What are rights and obligations of parties to logistics service contracts in Viet Nam?

Logistics is a very growing service industry in recent years, especially with the growth of international e-commerce. Commercial Law 2005 has specific regulations for logistics services. Let ‘s find out with Lawyer X about these regulations through the following situation: “My company is currently looking for a company that specializes in shipping, warehousing, and logistics services. I want to ask about when entering into logistics service contracts, what are the rights and obligations of the parties? Thanks for your answer!”

Legal grounds

Commercial law

What are logistic services?

Logistic services are commercial activities whereby traders organize the performance of one or many jobs including reception, transportation, warehousing, yard storage of cargoes, completion of customs procedures and other formalities and paperwork, provision of consultancy to customers, services of packaging, marking, delivery of goods, or other services related to goods according to agreements with customers in order to enjoy service charges.

Logistic service contracts mean agreements between parties whereby traders organize the performance of one or many jobs including reception, transportation, warehousing, yard storage of cargoes, completion of customs procedures and other formalities and paperwork, provision of consultancy to customers, services of packaging, marking, delivery of goods, or other services related to goods according to agreements with customers in order to enjoy service charges.

Conditions for logistic service provision

– Traders providing logistic services are enterprises fully satisfying the conditions for logistic service business provided for by law.

 – The Government shall specify logistic service business conditions.

Rights and obligations of parties to logistic service contracts

Rights and obligations of traders providing logistic services

 – Unless otherwise agreed, traders providing logistic services shall have the following rights and obligations:

 + To enjoy service charges and other reasonable expenses;

+ To depart from instructions of customers during the performance of contracts for plausible reasons and in the interests of customers, provided that customers must be notified thereof immediately;

+ To notify such customers immediately for further instructions in cases where instructions of customers cannot be followed in part or in whole;

+ To perform their obligations within a reasonable period of time if there is no agreement on specific time limit for performance of their obligations to customers.

– In the course of transportations of goods, traders providing logistic services must comply with the provisions of law and transportation practices.

Rights and obligations of customers

Unless otherwise agreed, customers shall have the following rights and obligations:

– To guide, inspect and supervise the performance of contracts;

– To provide sufficient instructions to traders providing logistic services;

– To provide sufficient, detailed and accurate information on the goods to traders providing logistic services;

– To pack and mark the goods according to contracts for purchase and sale of goods, except where there is an agreement that traders providing logistic services shall undertake to do such job;

– To compensate for damage caused to, and pay reasonable costs incurred by, traders providing logistic services if such traders have strictly complied with customers’ instructions or if the customers are at fault;

– To pay traders providing logistic services all amounts due.

Liability exemption for traders providing logistic services

– Apart from the cases of liability exemption specified in Article 294 of Commercial law, traders providing logistic services shall not be liable for the goods loss caused in the following cases:

+ The loss is caused by faults of customers or their authorized persons;

+ The loss is caused by traders that have strictly followed the instructions of their customers or persons authorized by customers;

+ The loss is attributed to defects of the goods;

+ The loss occurs in cases of liability exemption according to law and transportation practices, if traders providing logistic services organize transportation;

+ Trader providing logistic services are not notified of complaints within fourteen days from the date they deliver goods to recipients;

+ After being complained against, traders providing logistic services are not notified of lawsuits against them being instituted at arbitrations or courts within nine months from the date of delivery of goods.

– Traders providing logistic services shall not be liable for the loss of profits which their customers would have earned, for any services delayed or provided at wrong addresses, for which they are not at fault.

Limitation to liability

– Unless otherwise agreed, the full liability of traders providing logistic services shall not exceed the limitation of liability for the full loss of the goods.

– The Government shall provide in detail for the limitation of liability of traders providing logistic services in compliance with provisions of law and international practices.

– Traders providing logistic services shall not enjoy the limitation of liability for damage compensation if persons with related rights and benefits prove that the loss, damage or delayed delivery of goods is caused by deliberate actions or inactions of traders providing logistic services with the intention to cause such loss, damage or delayed delivery or their actions or inactions are known to be risky who were also aware of such loss, damage, or delay would certainly occur.

The right to withhold and dispose of goods

– Traders providing logistic services shall be entitled to withhold a certain quantity of goods and related documents in order to claim payment of due debts by customers but shall have to notify promptly customers thereof in writing.

– After forty five days from the date of notification of the withholding of goods or their related documents, if customers fail to pay debts, traders providing logistic services shall be entitled to dispose of such goods or documents according to provisions of law. Where there are indications of deterioration of goods, traders providing logistic services shall have the right to dispose of the goods immediately after any debt of customers becomes due.

– Before disposing of goods, traders providing logistic services must immediately notify their customers of such disposal.

– All expenses for the withholding and disposal of goods shall be borne by customers.

– Traders providing logistic services shall be entitled to use proceeds from the disposal of goods to pay for debts owed to them by their customers and related expenses. If the proceeds from the disposal of goods exceed the value of debts, the difference must be returned to customers. From that point of time, traders providing logistic services shall no longer be responsible for the goods or documents already disposed of.

 Obligations of traders providing logistic services when withholding goods When the right to dispose of goods provided for in Article 239 of Commercial Law is not yet exercised, traders providing logistic services and withholding goods shall have the following obligations:

 – To preserve and keep the goods;

– Not to use goods without consent of the parties whose goods are withheld;

– To return goods where the conditions for withholding and disposal of goods provided for in Article 239 of Commercial Law no longer exist;

– To pay damages to the parties whose goods are withheld if they cause loss or damage to withheld goods

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