BUSINESS CONTRACT

I. Validity of a contract:

1. Parties to the contract:

- Civil legal capacity: năng lực pháp luật dân sự
- Capacity for civil acts: năng lực hành vi dân sự
- Legal capacity: Individuals -> Equal except for some circumstances
 Legal capacity will terminate when you die
 When you are in jail, your legal capacity will be restricted
- Legal capacity: Legal entities – Legal person (Pháp nhân – The person creating the law) -> Refer
to organizations only. Not every organization is a legal entity -> Satisfy several conditions (Art
74):
 (1) Lawfully established (public sectors have to be established under the permission of the
Gov -> enterprise registration certificate (ERC) – giấy chứng nhận đăng kí doanh nghiệp)
 (2) Well-structured (have a management body)
 LLC – Limited liability company
o Chairman of the Members’ Council
o Director/General Director of the Members’ Council
 Management body of the LLC
 Partnership company (công ty hợp danh) -> Management body giống LLC
 Joint-stock company/Share-holding company (công ty cổ phần)
o General Meeting of Shareholders
o Board of Directors/Board of Management (hội đồng quản trị) -> Director/General
Director (CEO)
 Cannot sue the organization which isn’t a legal entity -> Can only sue the owner // Might
sign the contract with the company but cannot sue them
 (3) Property independent/separated
 (4) Legal relation independently

E.g: FTU – HCMC Campus, Ministry of Education & Training, State Bank of VN, a sole proprietorship, a
business household (hộ kinh doanh cá thể), a company’s branch, a representative office of a company, a
partnership, a LLC, a JSC

 Legal entities: Ministry of Education & Training (State agencies - Art 76.2), State Bank of VN,
a partnership, a LLC, a JSC

FTU – HCM Campus is a branch of a legal entity, not a legal entity (Art 84)

A sole proprietorship is owned by only one person -> Not a legal entity because the property of the
owner isn’t separated from the property of the company -> Same for a business household, a company’s
branch, a representative office of a company

- Civil capacity: Individuals

 The age of majority
 Minors (Art 21, Civil Code) -> Distinguish 3 groups
 Loss of capacity (Art 22, Civil Code):
  Mental heath, losing his/her control of behaviors (evidenced by the authority – doctors,
…) -> not losing civil capacity. Without any decisions made by the court, you still have
the civil capacity.
 Art 23 ≠ Art 22: Art 22 refers to serious circumstances for the whole time. In Art 23,
people just experience difficulties and have to have one person to help.

E.g (Art 23): Tourette Syndrome (cannot control their behaviors but they are still totally aware of it)

 Art 24: Civil capacity is restricted. Người có khả năng gây ảnh hưởng xấu, gây hại đến
những người xung quanh (using drugs,…) -> Have to restrict
- Competence to enter into a contract:
 Legal representative (người đại diện trên pháp luật): Every enterprise should have one.
Their function: sign the contract on behalf of the enterprise,…
 Authorized representative (người đại diện theo uỷ quyền) (Power of attorney –
authorization letter – giấy uỷ quyền):
 Scope of authorization: Nếu contract được ký có ghi amount of money trên mức được
chỉ định trong power of attorney thì sẽ invalid -> Integral part of the contract
 Duration

E.g: Mr. A (legal representative) -> Mr. B (authorized representative) -> Mr. C (sub-authorization) (Art
564.1.a): The sub-authorization is only allowed if Mr. A approves the transaction.

2. Voluntary consent: tự nguyện giao kết hợp đồng

- Absence of free will: threaten, doạ giết,… -> The contract would be invalid.

 (1) The contract is voidable. Because previously the two parties believed that she was a
barren cow and worth $80, but when they found out the pregnency, there is a mistake in
the contract. (Art 126)
(2) The contract isn’t voidable. When referring to mistakes, they are facts. Here they are just
personal predictions (VD mua nhà, khi mua thì predict về profit,… nhưng it turns out not like
that, thì cũng không thể take money back)

3. Purpose and content of the contract:

- Not contrary to the law or social morals
 E.g: woman trafficking, organ trafficking,… (contrary to the law)

Cao Toàn Mỹ & Hoa hậu Phương Nga (love contract) (not contrary to the law but to social morals)

- Content of the contract (Art 398): The terms and conditions are not necessary, just a
recommendation.
- However, the specialized law prevails. Nếu luật chuyên ngành có mention bắt buộc terms and
conditions, thì phải follow.

❓ The sale contract is declared invalid if it contains no price clause -> FALSE

❓ The franchise contract is declared invalid if it contains no price clause -> FALSE (Decree 35/2006)

E.g: Law on Residensial Housing, Law on Employment,…: You have to mention terms and conditions
made by the law -> Rent contract, investment contract,…

4. Forms of the contract: (Art 119, Civil Code; Art 24 + 74, Commercial Law)
- Verbal
- In writing
- Specific acts
- In writing + notarized/certified?
 Notarization (công chứng) ≠ Certification (chứng thực):
 Certify ở Local People’s Committee (of all levels) or the Notary Public -> 2 kinds of
certification: certify the copy (chứng thực bản sao), certify the signature (chứng thực
chữ ký)
 Notarization can only be done by the Notary Public (higher level than certification) ->
Make sure the documents are legally valid -> They have to have a law degree to do that
job

E.g: (1) The international sale of goods contract must be made in writing -> TRUE (Art 24.2, Law on
Commerce) (form equivalent to the written form: data message, fax, mail,…)

(2) The sale of apartment contract must be made in writing and notarized -> TRUE (Law on
Residensial Housing)

(3) The franchise contract needs not to be made in writing -> FALSE (Art 254, Law on Commerce)

II. Void contracts:

- Art 122:
 Party
 Free will
 Content/purpose
 Fail to meet one of those -> Invalid
 - Art 129: If it is made in writing but not notarized? Violating the form of the contract doesn’t
mean the contract is invalid immediately. It depends on how far you have performed the
contract.
 The court will decide the contract is invalid or not
- Legal consequences (Art 31): Restore everything to its original state (it’s like there is not
contract at all) -> return money or in kind (if not able to be made in kind, value them in terms of
money), make compensation if causing loss and damage.

III. Remedies for breach of the contract: các biện pháp khắc phục khi 1 bên vi phạm hợp đồng

1. Exemptions for non-performance (miễn trách nhiệm):

- Art 294 – Law on Commerce:
 A case of liability exemption agreed upon by the parties: Mention the exemption in the
contract -> 1 party isn’t responsible for not performing duties

E.g: Due to the power cut,… -> the seller isn’t responsible for the late production

 Force majeure event (sự kiện bất khả kháng): (compared to Art 79.1 CISG)

E.g: Shortage of supplies due to epidemic, disease, the act of God (natural disasters, tsunamis, tornados,
…)

 A breach by one party is entirely attributed to the other party’s fault:

E.g: The seller delivers the goods late, but it is because the buyer makes a late payment

 A breach is committed by one party as a result of the execution of a decision of a competent

state management agency which the party cannot know, at the time the contract is entered
into:

E.g: Export rice to a company in Australia. Sign the contract in March that states that the contract is
entered into in May. However, in April the Gov announces that rice mustn’t be exported because of
national security -> Not responsible because we cannot control that

- Force majeure -> has 3 conditions (Art 156.1 – Civil Code):

 Happen in an objective manner: Something that happens not depending on you/beyond
your control
 Not able to be foreseen

❓ COVID-19 có phải force majeure -> Bây giờ thì có thể predictable, nhưng back to Oct 2020 it is
unpredictable

 Not able to be remedied by all possible necessary and admissible measures being taken:
Have to take every measure, but you still cannot overcome the consequences

E.g: Sign the contract with a Ukrainian company before the war -> The war occurs, the borders are
closed -> You cannot control.
Deliver to Turkey, from Turkey deliver to Ukraine: A measure that can be taken so that you can
overcome the consequences -> Not a force majeure

 Compare to Art 79.1 – CISG: 3 conditions are the same (but it is much clearer due to the
wording)

 The applicable law is CISG (2 countries are members of this convention). The seller couldn’t
be exempted because it is predictable. The delivery time is July – December, but SARS was
not under control until by June 2003, so the seller can predict this circumstance -> not
satisfy the 3 conditions of Art 79.1 – CISG
- Remarks (Art 296 – Law on Commerce):
 Compare to CISG:
 VN Law requires writing form (email, fax, letter,…), CISG không quy định về form -> any
form
 VN Law -> promptly, CISG -> within a reasonable time (<5 or 8 months??)
 CISG is more flexible
- Effects of exemptions on the rights and duties of the parties:
 Not liable for damages resulting from non-performance (Art 294 – Law on Commerce; Art
351.2 – Civil Code)
 Same with the CISG
 We aren’t allowed to terminate the contract but give the extra time for the other party to
perform their duties -> Can be the same with the time the force majeure happened
 If we expand the time but they still cannot fulfil their obligations -> We have the right to
terminate the contract
- Drafting the FM clause:
 ICC Force Majeure clause 2020:
 Paragraph 1: The same with the CISG (3 conditions)
 Paragraph 2:
❓ If we base on paragraph 2, COVID-19 is not a force majeure event because it only needs to satisfy
condition (a) and (b) of paragraph 1, missing condition (c) -> not overcome the consequences

 Paragraph 3: Notification -> Same with the VN Law

 Case to terminate the contract: If the force majeure impedes you from getting the
benefits of the contract
- Force majeure vs. Hardship (hoàn cảnh thay đổi cơ bản):
 Different in condition (c), (d), (dd)
 In force majeure, there is nothing you can do to overcome consequences, but in hardship,
you can but with high prices/suffering great l (transportation fees, other fees,…)
- Effects of hardship:
 Have the right to re-negotiate to make sure it is equal for both parties
 If the re-negotiation is unsuccessful, request the court to terminate the contract or adapt
the contract -> Restore equilibrium

 The applicable law is the CISG

(i) isn’t a force majeure because it doesn’t satisfy the condition (b) and (c). It is just a risk in
the market, we have to predict it when doing foreign transactions
(ii) is a force majeure event. This control cannot be predicted and the manufacturer has
nothing that can be done
(iii) (cornered by a group of speculators: bị lũng đoạn bởi 1 nhóm nhà đầu tư) isn’t a force
majeure event, just a risk that has to be predicted by businessmen