Business Law

LL.M. Nguyễn Chí Thắng

 Content of Course
• Overview of Law and State
• Contract law
• Laws on Enterprises
• Labor Law
• Dispute Resolution
 Definition of law

– A set of rules that are created and enforced by a

government authority
ORIGIN OF STATES
 Types of State

• State of Slavery
• Feudal State
• Capitalism State
• Socialism State
• Islamic State
 Function of State
• Domestic Affair
• Foreign Affair
 Characteristics of State
1. Divide population into provinces
2. Setting up the public power
3. Having its national sovereignty
4. Having rights to enact laws
5. Having right to issue tax and collect tax
 Separation of powers

 the state power is divided into three branches

 each branch has separate and independent powers and
areas of responsibility

STATE POWER

JUDICIAL
LEGISLATIVE EXECUTIVE

COURTS
PARLIAMENT GOVERNMENT
(interprets
(enacts laws) (implements laws)
applies laws)
 Objectives of Law
• Establish rules of conduct, so that:
– Society can resolve disputes;
– Individuals and businesses can know the
standards to which they must conform their
conduct.
• Protects relations in the society.
• Education: the law influences people’s mind,
thus educating people’s behavior
 Civil and Criminal Law
 Civillaw:
 Regulate disputes over the rights and
obligations of persons dealing with each
other
 Normally, Civil law is to impose settlement,
compensation
 No concept of punishment  civil liability
 Civil and Criminal Law (cont.)
Criminal law:
A crime is conduct prohibited by the
law
Usually, crime leads to punishments
The act infringes the community as a
whole as the law is broken
 Types of State

• State of Slavery
• Feudal State
• Capitalism State
• Socialism State
• Islamic State
 CATEGORIES OF LAW

Legal systems in countries around the world

generally fall into one of two main categories:
common law systems and Statutory law systems.

There are roughly 150 countries that have what can

be described as primarily civil law systems, whereas
there are about 80 common law countries.
 STATUTORY LAW COMMON LAW
(CASE LAW)
Its core principles are Legal system characterized
codified into a referable by case law, which is law
system which serves as the developed by judges
primary source of law. through decisions of courts
Statutory Law Case Law
Countries Countries:

- China - The United States

- Japan - England
- Germany - India
- France - Canada
- Spain
 What is a Contract
• An agreement which legally binds the
parties
• Such an agreement creates rights and
obligations to the parties.
Principle of “Freedom of Contract”
• Parties are completely unrestricted in deciding
whether or not to enter into an agreement, if
they do so, upon the terms governing that
relationship.
• A contract, once concluded, becomes the law
btw the parties.
 Types of contract
• Face to face;
• Written;
• Distance selling (electronic contract)
 Invalid contracts
• Void contract:
– Illegal, immoral
– Incapacity: mất năng lực hành vi
– Inconsistent forms
• Voidable contract:
– Coercive, fraud, mistake
– Limited capacity
 Invalid contracts
• Unenforceable contract
– Contractual obligations are unable to be performed
 Capactity for Contract Conclusion
• FULL CAPACITY for Individual
– Over 18
– No mental illness

• Organization: The legal Representative

 Age for contractual conclusion
• According to Civil Code (Art.21)
– Transactions of those who are under 6 shall be
made by their legal representative
– Those who are from 6-15 are allowed to conclude
contracts for goals of daily life
– Those who are from 15-18 are allowed to
conclude all contracts except real estate
transactions
 Language of contract
• Must be detailed
• The language is simple, unambiguous
• The more details the parties agree, the less
disputes the parties have
 Formation of contract
• There are 3 basic essentials to the creation of
a contract: (i) agreement; (ii) contractual
intention; and (iii) consideration

• Agreement = offer + acceptance

 Content of a contract
• Contracting Parties
– Name, address, the representative
• Goods, services (should be in detail)
• Rights and obligations of the parties
• Delivery (place and method)
• Payment (time and method)
• Dispute resolution
 Clauses in contract
• Condition (cơ bản, chủ yếu)
• Warranty (thứ yếu, phụ)
• Exclusion clause (miễn trừ)
• Penalty clause (phạt vi phạm)
• Force Majeure Clause (bất khả kháng)
 Condition
• A condition is a stipulation essential to the
main purpose of the contract, the breach of
which gives the other party the right to treat
the contract as repudiated.
 Warranty
A warranty is a stipulation collateral to the
main purpose of the contract, the breach of
which gives rise to a claim for damages but
not to a right to treat the contract as
repudiated.
 Exclusion clause
• Definition:
a clause in a contract which purports
to exclude liability altogether when
agreed events happened
 Penalty clause
• The breaching party pays a sum of money for
the other party as agreed in the contract.
 4.1 Force majeure
• Force majeure clause is inserted into
contracts where parties can foresee that
difficulties are likely to arise as a reason
for one party to breach the contract.

• Force majeure events usually are natural

disasters, war, terrorism,...
 Force Majeure
• A party is not liable for a failure to perform
any of his obligations if he proves that the
failure was due to an impediment beyond his
control and that he could not reasonably be
expected to have taken the impediment into
account at the time of the conclusion of the
contract or to have avoided or overcome it or
its consequences.
 4.1 Force Majeure
• In order to exclude liability, the breaching
party must prove 3 elements:
1. The impediment was beyond the control of the
breaching party
2. Unforeseeable
3. Be unable to overcome
 Breach of Contract
• Definition:
A party in breach of contract is the one who did
not perform or perform uncorrectly the
contractual obligations
 Breach of Contract
• Serious Breach:
– Termination of contract
– Claim for Compensation
• Non-Serious Breach
– Claim for compensation
 Remedies for Breach
• Termination of contract
• Specific performance
• Delivery of substitute
• Damages
• Penalty (agreed in the contract)
• Price reduction
 Passing of Risk
• Risk is defined as loss or damages to the
goods.
• Risk passes from the seller to the buyer when
the goods are handed over to the buyer.
• The risk passes to the buyer when the goods
are handed over to the carrier for
transmission to the buyer.
 LAWS
ON
ENTERPRISES
Legal Documents governing Enterprises

• Law on Enterprise 2020

• Decree No. 01/2021/ND-CP on Enterprise
Registration
 Definition
• Enterprise means an organization that has its
own name, assets, office, and is registered in
accordance with law to do business.
 ENTERPRISE ESTABLISHMENT

• Every organization and individual is entitled to

establish enterprises in Vietnam in accordance
with this Law, except some cases:
– Officials and civil servants
– Minors; people that are legally incompetent
– Any person facing criminal prosecution, serving a
prison sentence
– ...
 The company’s charter.
• is a written document drafted by the founders
of a company detailing the major components
of a company such as its objectives, its
structure and its planned operations. The
charter is the law binding to the owners.
 The company’s charter.
CONTENT:
• Rights and obligations of owner
• The legal representative
• Method for ratifying the enterprise’s decisions; rules
for resolution of internal dispute;
• Rules for distribution of post-tax profit and handling of
business loss;
• Cases of dissolution
• Rules for making amendments to the company’s
charter....
The business registration authority
• Where to register your company’s
establishment?

DEPARTMENT OF PLANNING AND

INVESTMENT 
 Capital of an enterprise
• Charter capital means the total value of assets
that are contributed or promised to be
contributed by the owners when establishing
the company, which is registered in the
Charter.
 Legal Capital
• Legal capital: the minimum capital is required
to establish a company. The legal capital is
determined by the competent authority. (
applying only for some fields of business)
ASSETS for CONTRIBUTING CAPITAL
• Contributed assets may be Vietnam Dong
(VND), convertible foreign currencies, gold,
value rights to use land, value of
intellectual property rights, technologies,
technical secrets, and other assets
-> non-cash assets must be evaluated
 Enterprise’s name
• The Vietnamese name of an enterprise
consists of two elements:
– 1. The type of business entity
– 2. The proper name is written using the
Vietnamese alphabet and the letters, F, J, Z, W,
Vd: Công ty TNHH MINISTOP VIETNAM
Công ty cổ phần Hoàng Anh Gia Lai
JST HOANG ANH GIA LAI
Prohibitions when naming enterprises

• Picking a name that is the same as or confused

with another enterprise’s name which has
been registered.
• Using names of regulatory bodies, the armed
forces, political organizations.
• Using words or symbols that offend the
history, tradition, culture of Vietnam
Cần phân biệt tên công ty với biển hiệu
 Used names
• A used name means a Vietnamese name
chosen by an enterprise which is exactly the
same as the name of another registered
enterprise.
 Confusing names
• pronounced similarly
• The proper name chosen by the enterprise is different
from that of a registered enterprise of the same type by
only a the word “tân” (“new”) before or “mới” after the
proper name
• The proper name chosen by the enterprise is different
from that of a registered enterprise of the same type by
only a word "miền Bắc” (”Northern”), “miền Nam”
(”Southern”), “miền Trung” (”Central”), “miền Tây”
(”Western”), “miền Đông” (”Eastern”), or a word with
similar meanings.
 Branches, representative offices, and business locations of the
enterprise

• 1. A branch is a unit independent of the enterprise

and obliged to perform part or all of the
enterprise’s functions
• 2. A representative office is a unit dependent on the
enterprise and obliged to represent the enterprise’s
interests under authorization and protect such
interests.
• 3. Business location is a place where the enterprise
does some particular business activities.
 Types of Enterprise
• Sole Proprietorship
• Limited Liability Company
– Single-member limited liability company
– Multi-member limited liability company
• Partnership
• Joint Stock Company
 Sole Proprietorship

• A Sole Proprietorship is an enterprise

owned by one individual.
• The owner shall be liable for all activities
of the enterprise to the extent of all his or
her assets (unlimited liability)
• Sole Proprietorship may not issue any
type of securities.
 Sole Proprietorship

• Each individual may establish only one Sole

Proprietorship.
 Business management
• 1. The owner of the Sole Proprietorship has the
absolute discretion as to the company’s business
operation, the use of post-tax profit, and shall fulfill
other financial obligations as prescribed by law.
• 2. The owner may directly or hire another person
to manage the business operation. When hiring
another person as the Director, the owner is still
responsible for every business operation of the
company.
 Limited Liability Company
One member
• A one-member limited liability company is an
enterprise owned by one organization or an
individual (owner).

• the company owner is liable for all debts to

the extent of the amount of the charter capital
of the company (limited liability)
 Limited Liability Company
One member

• A one-member limited liability company may

not issue shares.
 Organizational structure
• 1. Under the ownership of an individual shall
have a company's President and a Director.

• 2. Under the ownership of an organization

The company's President, Director, and
Supervisor
 Limited Liability Company
One member
• Raising charter capital:
– the company owner making
additional investment
– contributed by other persons
(multi-members Ltd.)
 Limited Liability Company
One member
• Decreasing the charter capital: Return of part of
capital contribution in its charter capital to the
owner:
• the company has continued its business
operation for more than 02 years from the
business registration date, and
• all debts and liabilities can be paid after the
return
 Organizational structure
• 1. A single-member limited liability company
under the ownership of an organization shall
apply one of the following organizational
models:
• a) The company's President, Director/General
Director, and Controller;
• b) The Board of members, Director/General
Director, and Controller.
 MULTI-MEMBER LIMITED LIABILITY
COMPANY
• Multi-member limited liability company is an
enterprise where:
• a) Members are organizations and/or
individuals; the number of members is over 2
b) Members are liable for debts and other
liabilities of the enterprise up to the value of
capital they contribute to the enterprise
 MULTI-MEMBER LIMITED LIABILITY
COMPANY
• Capital of members shall be transferred
• Multi-member limited liability companies
must not issue shares
 MULTI-MEMBER LIMITED LIABILITY
COMPANY
• Offer the stakes to other members in
proportion to their stakes in the company
• Only transfer the stake to persons other than
members if the members do not buy or do not
buy completely the offered stake.
 MULTI-MEMBER LIMITED LIABILITY
COMPANY
• The company may increase its charter capital
in the following cases:
a) Capital contribution of members is increased;
b) Capital contributions are made by new members.
 Increasing stakes of members
• the additional capital shall be split to the
members according to their proportion of
stakes to the company’s charter capital.
 MULTI-MEMBER LIMITED LIABILITY
COMPANY
The company may decrease its charter capital in
the following forms
– Part of stakes is returned to members
– The company repurchases a member’s stake
 Returning Part of stake
• Part of stakes is returned to members
1. If the company has run for more than 02
consecutive years from the date of business
registration,
2. Provided the debts and other liabilities can
be paid after the return is made
 Repurchasing stakes
• 1. Every member is entitled to request the
company to repurchase his/her stake if such
member votes against the resolution of the Board
of members on:
• a) Amendments to the company’s charter that are
related to rights and obligations of members
and/or the Board of members;
• b) Company restructuring;
• c) Other cases prescribed by the company’s charter
 MULTI-MEMBER LIMITED LIABILITY
COMPANY
• Termination of membership
– Tranfer his capital to the other
– Death  successor (heir)
– The organizational member goes bankrupt or
dissolved
– The company goes bankrupt or dissolved
 MULTI-MEMBER LIMITED LIABILITY
COMPANY
• Establishment of membership
– Death of a member -> the heir (No need of
permission from the other members)
– Capital for debt payment (Permission from the
other members)
– Capital for donation (Permission from the other
members)
 Organizational structure
• Article 55. Organizational structure
• Board of members, a Chairperson of the Board
of members,
• Director
• Control Board (11 members or more); (fewer
than 11 members if necessary)
 PARTNERSHIP
• A partnership means an enterprise of which
– At least 02 partners are co-owners of the company
who run business together in a common name
– Apart from general partners, the company may
have contributing partners
 PARTNERSHIP
• General partners are individuals who are
responsible for the company’s obligations with
all of their property (unlimited liability)
• Contributing partners are only liable for the
company’s debts up to the value of capital
contributed to the company (limited liability)
 PARTNERSHIP
• Partnerships must not issue any kind of shares
JOINT-STOCK COMPANIES
 JOINT-STOCK COMPANIES
• A joint-stock company is an enterprise of which:
- Charter capital is split into multiple units of equal
value called shares
- A Shareholder is the one who owns at least one
share
- Shareholders may be organizations and individuals
- Shareholders are only liable for the enterprise’s
debts and other liabilities up to the value of capital
contributed to the enterprise (limited liability)
 JOINT-STOCK COMPANIES
• Shareholders are entitled to transfer their
shares to other persons
 JOINT-STOCK COMPANIES
• Joint-stock companies are entitled to issue
various types of securities to raise capital
(shares, bonds)
• Compare BONDS vs. SHARES ?????
 Types of Share
• A joint-stock company must have ordinary
shares. Holders of ordinary shares are
ordinary shareholders
• Apart from ordinary shares, a joint-stock
company may have preferred shares.
 Preferred shares
• a) Voting preference shares (for founding
shareholders);
• b) Shares with preferred dividends (no right
for vote);
• c) Redeemable preferred shares (no right for
vote)
 Types of Enterprise in Malaysia

1.Sole proprietorship
2.Partnership

3.Limited Liability Partnership (LLP)

4.Private Limited Company (Sdn. Bhd.)

5.Public Limited Company (Berhad)
 JOINT-STOCK COMPANIES
• General Meetings of Shareholders
• Board of Management ( president)
• Director/General Director
 HOUSEHOLD BUSINESS
• Business household is a business entity owned
by an individual who is a Vietnamese citizen or
a group of people or a household, which may
only register business at one location, employ
no more than ten employees, and not has a
seal and is responsible for all its assets for
business activities.
 HOUSEHOLD BUSINESS
• Business registration subject is an individual, a
Vietnamese citizen, a group or a household.
• Vietnamese citizens who are full 18 years old
and have civil capacity.