Legal issues related to bilateral contracts under Vietnamese Law

by QuynhHuong

Accordingly, bilateral contracts are the most familiar type of contract. So, what are the legal issues related to bilateral contracts under Vietnamese Law? Let’s find out with LSX!

  • 2015 Civil Code

The concept of bilateral contracts

Hence the provisions of clause 1 of article 406, a bilateral contract is a contract in which each party has obligations towards the other. Unlike a unilateral contract, in a bilateral contract, all parties and subjects have their own obligations. Therefore, the rights of one party will correspond to the obligations of the other party and vice versa.

Also according to the 2015 Civil Code, an obligation is something that the parties must transfer the right, hand over/pay/valuable papers in order to perform or not perform a certain job. This work is done for the benefit of one or more rights holders.

Performance of a bilateral contract

Unlike a unilateral contract, where only one party has an obligation, in a bilateral contract; the parties to the contract have obligations towards each other. In fact, the parties to a bilateral contract must perform their obligations on time as agreed upon; and must not postpone performance because the other party has not yet performed their obligations towards them. Postponement of performance of an obligation in a bilateral contract specified in Article 411 of the Civil Code 2015; and an obligation that cannot performed due to one party’s fault specified in Article 413 of the 2015 Civil Code are two exceptions to the improper performance of the parties in a bilateral contract.

Article 410 of the 2015 Civil Code provides for the performance of a case-by-case contract as follows:

  • The performance of obligations in a bilateral contract is carried out as follows:
    • According to the agreement of the parties in the contract: the parties may agree on the simultaneous performance of the obligations or the performance of the latter;
    • In case the parties do not agree, in order to ensure fairness between the subjects, the obligations of the parties perform concurrently; concurrent performance is the parties performing the obligations in a certain period of time;
    • In case an obligation cannot perform at the same time, the obligation that takes longer to perform shall has its performance first.

Postponement of performance of obligations in bilateral contracts

Basically, the parties to a relationship must perform their obligations when they are due. However, in some cases, the obligor has to postpone the performance of the obligation. Deferred performance of an obligation is an obligation to temporarily stop, not continue to perform until a certain period of time. The right to postpone performance of an obligation in a bilateral contract appears in non-concurrent performance obligations; whereas, the party that has to perform an obligation before or after has the right to postpone performance; in case the other party breaches the obligations.

The Civil Code provides for the right to postpone the performance of a bilateral contract as follows:

Right to postpone the performance of an obligation of the party that must perform the obligation first

Accordingly, the party that is performing a previous obligation; which is performing an obligation, when the conditions specified above occur, it has the right to postpone the performance of the obligation; and in case the previous obligor has completely fulfilled the obligation; but the later obligor is unable to perform the obligation; due to a serious decrease in its ability to perform the obligation, the previous obligor cannot can postpone. The ability to perform obligations can be property capabilities or other capabilities such as human resources, skill factors…

The postponement extension period is until the later obligee is able to perform the obligation or has measures to secure the performance of the obligation. Security measures include not only guarantees but also other measures such as pledge, mortgage, deposit, deposit… In case the performance of an obligation is not possible or there is no measure to secure the performance of the obligation; the previous performer is not required to continue to perform its obligation. This provision is to ensure the interests of the obligor to perform the obligation first; to avoid the situation where the first obligor has fulfilled its obligation; but the later obligor is unable to perform the obligation; causing damage to the previous obligor.

The right to postpone the performance of an obligation of the obligee to perform the following obligations

The latter party has the right to postpone the performance of the due obligation if the previous obligor has not yet performed its obligation when it is due. When the performance of an obligation is due but the party that need to perform the obligation first fails to perform, it breaches the performance of the obligation towards the latter. Therefore, the latter obligor is to postpone the performance of its obligation. The failure to perform the obligations of the latter party in this case is not a breach of the obligations towards the other party because in this bilateral contract, the rights and interests of the latter party perform the obligations.

Holding property in a bilateral contract

Thus, property lien is a measure to secure the performance of obligations; specified in Article 292 of the Civil Code 2015. Like other security measures, lien has the purpose of increasing the liability of the party having the property on hold; and at the same time ensuring the interests of the holder of the property.

Article 412 stipulates the passage of reference to the content of property lien specified from Articles 346 to Article 350 of the Civil Code. The lien arises from the time when the obligation is due; but the obligor fails to perform or improperly performs the obligation.

The obligor’s failure to properly perform his/her obligations is one of the circumstances; in which the obligee (the holder) is legally holding the property that is the subject of a bilateral contract to seize the property. However, this lien is only possible when the lien is the subject of a bilateral contract; thus, for other bilateral contracts, the obligee does not automatically establish a lien over the obligor’s property.

Lastly, thank you for paying attention to our article on “Legal issues related to bilateral contracts under Vietnamese Law”. Hope that this article will help you solve your problem. In case you have any questions, please feel free to contact Lawyer X for quick and best legal services: +84846175333.

Is a contract for gifting a property a bilateral contract?

The donation contract includes two types: conditional property donation and unconditional donation. Pursuant to the provisions of the Civil Code 2015 Article 462: “The donor may request the recipient to perform one or more obligations before or after the donation”. The receiver of the property has an obligation to perform in order to receive the property. Therefore, a contract for gifting a conditional property is a bilateral contract.

Are all civil contracts bilateral?

Not all contracts are bilateral contracts. Civil contracts are classified as unilateral or bilateral. Based on the relationship of rights and obligations of the subject parties. In fact, the number of dual-season contracts accounts for a larger proportion than single-season contracts. Examples of unilateral contracts are: Contracts for gifting of property without conditions; testament.

When to terminate a bilateral contract?

The contract terminates when the parties have completed all obligations; as well as receive its full benefits. When the contract has changes that cannot be performed; The subject has the right to request a competent court to declare the contract invalid or to cancel the contract. There are also cases where the parties have other agreements; agree to terminate the contract.

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