Performance of contracts according to Vietnam Civil Code
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Performance of contracts is really important to realize rights and obligations of parties to contracts. Let’s find out this isse through the following situation: “Dear Lawyer! I want to ask what are regulations on per. Performance of unilateral contracts and Performance of bilateral contracts in Vietnam? How are agreements on fines against violations regulated in Vietnam? Thanks for answering me!”
Legal grounds
- 2015 Vietnam Civil Code
Performance of unilateral contracts
With respect to a unilateral contract, the obligor must perform the obligation strictly as agreed. The obligor may only perform the obligation prior to or after the time limit with the consent of the obligee.
Performance of bilateral contracts
With respect to a bilateral contract, where the parties have agreed on a time limit for the performance of an obligation, each party must perform its obligation when the obligation falls due. One party may not postpone performance by reason of the other party not having performed the obligations owed to the former party, except in the cases provided in Articles 411 and 413 of Vietnam Civil Code.
Where the parties have no agreement on which party will perform its obligation first, the parties must perform their obligations concurrently; where obligations are not able to be performed concurrently, the obligation the performance of which will take longer shall be performed first.
Right to postpone performance of civil obligations in bilateral contracts
The party which is required to perform its obligation first has the right to postpone the performance of such obligation, if the property of the other party has substantially decreased in value such that its obligation is not able to be performed as undertaken, until the other party is able to perform its obligation or has a guarantor.
The party which is required to perform its obligation last has the right to postpone the performance of such obligation when it falls due if the party which was required to perform its obligation first failed to do so when such obligation fell due.
Lien on property in bilateral contracts
If the obligor fails to perform his/her obligations, the obligee shall establish the right to lien on property of the obligor as prescribed in Article 346 to Article 350 of Vietnam Civil Code.
Obligations not able to be performed due to fault of obligee
With respect to a bilateral contract, when one party is not able to perform its obligations due to the fault of the other party, the former party has the right to demand the latter party to continue to perform its obligation with respect to the former party or has the right to cancel the contract and demand compensation for damage.
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Failure to perform obligations not due to fault of parties
With respect to a bilateral contract, when one party is not able to perform its obligations but there is no fault of any party, the party not being able to perform does not have the right to demand the other party to perform its obligation with respect to the former party. When one party has performed part of its obligations, such party has the right to demand the other party to perform its corresponding obligation with respect to the former party.
Performance of contracts for benefit of third parties
Where a contract is performed for the benefit of a third person, the third person has the right to demand personally the obligor to perform the obligations with respect to such third person. If there is a dispute between the parties over the performance of the contract, the third person does not have the right to demand performance until the dispute is resolved.
An obligee also has the right to demand the obligor perform a contract for the benefit of a third person.
Right to waive of third persons
Where a third person waives its right to benefits prior to the performance of an obligation by an obligor, the obligor shall not be required to perform the obligation but must notify the obligee, the contract shall be deemed to be cancelled, and each party shall return anything it has received from the other party.
If a third person waives its [right to] benefits after the obligor has performed the obligation, the obligation shall be deemed to have been fulfilled and the obligee must perform its undertakings with respect to the obligor. In this case, benefits derived from the contract shall be enjoyed by a party that should have been the beneficiary if the contract is performed for the interests of a third party, unless otherwise agreed.
No amendment or cancellation of contracts for benefit of third persons
Where a third person has agreed to receive a benefit, the parties to the contract may not amend or cancel the contract, even where the contract is yet to be performed, except with the consent of the third person.
Agreements on fines against violations
Agreements on fines for violations are reached by the parties to a contract which requires the violating party to pay a fine to the aggrieved party.
The fine levels shall be agreed among the parties, unless otherwise prescribed by relevant laws.
The parties may reach an agreement that the violating party has to pay only a fine for violations and is not liable to any compensation for damage, or has to pay both a fine for violations and a compensation for damage.
In case the parties have an agreement on fines against violation which does not specify that the violating party has to pay both a find for violations and a compensation for damage, then the violating party has to pay only the fine for violations.
The damage to be compensated for breach of contract
The damage to be compensated for breach of contractual obligations is determined in accordance with Clause 2 of Article 419, Article 13 and Article 360 of Vietnam Civil Code.
The obligee may demand compensation for damage to its supposed benefits that will be enjoyed by the contract offer. The obligee also may request the obligor to pay the costs incurred due to its non-fulfillment of contractual obligations which do not overlap with the compensation for damages for contractual benefits.
At the request of the obligee, a court may compel the obligor to pay spiritual damages to the obligee. The damages shall be decided by the court according to contents of case.
Performance of contract upon the basic change of circumstances
The change of circumstances shall be deemed basic when it meets all following conditions:
- The circumstances change due to objective reasons occurred after the conclusion of the contract;
- At the time of concluding the contract, the parties could not foresee a change in circumstances;
- The circumstances change such greatly that if the parties know in advance, the contract has not been concluded or are concluded, but with completely different content;
- The continuation of the contract without the change in the contract would cause serious damage to one party;
- The party having interests adversely affected has adopted all the necessary measures in its ability, in accordance with the nature of the contract, cannot prevent or minimize the extent of effect.
In the case of basic circumstances change, the affected party may request the other party to the re-negotiate the contract in a reasonable period of time.
If the parties cannot reach an agreement on amending the contract within a reasonable period of time, any of the parties may request a court to:
- Terminate the contract at a specific time;
- Amend the contract to balance the lawful rights and interests of the parties due to basic change of circumstances.
The court may only decide to amend the contract in the event that the termination of the contract would cause greater damage than the cost to perform the contract if it is modified.
In the process of negotiating amendments and termination of the contract and the court handling the case, the parties must continue to perform its obligations under the contract, unless otherwise agreed.
Please see more:
- Instructions for exclusive registration of company logos in Vietnam
- Service of changing the legal representative of Vietnamese enterprises
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Frequently asked questions
With respect to a unilateral contract, the obligor must perform the obligation strictly as agreed. The obligor may only perform the obligation prior to or after the time limit with the consent of the obligee.
With respect to a bilateral contract, where the parties have agreed on a time limit for the performance of an obligation, each party must perform its obligation when the obligation falls due. One party may not postpone performance by reason of the other party not having performed the obligations owed to the former party, except in the cases provided in Articles 411 and 413 of Vietnam Civil Code.
The change of circumstances shall be deemed basic when it meets all following conditions:The circumstances change due to objective reasons occurred after the conclusion of the contract; At the time of concluding the contract, the parties could not foresee a change in circumstances; The circumstances change such greatly that if the parties know in advance, the contract has not been concluded or are concluded, but with completely different content; The continuation of the contract without the change in the contract would cause serious damage to one party; The party having interests adversely affected has adopted all the necessary measures in its ability, in accordance with the nature of the contract, cannot prevent or minimize the extent of effect.
Conclusion: So the above is Performance of contracts according to Vietnam Civil Code. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com