Garment processing contract is a contract in which the parties can agree specifically or in advance about the trend of cooperation, how to process the products here are clothes, uniforms, … In the article In this case, Lawyer X will advise on garment processing contracts in Vietnam for readers to refer to.
Legal grounds
Civil Code 2015
Commercial Law 2005
What is a garment processing contract?
Article 542 of the 2015 Civil Code provides:
Processing contract is an agreement between parties whereby the processor performs work to create products at the request of the outsourcing party, the outsourcing party accepts the product and pays wages.
Article 178 of the Commercial Law 2005 also provides:
Commercial processing is a commercial activity whereby the processor uses part or all of the raw materials of the ordering party to perform one or more stages in the production process as required of the outsourcing party to receive remuneration.
Contents of garment processing contract
Currently, both commercial law and civil law regulate processing contracts.
Depending on the applicable law, it will create a commercial contract or a civil contract.
However, no matter which law is applied, the content of the contract is indispensable with the following basic provisions:
Name and quantity of finished products: It is necessary to specify, avoid confusion, if processed goods include many types, the name and quantity of each type must be clearly stated.
Quality and specification of the product: The two parties need to agree in detail on this issue, because this is the main object of this contract.
The processing party will have to complete the product according to the specified quality and specifications. The parties can agree on a separate contract annex for processed products.
Raw materials: these are raw materials (main and auxiliary) used to produce and process processed goods. In this clause must clearly specify the supplier of the material; types and names of raw materials; quantity, quality, etc. In addition, the time and method of delivery of materials are also important to be agreed upon in the contract.
Processing remuneration and payment method: According to the law, the processing party will receive a remuneration. Remuneration can be calculated based on each processed product or according to the value of the contract, the parties agree on their own.
Delivery and form of delivery: The parties themselves agree to not cause instability in production and business affecting their interests.
Penalty clause for breach of contract: The parties can agree to determine the penalty for breach and compensation for damage (if any). However, for a processing contract that is determined to be a commercial contract, the maximum penalty is only 8% of the value of the breached obligation. If it is a civil contract, the parties can freely set the penalty without being bound.
Dispute resolution, contract validity…
Location for processing customs procedures
The processing customs declaration unit can choose one of the following locations:
a.1) The Sub-department of Customs where the organization or individual has its head office or branch office or production facility;
a.2) The Sub-department of Customs at the border gate or the Sub-Department of Customs at the port of export or import of goods established in the inland;
a.3) The Sub-department of Customs in charge of processed and manufactured goods for export belongs to the Customs Department where the production facility is located or where the import border gate is located.
During the performance of the processing contract, the main customs procedures are as follows:
Procedures for importing raw materials and supplies
Procedures for importing leased or borrowed machinery and equipment to perform processing contracts
Procedures for exporting processed products
Customs procedures in case of outsourcing
Procedures for delivery and receipt of transitional processed products
Customs procedures for handling excess raw materials and supplies; waste, scrap, waste products; machinery and equipment rented or borrowed
Handling of cases where the ordering party abandons excess raw materials and supplies; leased or borrowed machinery and equipment; handmade products.
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Instructions for drafting garment processing contracts
In order to draft the most accurate garment processing contract, the parties should note the following issues:
National title and slogan in accordance with regulations;
The parties to the contract need to show all the information. Individuals must have complete information such as name, date of birth, and personal identification number, ..; for legal entities, it will be Name, address, tax code, representative,…
The subject matter of the contract must be clearly stated in the contract. It should be expressed in detail in the quantity, quality, nature or technical characteristics of the products that the two parties exchange, buy and sell,…
Content of work that parties must perform: What is outsourcing work? How long should it take? How’s the pay?
Penalties for violations and dispute settlement procedures.
Conditions in garment industry when registering
The garment industry is a business without conditions. In order to carry out production and business activities, enterprises only need to carry out procedures for registration of industries suitable to their production and business activities in accordance with the industry code in the system and notify the business registration agency.
Garment companies in order to be able to carry out garment activities must register for appropriate business lines related to garment activities. Business code lookup must be performed to be able to register a business.
Business codes that can be registered in accordance with the garment industry are as follows:
Code 4771: Retail sale of garments, footwear, leather and imitation leather goods in specialized stores
Code 4669: Other specialized wholesale not elsewhere classified. Details: Wholesale of silk, fiber, textile yarn
Wholesale of garment and footwear accessories
Code 1511: Tanning and preliminary processing of leather; processing and dyeing fur skins
Code 1430: Manufacture of knitted and crocheted garments
Code 1410: Sewing of clothing (except fur clothing)
Code 1323: Manufacture of carpets, blankets
Code 1321: Manufacture of knitted fabrics, crocheted fabrics and other nonwovens
Code 1311: Yarn production
Code 1313: Finishing of textile products
Code 1312: Manufacture of woven fabrics
Code 1329: Manufacture of other textiles n.e.c
Code 1420: Manufacture of fur products
Code 1322: Manufacture of ready-made garments (except apparel)
Code 4751: Retail sale of fabrics, wool, yarn, sewing thread and other textiles in specialized stores
Code 1512: Manufacture of suitcases, bags and the like, manufacture of seat cushions
Code 4641: Wholesale of fabrics, ready-made goods, shoes
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Frequently asked questions
The subject matter of a garment processing contract is a pre-determined object according to the form and standard agreed upon by the parties or prescribed by law.
Article 179 of the Commercial Code 2005 clearly states that a processing contract must be made in writing or in another form with equivalent legal validity.
However, if this garment processing contract is determined to be a type of civil transaction, then this contract can be expressed verbally, in writing or in specific acts.
Therefore, before conducting a transaction, the parties need to clearly determine whether this is a commercial contract or a civil contract, to avoid unnecessary disputes later.
Conclusion: So the above is Contract for garment processing in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
