The trend of globalization is considered a springboard to help countries reach their development, including Vietnam. Currently, Vietnam is entering the integration period, so the sale and production to foreign countries is taking place a lot in the market. So about the matter “How to draft a contract with foreign elements in Vietnam?” Let’s find out with LSX in the article below. Hope this article will help you with your isse!
Legal grounds
- Civil Code 2015
- Commercial Law 2005
Definition of contracts with foreign elements
According to the provisions of civil law in Vietnam, a contract is an agreement to perform, change or terminate by the parties thereby expressing the rights and obligations that the parties agree to meet their interests of each party.
– In legal practice, foreign factors are considered as the basis and basis for formulating and determining the principles of selecting the governing law, in order to solve the problem of legal conflicts and conflicts of jurisdiction in international law. For example, for the element of the subject participating in legal relations, there is the principle of nationality law, respectively; for the element of a legal event taking place in a foreign country, respectively, there is the law of the place where the contract is signed or the place where the disputed event occurs; for the object of the transaction, there is the corresponding principle of law where there are things..
– According to the provisions of Article 663 of the Civil Code 2015, a contract with foreign elements is a contract determined based on specific factors as follows:
+ One of the contracting parties is a foreign subject. Subjects here can be individuals or legal entities;
+ The parties to the contract are all Vietnamese individuals and legal entities, but the establishment, change, performance or termination of the contractual relationship occurs in a foreign country;
+ The parties to the contract are all Vietnamese individuals and legal entities, but the subject of the contract is a foreign party.
Thus, a contract with a foreign element is a contract involving a foreign entity; the legal grounds giving rise to, changing or terminating the contract occur in a foreign country or under foreign law; the property related to the contract is located abroad. Since then, determining the law applicable to the contract as well as to protect the interests of the parties when settling disputes arising from the contract will inevitably face many difficulties. To solve this problem, one of the important principles is that a contract with one of the above elements will be considered a contract with foreign elements in the laws of other countries. As analyzed above, in fact, transactions related to contracts with foreign elements are increasing day by day. It comes from the economic development, cooperation and foreign policy trends of each country. A contract with a water element is considered as a standard basis to regulate the legal relationship between the parties; protect the legitimate rights and interests of the parties if a dispute occurs.
How to draft a contract with foreign elements in Vietnam?
Notes when drafting a contract with a foreign company partner
– Legal entity check
The foreign legal entity is very important, because it determines the status and capacity of the foreign partner whether it is a fake organization or unit. It is also considered a base operating under foreign law.
Therefore, Vietnamese enterprises need to check their legal status before signing a contract with a foreign company partner.Language The language difference between Vietnamese and foreign partners is inevitable. To avoid misunderstandings due to language inconsistencies, when entering into contracts, Vietnamese enterprises should actively draft contracts in English. Because English is considered a valuable and widely used language.
In addition, two partners can jointly make several more contract templates with different language versions.
– Payment
Payment method in the contract
The form of payment is a point worth paying attention to. The fact that the business pays quickly and on time can help increase the trustworthiness between the two partners. However, many Vietnamese businesses are subjective, leading to the situation of “lost money”. The form of temporary payment and money deposit can make businesses lose their vigilance, leading to easy falling into fraud traps.
Therefore, businesses need to choose a form of payment to suit each situation. Some of the current forms of payment include: cash, L/C or wire transfer, etc. Law provisions in contracts with foreign partners; The choice of law is to adjust the contract as well such as unifying the law governing dispute settlement. The two partners can choose the law of Vietnam or the law in the country the legal entity has nationality.
In addition, the law of a third country can be selected as the governing law. However, the choice of the law of any country must be specified in the contract. Besides, the Dispute Settlement Body must also be agreed. The body can be a Court or an Arbitration. One of the selected priority arbitrations is the International Arbitration Center in Vietnam or the International Arbitration Center abroad, the Singapore International Arbitration Center (SIAC).
– Company information
In order to avoid confusion in the process of compiling the contract, both parties need to compare the company information with the information recorded on the Business License. Specifically, information about: address, name, business tax code, representative, mailing address, etc.
Some points to pay attention to in terms of international commercial contracts
When entering into a contract with a foreign legal entity, an international commercial contract is one of the most commonly used types of contract. Here are a few terms businesses should keep in mind when concluding a contract for the sale of goods under an international commercial contract.
– Product Description
Product descriptions should be written in common language. Or apply official documentation from the manufacturer. At the same time, the enterprise can design a separate appendix to describe the goods. For an international sale and purchase contract, which is a form of principle contract where the purchase and sale of goods is performed according to each PO, it is necessary to determine quantity and type of goods, etc. In particular, the principle of product pricing must be determined.
– Packaging products
The packaging and delivery process is very important, both partners need to agree on the delivery method and the type of transport. This is a common obligation of both the seller and the buyer.
– Port of receipt and arrangement of goods
The port of delivery and loading must comply with the Incoterms of both parties. Specifically as follows: Time of delivery or delivery date Penalties for late delivery, missing delivery Incoterms delivery terms (Must have) Payment method Related documents (Time of delivery to importer, Original book with a copy will be provided) Force majeure events (epidemic, embargo, natural disaster, war…)
– Dispute resolution
Like other contracts with foreign legal entities, the contract must clearly state the Dispute Settlement Authority and relevant laws. At the same time, the contract must have a uniform language. Finally, for the contract to be valid, it must be signed by representatives of both parties.
Services of LSX
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Finally, hopefully the information in the article will provide helpful information for readers and help you solve the problem “How to draft a contract with foreign elements in Vietnam?” At the same time, LSX Law firm always has leading lawyers and legal consultants who will help you in legal matters of life. If you have any need, please get in touch with us via hotline: +84846175333 or Email: [email protected]
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Frequently asked questions
A contract with a foreign element must have at least one person participating in the relationship who is a foreigner, or the parties are all Vietnamese citizens or Vietnamese legal entities, but the establishment, change, performance or Termination of such relationship occurs in a foreign country or the parties to the contract are Vietnamese citizens or Vietnamese legal entities, but the subject matter of such civil relations is abroad.
Methods of settlement when there is a dispute in a contract involving foreign elements include: Negotiation, Court or Commercial Arbitration.
Pursuant to Article 664 of the 2015 Civil Code stipulates how to determine the law applicable to civil relations involving foreign elements as follows:
The law applicable to civil relations involving foreign elements shall be determined according to international treaties to which the Socialist Republic of Vietnam is a signatory or Vietnamese law.
If an international treaty to which the Socialist Republic of Vietnam is a signatory or Vietnamese law provides that the parties have the right to choose, the law applicable to civil relations involving foreign elements shall be determined. at the option of the parties.
If it is impossible to determine the applicable law as prescribed in Clauses 1 and 2 of this Article, the applicable law is the law of the country that has the closest relationship with that civil relationship involving foreign elements.
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