Contracts under Civil law

Civil transactions

Unilateral legal acts

Contracts

Definition

A contract is an agreement between parties in relation to the establishment, change or termination of certain civil rights and obligations.

(Art. 388 Civil Code 2005)

How to define a contract?

Is there an agreement in

existence?

Who are the parties?

To establish, change or terminate

what rights and

obligations?

Business contracts

Civil contracts

Labor contracts

Business contracts

Civil contracts

Business contracts: Civil contracts arising in the process of business operation (profit-making activities)

Subjects of contracts

Subjects to execute the contract

Subjects of the contract

Parties involved: individuals,

organizations with civil act capacity

In person

By representative

Legal representative: when party involved is a

business entity or guardian of a

minor/unqualified subject

Authorized representative:

authorized by subject of the contract or by legal

representative

An authorised person may authorize another person subject to consent of the authorizer or as permitted by law

Rights and obligations under

contracts

Forms of contracts

Business contracts

Oral

Written

Normal

Notarization

Authentication

Registration, Permission

By certain act

All forms to have the same legal value

Classification of contracts

Other types of contracts

Contract for the benefit of a third party

• Contract under which the contracting parties must perform the obligations and the third party shall enjoy benefits from the performance of such obligations

• Ex: insurance contract for the benefit of a child

Conditional contract

• Contract the performance of which depends on the occurrence, change or termination of a certain event

• Such event to be objective, performable, in compliance with law and social ethics

• Ex: Gasoline agency contract (pending the satisfaction of conditions as provided for by law or required by supplier)

Contracts classified based on substance under Civil Code

• Contract on property sale and purchase

• Contract on house sale and purchase

• Contract on property exchange

• Contract on property donation

• Contract on property loan

• Contract on property borrowing

• Contract on property leasing

• Service contract

• Transportation contract

• Processing contract

• Contract for bailment of property

• Insurance contract

• Mandate contract

• Promises of reward and competition for prizes

Valid vs. void contracts

Valid contract

• Legally binding and enforceable

Voidable contract

• Can be affirmed or rejected at the option of one or more of the contracting parties

Void contract

• Can never have any legal effect

Source of Contract Law

General law

• The Civil Code 2005

Specific law

• Commercial law 2005

• Other specialized laws:

• Insurance Business Law

• Securities Law

• Construction Law

• Banking Law

• Maritime Law, Railway Law, Civil Aviation Law…

Other sources

• International treaties

• Foreign laws

• International commercial practices…

Application of law

ELEMENTS OF A CONTRACT

Elements of Contract under Vietnamese law (Civil law system)

Offer to enter into a

contract

Acceptance of offer

Agreement

Offer

• Offer to enter into a civil contract means the expression of the intention to enter into the contract and to be bound on this offer of the offering party to the other specified party

(Art. 390 Civil Code 2005)

Content & forms of Offer

• Note: ▫ Vietnamese law: brochures, leaflets, advertisement, catalog… are not

considered as offers because they do not specify the other party ▫ US-UK law: possibly considered as a contract when there is a subject

perform exactly the requirements of the offeror. ▫ Anyway, in both legal systems: there is obligation arisen with regard to

the subject having an unilateral legal act or an offer to enter into a contract

• to specify the main content of the contract Content

• offer to sale or offer to purchase (placement in an auction) Form

Conditions for a valid offer

(1) Specifying a specific subject as the offered party (not a general saying to many people without defining a specific party)

(2) To express a wish to enter into a contract and accept to be bound by such offer (to distinguish between offer and invitation for negotiation and quotation information)

Validity of offer

• As the offer will be binding on the offeror, thus the offer should not be withdrawn, changed or cancelled.

• There should be a timeframe to response to the offer as the offeror cannot commit to the offer forever.

• Exceptions apply if conditions to withdraw, change or cancel the offer have been specified.

Compensation for breaching offer

• In cases where the offer to enter into a contract clearly states the time limit for reply and the offeror enters into the contract with a third party within such time limit, he/she/it must pay compensation for damage to the offeree and must not enter into the contract if damage is caused.

(Art. 390 Civil Code 2005)

Termination of offer

1. The offeree replies not to accept the offer;

2. The time limit for reply of acceptance has expired.

3. When the notice on modification or revocation of the offer takes effect;

4. When the notice on cancellation of the offer takes effect;

5. It is so agreed upon by the offeror and the offeree within the time limit for reply by the offeree

(Art. 394 Civil Code 2005)

Modification, revocation of offer by offeror

Offeror may modify or revoke the offer

If the offeree receives the notice on modification or revocation of offer before

or simultaneously with the time of receiving the offer; or

If the conditions for modification or revocation of the offer arise in cases

where the offeror has clearly stated the eligibility for modification or revocation of

the offer when such conditions arise

When the offeror changes the content of the offer, such offer shall be

considered a new offer

Cancellation of offer

The offeror may exercise the right to cancel the

offer

If the offeror has clearly stated the right in the offer and must notify the offeree

thereof; and

Such notification shall take effect only when it is received by the offeree before the offeree replies to accept the offer to

enter into the contract

Acceptance of offer

• The acceptance of an offer to enter into a contract is the offeree’s reply to the offeror on the acceptance of the whole contents of the offer

(art. 396 Civil Code 2005)

Acceptance of offer

Acceptance of offer will only be valid if meeting the two following conditions:

• To be rendered within the timeframe specified in the offer

• To accept all of the content of the offer

Acceptance of offer may not be withdrawn unless

• The acceptance has been rendered but the offeror has not received yet or received at the same time of the notice to withdraw the acceptance