss suffered by the
aggrieved party due to the breach of the
breaching party and the direct profit which
the aggrieved party would have earned if
such breach had not been committed.

=> Applicable in all cases where one party's

violation causes damage to the other party.

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 Compensatory damages: direct, actual
damages.

=> Compensation principles:

In order to claim compensation, the
aggrieved party must prove the damage with
reasonable documents and evidence. How
much can you prove, you will be
compensated.
The claimant has an obligation to limit the
loss (a requirement of good faith).
No compensation for damages that could
have been limited. Expenses to limit losses
are compensated.

4 Suspension of performance of Suspension of performance of contract

contract  Applicable cases:
When the parties have an agreement on the
case to cancel the contract.
According to regulations of the Law
Art 312 (VN Commercial Law 2005): one
party has the right to cancel the contract
when the other party fundamentally violates
the contractual obligations.

 Basic violation
Article 25 of the CISG
Article 3, clause 13 of VN CL 2015
Substantial breach means a contractual
breach by a party, which causes damage to

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the other party to an extent that the other
party cannot achieve the purpose of the entry
into the contract.

 The practice of adjudication

recognizes cases of contract
cancellation.
Buyer has the right to cancel the contract
when:
- The seller fails to deliver the goods within
the extended time limit.
- The seller delivered the wrong type of
goods, delivered the wrong model.
- The seller delivers goods of such poor
quality that they do not meet the buyer's
purpose.

 The seller has the right to cancel the

contract when:
- Buyer does not pay within the extended
period.
- Buyer does not receive the goods within
the extended time limit.

Legal consequences:
- The contract has no effect from the time of
signing.
- Return of goods.
- The party that violates the contract is at
fault leading to the cancellation of the
contract and must compensate for the

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 damage.

5 Cancellation Cancellation of contract

CISG prescribes 2 cases of contract Art 312.
cancellation (Art 64.1 & Art 49.1): Fundamental breach: Article 3 Clause 13
- When one party has a fundamental Vietnam CL 2005
breach of the contract. Substantial breach means a contractual
- When one party fails to perform the breach by a party, which causes damage to
contract within the extended time the other party to an extent that the other
limit. party cannot achieve the purpose of the entry
into the contract.

Stoppage of performance of contracts

Art 310 & Art 311.1

Other remedies agreed upon by involved

parties which are not contrary to the
fundamental principles of Vietnamese law,
treaties to which the Socialist Republic of
Vietnam is a contracting party and
international commercial practices.

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