- The Restatement (second) of contract defines a contract as “a promise or set of

promises for breach of which the law gives a remedy or the performance of which
the law in some way recognizes a duty”
- According to Article 385 of the 2015 Vietnam Civil Code, “A contract is an
agreement between the parties on the establishment, change or termination of civil
rights and obligations”
- There are three elements necessary for the formation of a VALID contract which
is OFFER, ACCEPTANCE, AND CONSIDERATION. If lack of one element of
the presence of a problem can make the contract INVALIDATE.
- A contract is formed when two parties with the intent to enter into a contract
agree to do certain lawful acts in a mutual exchange of detriment.
- Breach of Contracts occurs when one party to the contract does not fulfill their
obligation to the other party (when one party breaks the terms of an agreement
between the parties)
- The Elements of breach contracts claim:
(1) The existence of a contract
(2) Performance by the party seeking recovery
(3) Non-performance by the other party
(4) Damages attributable to the breach
- There are four types of contract breaches recognized by the law today:

 Minor breach: is when the non-breaching party of the contract is not entitled
to an order for the performance of its obligations but only to collect the
damages for which they are owed.
 Material breach: is when there is a failure to perform a part of a contract that
permits the other party of the contract to ask for damages because of the breach
that has occurred.
 Fundamental breach: s when the person that has had the contract breached
against can sue the breaching party for damages incurred as well as terminate
the contract if they wish to do so.
 Anticipatory breach: is when the non-breaching party realizes that the other
party of the contract will fail to perform his or her part of the contract in the
future and can terminate the contract and sue for damages before the breach
happens.

- If performance is not excused and there is a valid contract, the non-breaching

party can recover for damages from the non-performing party.

- Under U.S law, there are 4 types of contract remedies:

(1) Compensatory damages – to put the non-breaching party in the same
position he or she would have been in had no breach occurred.
(2) Incidental damages – the costs of collecting compensatory damages
(3) Liquidated damages – Damages agreed upon in advance – Are enforceable
as long as not excessive and compensatory damages have not been paid in
addition
(4) Consequential damages – Damages that result because of the breach and
generally involve loss (business, profit, or late penalties)

- Vietnam’s contract law stipulates two forms of contract remedies when

breaching a contract, which are Penalty for breach and Compensation for
damage.
- PENALTY for breach: Article 418 of the 2015 Civil Code stipulates the
agreement on fines for violations as follows:

(1) Penalty for breach is an agreement between the parties in a contract

whereby the breaching party must pay a sum of money to the aggrieved party.

(2) The level of fines for violation shall be agreed upon by the parties unless
otherwise provided for by relevant laws.

(3) The parties may agree that the breaching party only has to pay a fine for the
breach without having to pay compensation or both to pay a fine for the
violation and to pay compensation for damage.
In case the parties agree on penalties for violations but do not agree on both the
penalties for violations and compensation for damage, the breaching party will
only have to pay the fines for violations.

- COMPENSATION: In addition to the penalty for breach of contract, when

there is damage arising from the breach of contract, the aggrieved party can
also request the breaching party to compensate for the damage.

Article 419 of the 2015 Civil Code provides for compensation for damage
caused by a breach of contract as follows:

(1) Compensation for damage caused by a breach of contractual obligations

shall be determined according to the provisions of Clause 2 of this Article,
Article 13, and Article 360 of this Civil Code.

(2) The obligee may claim compensation for benefits he or she would
otherwise be entitled to under the contract. The oblige may also require the
obligor to pay expenses incurred due to the non-fulfillment of contractual
obligations that do not overlap with the level of compensation for damages for
benefits brought by the contract.

3. At the request of the oblige, the court may compel the obligor to pay
compensation for mental damage to the oblige. The level of compensation shall
be decided by the Court based on the contents of the case.

When there is a breach of contractual obligations that causes damage, the

damage-causing party must compensate for the whole, except for the following
cases: the following case:

Due to the agreement of the parties to exempt from liability for damage
compensation.
Damage caused is not the fault of the aggrieved party but the fault of the
aggrieved party.
Damage caused by force majeure events.