Rights and obligations of parties in commercial brokerage activity in Viet Nam

Trading brokerage has a long history in the development of commercial activities. The two main actors in economic relations are the producers and consumers. However, in a large market, it is not always possible for the produced goods and services to be delivered easily to consumers in need, but sometimes it needs the role of a third party to introduce parties with supply and demand to meet each other. Vietnamese law currently has specific provisions on commercial brokerage activities. Let’s join Lawyer X to find out about this issue through the following scenario: “Hi, lawyer! My company is looking to promote product sales by finding a commercial brokerage company in Viet Nam. So when entering into commercial brokerage contracts, what are the legal regulations on the rights and obligations of the parties? Thank you for your answer! “

Legal grounds

Viet Nam’s Commercial law

What is commercial brokerage?

Commercial activities mean activities for the purpose of generating profits, including: sale and purchase of goods, provision of services, investment, commercial promotion and other activities for the profit purpose. Of which, purchase and sale of goods mean commercial activities whereby the seller is obliged to deliver goods, transfer ownership of goods to the purchaser and receive payment; the purchaser is obliged to pay to the seller and receive goods and the ownership thereof as agreed.

Goods include: All types of movables, including those to be formed in the future; Things attached to land; Origin of goods means a country or a territory where all the goods are turned out or where the last stage of substantial processing of goods is performed in cases where many countries or territories join in the process of producing such goods.

Purchase and sale of goods transactions can be concluded by 2 methods: direct purchase and sale of goods between sellers and buyers; and transaction through commercial intermediaries.

Commercial intermediary activities mean activities carried out by a trader to effect commercial transactions for one or several identified traders, including representation for traders, commercial brokerage, goods sale or purchase entrustment, and commercial agency.

Of which, commercial brokerage means a commercial activity whereby a trader acts as an intermediary (referred to as broker) between parties selling and purchasing goods or providing commercial services (referred to as principals) in the course of negotiations and entering into contracts for sale and purchase of goods or provision of services and shall be entitled to a remuneration under a brokerage contract.

It can be seen that the above provision does not require the broker to be a trader but it clearly states that the broker is an intermediary trader. Thus, the commercial broker must satisfy the general conditions of traders in Article 6 of the 2005 Commercial Law, which are:

– Traders include lawfully established economic organizations and individuals that conduct commercial activities in an independent and regular manner and have business registrations.

 – Traders are entitled to conduct commercial activities in occupations and sectors, in geographical areas, in forms and by modes which are not banned by law.

– The right of traders to conduct lawful commercial activities is protected by the State.

The State exercises for a definite time its monopoly over commercial activities in respect to a number of goods and services or in a number of geographical areas in order to ensure the national interests. The Government shall specify the lists of goods, services and geographical areas subject to the State monopoly.

Big enterprises in the trade brokerage industry in Vietnam can be mentioned as: Gia Cat Loi Commodity Trading Joint Stock Company; Ho Chi Minh City Commodity Joint Stock Company; Saigon Futures Joint Stock Company; Huu Nghi International Investment Limited Company; International Commodity Trading Joint Stock Company; …

Rights and obligations of the parties in the commercial brokerage activity

*Obligations of commercial brokers

Unless otherwise agreed, a commercial broker shall have the following obligations:

– To preserve samples of goods and documents assigned for the performance of brokerage activities, and to return them to the principals after the completion of brokerage; When samples of goods and documents assigned for the performance of brokage activities are delivered to the commercial broker, then it is necessary to determine responsibility of the commercial broker in preserving samples of goods and documents. Because in case the commercial broker is careless and spoils samples of goods or loses important documents, then it could cause damages to the principals. If legal regulations do not determine obligations of the broker in preserving samples of goods and documents assigned, many brokers will not pay attention in ensure the interests of principles.

– Not to disclose or supply information to the detriment of the interests of the principals; Business secrets are important to any merchants in a competitive business market. The commercial brokers must safeguard the principal’s business information

– To be responsible for the legal status, but not for the solvency, of the principals;

– Not to take part in the performance of contracts between the principals, except where so authorized by the principals.

*Obligations of principals

Unless otherwise agreed, a principal shall have the following obligations:

– To supply information, documents, necessary means related to goods and services;

– To pay brokerage remuneration and other reasonable expenses to the broker.

*The right to enjoy brokerage remuneration

 Unless otherwise agreed, the right to enjoy brokerage remuneration arises from the time the principals enter into contracts.

Where there is no agreement, brokerage remuneration rates shall be determined according to the provisions of Article 86 of Commercial law: “Service charge rate: Where there is no agreement on service charge rate, no agreement on methods of determining service charge rate, and also there is not any indication to service charge rate, the service charge rate shall be determined according to the charge rate of the same type of service under similar conditions on mode of provision, time of provision, geographical market, mode of payment and other conditions which can affect the service charge rate.”

*Payment of expenses incurred in relation to brokerage

Unless otherwise agreed, principals must pay all reasonable expenses incurred in relation to brokerage to brokers, even when the brokerage does not bring about any results for principals.

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Conclusion: So the above is Rights and obligations of parties in commercial brokerage activity in Viet Nam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com