International sale and purchase contract or international commercial contract is a term often used in international trade and trading relations of Vietnamese enterprises with foreign enterprises. So what is an international contract of sale of goods and how are the Vietnamese and international laws on contracts for the international sale of goods. And about the matter “Commercial contract with foreign elements in Vietnam” Let’s find out with LSX in the article below.
- Civil Code 2015
- Civil Procedure Code 2015
- Law on Commercial Arbitration 2010 No. 54/2010/QH12 promulgated by the National Assembly
- Commercial Law 2005
- Decree 22/2017/ND – CP
What is a contract of sale of goods?
In order to understand international commercial contracts, it is necessary to first understand the sale and purchase contract because an international sale of goods contract is an international contract of sale of goods. The law of Vietnam has provisions on property purchase and sale contracts as follows: a property purchase and sale contract is an agreement between parties whereby the seller transfers ownership of the property to the buyer and the buyer pays for the purchase of the property, seller (Civil Code 2015). According to the 2005 commercial law, goods are all types of movable property, including movable property formed in the future; and things attached to the land that can be bought and sold.
Thus, a contract for the sale of goods is an agreement between the parties that the seller transfers the ownership of the goods – the object of the contract of sale of goods to the buyer and the buyer pays the seller.
Commercial contract with foreign elements in Vietnam
Contracts for the international sale of goods under the Vienna Convention 1980
An international contract for the sale of goods is a contract for the sale of goods of an international nature. The international nature of a sale contract is determined by national and international regulations. Specifically, according to the Vienna Convention of 1980 (hereinafter referred to as CISG), contracts for the international sale of goods are contracts for the sale and purchase of goods between parties having commercial offices in different countries (terms of law – on the scope of application of this Convention). From this provision, there are many countries, scholars believe that the international element of an international sale of goods contract is determined between the headquarters of the parties involved in the international goods sale and purchase relationship rather than nationality. This concept is based on the actual situation when currently the parties involved in international trading relations often have many nationalities (multinational companies). However, the CISG has scope to apply to the Contracting States and also in cases where the contract provides for the application of the CISG to govern the contract, so the provisions of the CISG are not necessarily mandatory in all cases for the international sale of goods. However, the basis of the main place of business is also one of the basis used by many countries to determine the internationality of contracts for the international sale of goods.
Contracts for the sale of international goods under Vietnamese law
Vietnamese law does not have specific provisions on international goods sale and purchase contracts, however, in Article 663 of the Civil Code 2015 there are provisions on civil relations involving foreign elements. Accordingly, a civil relationship is considered a civil relationship with foreign elements when there are one of three factors: the subject has foreign elements; the establishment, change, performance or termination of such relationship occurs in a foreign country; the subject matter of that civil relationship is abroad. International sale and purchase of goods is an international commercial relationship and accordingly a civil relationship in a broad sense and is governed by international law. Thus, the provisions of Article 663 are applied to define an international sale of goods. So a contract for the sale of goods is considered an international sale of goods contract when it has one of the following three grounds:
– At least one of the parties involved in the purchase and sale of goods is a foreign agency, organization or individual;
– Grounds for establishing, changing or terminating the goods purchase and sale relationship according to foreign laws;
– Goods, the subject matter of the contract are in foreign countries.
Applicable law in commercial contracts with foreign elements
Pursuant to Article 683 of the 2015 Civil Code stipulating on how to determine the law applicable to contracts with foreign elements as follows:
1. Contracting parties in a contract may agree to select the applied law for the contract, other than regulations of Clauses 4, 5 and 6 of this Article. In case the contracting parties fail to agree the applied law, the law of the country with which such contract closely associates shall apply.
2. The laws of any of the following countries shall be treated as the law of the country with which such contract closely associates:
a) The law of the country where the seller being natural person resides or the seller being juridical person is established in terms of sale contracts;
b) The law of the country where the provider being natural person resides or the provider being juridical person is established in terms of service contracts;
c) The law of the country where the transferee being natural person resides or the seller being juridical person is established in terms of contracts of transferring rights to use or intellectual property rights;
d) The law of the country where employees frequently perform do jobs in terms of labor contracts. If an employee frequently does jobs in multiple countries or the country in which the employee frequently does his/her job is unidentifiable, the law of the country with which his/her labor contract closely associates shall be the law of the country where the employer being natural person resides or the employer being juridical person is established.
dd) The law of the country where consumers resides in terms of consume contract.
3. If there is evident that the law of a country other than the country prescribed in Clause 2 of this Article associates with the contract more closely than the latter, the law of the former country shall prevail.
4. If the object of a contract is an immovable property, the law applied to transfer of its ownership rights and/or other property-related rights, lease of immovable property or using the immovable property as the guarantee for performance of obligations shall be the law of the country where the immovable property is located.
5. If the applied law selected by contracting parties in a labor contract or a consume contract affects adversely minimum interests of employees or consumers as prescribed in the law of Vietnam, the law of Vietnam shall prevail.
6. Contracting parties in a contract may agree to change the applied law provided that such change does not affect adversely lawful rights and interests of a third party before changing, otherwise agreed by the third party.
7. Form of a contract shall be determined in accordance with the law applied to such type of contract. In case where the form of a contract does not comply with the form of the law applied to such contract but it comply with the form of the law of the country where the contract is entered into or the law of Vietnam, such form of contract shall be recognized in Vietnam.
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Frequently asked questions
The form of contract is regulated very differently in national and international law.
Article 96 of the 1980 Vienna Convention provides for respect for the form of a written contract;
Article 27 of the Vietnam Commercial Law 2005, the international sale and purchase of goods must be expressed on the basis of a written contract or in another form of equivalent legal validity.
This provision helps the parties to avoid adverse legal consequences, unnecessary risks and disputes as well as possible damages.
For commercial contracts with foreign elements, there are payment methods and forms of payment such as:
– The buyer pays the seller directly without going through a third party;
– The bank collects an amount on behalf of the seller on behalf of the buyer on the basis of drafts and/or delivery documents;
– The issuing bank of the Letter of Credit (L/C) will commit to pay a certain amount or accept the Draft drawn by the beneficiary, if he/she presents a valid set of payment documents with the content specified in Clause 1 of this Article. of the Letter of Credit.
Depending on the type of international commercial contract, the object of the contract will be different.
– Contracts for the international sale of goods: Goods;
– Service contract: A specific job;
– Technology transfer contract: Know-how, technical knowledge about technology, technical solutions, computer software, technical diagrams…