PHÂN TÍCH RỦI RO PHÁP LÝ KHI KÝ KẾT VÀ THỰC HIỆN HỢP ĐỒNG

Concept The 2005 Commercial Law does not define what a commercial contract means,but under Article 1 and Article 2 of the 2005 Commercial Law state the scope ofregulation and the subjec

END-MODULE DISSERTATION

Module: Commercial Law

IMPLEMENTING THE CONTRACT

Ho Chi Minh, May 2020

TABLE OF CONTENT

Introduction 1

I Overview of commercial contracts 2

1 Concept 2

2 Feature 2

1.2.2 Form 3

1.2.3 Subject 3

1.2.4 Purpose 4

1.2.5 Conditions of the validity of the contract 4

3 The facility recognizes the commercial contract 6

II Legal risks arising from signing and performing a commercial contract 8

1 Risk of the subject signing the contract 9

2 Risk of the formality of the contract 9

3 Risks of contract object 9

4 Risk of no provisions on the basic contents of the contract 10

5 Risk of price, payment methods 10

6 Risk of guarantee letter 11

7 Sanction risks apply in case the parties violate the contract 12

8 Risks related to provisions on force majeure events 12

9 Risk of dispute resolution 13

III Recommendations for Vietnamese enterprises 14

1 Risk of the subject signing the contract 14

2 Risk of the formality of the contract 14

3 Risk of contract object 14

4 Risk of no provisions on the basic contents of the contract 14

5 Risk of price, payment methods 14

6 Risk of guarantee letter 15

7 Sanction risks apply in case the parties violate the contract 15

8 Risks related to provisions on force majeure events 15

9 Risk of dispute resolution 15

Conclusion 17

Reference

In commercial business as well as in ordinary civil activities, contracts are animportant type of transaction of any entity, whether individual or legal entity Mostcompanies in developed countries always uphold the process of drafting and signingcontracts Therefore, their commercial contracts are very detailed, coherent andanticipate even rare situations For example: Bill Gate, in an interview with Microsoftcandidates, asked: “What do you think is the factor that maintains the stability andsuccess of today's business activities? A typical candidate answered, "That is thecontract rigor." Many people at the time doubted the seriousness of this candidate'sanswer, but Bill Gate didn't think so He gave this candidate maximum points and gothim to work

Meanwhile, the majority of Vietnamese companies have not paid much attention

to this issue yet, still use stereotypical, monotonous, confusing and even backwardcontract forms compared to the current laws Consequently, the performance of thecontract is very difficult, prone to disputes and often lost when litigation Therefore, inorder to ensure favorable transactions, minimize risks leading to unfortunate damagefor each party and ensure the harmony of the transactions, we need to protect ourrights by carefully consider all matters when entering into a contract

As a result, there are many legal risks when signing and implementing thecontract, which makes the contract performance very difficult, prone to disputes, andoften lost when litigation Therefore, in order to ensure favorable transactions,minimize risks leading to unfortunate damage to each party and ensure the harmony ofthe transactions, we need to protect our rights by carefully consider all matters whenentering into a contract

For the above reasons, I decided to choose the topic: "Legal risks when signingand implementing the commercial contract"

I Overview of commercial contracts

1 Concept

The 2005 Commercial Law does not define what a commercial contract means,but under Article 1 and Article 2 of the 2005 Commercial Law (state the scope ofregulation and the subject of the 2005 Commercial Law) can define: Trade contract is

an agreement to conduct commercial activities on the territory of Vietnam andcommercial activities outside the territory of Vietnam if the parties agree to apply thislaw or foreign law, international treaties to which Vietnam Nam is a member withregulations that apply this law ”

Commercial activities are activities for profit-making purposes, including goodssale and purchase, service provision, investment and trade promotion (includingpromotional activities, commercial advertising, display and introduction of goods).goods, services, and other lucrative activities

Goods in commercial activities include all types of movable assets (includingalso properties formed in the future) and objects attached to land

According to Article 174 of the Civil Code, real estate and movable property aredistinguished as follows:

- Real estate means properties including:

+ Land

+ Houses and constructions attached to land, including properties attached tosuch houses and constructions

+ Other properties associated with the land

+ Other properties prescribed by law

- Assets are properties that are not real estate

2 Feature

1.2.1 Content

The content of a commercial contract in particular and a contract in general is asummary of the terms agreed upon by the parties to the contract, these terms define thespecific civil rights and obligations of the contracting parties However, the basicdifference of a commercial contract is that the content of a commercial contract iscommercial activity Each type of contract has certain provisions on basic terms Forexample: For a sales contract, the basic terms include the object and the price.

The law promotes agreement between the contracting parties, but the content ofthe contract must comply with the general provisions of the contract law, as provided

in the Civil Code 2015 Excluding the provisions of the law, Compulsory content, theparties may agree on other terms than those prescribed by law Article 398 of the 2015Civil Law provides that parties to a contract have the right to agree on the content of acontract: The object of the contract; Quantity Quality; Price and mode of payment;Duration, location, mode of contract performance; Rights and obligations of theparties; Responsibility for breach of contract Argument settlement."

Depending on the nature of each type of contract, the parties may agree or notagree on all of the above The parties may also add to the contract terms that do nothave provisions but the parties feel unnecessary

In addition, to clarify the content of the contract, there is an addition by theappendix of the contract The contract annex has the same effect as the contract, butthe content of the appendix must not be contrary to the contract

If the annex contains terms contrary to the content of the contract, this provisionshall not be effective, unless otherwise agreed

If the parties accept the contract annexes, the terms are contrary to the terms ofthe contract, it is considered that the terms of the contract have been amended

1.2.2 Form

Under the 2005 Commercial Law, commercial contracts are expressed verbally,

in writing or established by specific acts In case the law requires in writing, it mustfollow this form (for example: International goods sale contract, Sales service contract,Commercial advertising service contract, Display service contract, Business law4Trade in goods , Sales contract, Sales agent contract, Trade contract, )

1.2.3 Subject

The subjects of business contracts include traders (including lawfully establishedeconomic organizations, individuals who conduct commercial activities independently,regularly and with business registration), individuals and other organizations engaged

in trade-related activities (Article 2 of the 2005 Commercial Law)

to solve in the case chosen by that party

1.2.5 Conditions of the validity of the contract

The signed commercial contract must ensure the principles of the contract asprescribed by law The provision of the principle of entering into a contract to ensurethe agreement of the parties is in accordance with their real will, towards the legitimateinterests of the parties, and at the same time does not infringe upon the benefits thatthe law need protection According to the provisions of the Civil Code, the conclusion

of a contract must abide by the following principles: freedom of contracting but notcontrary to law and social ethics, commercial law is a separate law of civil law, so it isalso subject to adjustment of the above principles

According to Article 117 of the 2015 Civil Code, a transaction is valid when itmeets the following conditions:

- Firstly, the participants in the transaction have civil act capacity, because theact of contracting will give rise to legal rights and obligations for the parties.Therefore, in order for the contract to be legally effective and enforceable, thesignatory must be able to be aware of the act of signing the contract as well as theconsequences of the conclusion of the contract For individuals and organizations thatenter into contracts, they must be strictly competent If the participants in thetransaction do not have full civil act capacity, the contract will not be valid and will bedeclared invalid according to the law

- Second, the purpose and content of the transaction does not violate theprohibition of the law, not contrary to social ethics The purpose of the contract is thelegal benefits that the parties desire to achieve when entering into the contract Thecontent of the contract includes the terms agreed upon by both parties In order for thecontract to be valid and capable of being implemented, the law stipulates the purposeand contents of the contract must not be contrary to law and social ethics.

- Third, participants in transactions are completely voluntary The provision ofthe principle of entering into a contract to ensure the agreement of the parties is inaccordance with their real will, towards the legitimate interests of the parties, and atthe same time does not infringe upon the benefits that the law need protection.According to the provisions of the Civil Code, the conclusion of contracts in generaland commercial business contracts in particular must follow the principles: freedom ofconclusion but not contrary to law and social ethics: Voluntary, equality, goodwill,cooperation, honesty and integrity Acts of coercion, intimidation, and deception toconclude contracts are the reasons leading to the contract being considered invalid

- Fourth, if the law provides for the form of a contract, this provision must befollowed Usually it is a contract that must be made in writing or a contract documentmust be notarized or authenticated In this case, the form of the contract is a validcondition, when the parties are signed Follow the form prescribed by law For acommercial contract to be effective, it must be established in legally recognized forms

3 The facility recognizes the commercial contract

organizations (may or may not havelegal status)

Traders engaged in commercial activities or other organizations and individuals related to trade

As such, at least one of the parties must be a trader or entities with merchant statusPurpose Purpose of consumption, giving,

Speech, behavior, text

There are legally binding statutory contracts Forms likefax, telex and email are considered documents

- Contract of renting service contract

- Contract of service provisionContent

- Quantity Quality;

- Price, mode of payment;

- Duration, location, mode of contract performance;

- Rights and obligations of the parties;

- Responsibility for breach of contract

The 2005 Commercial Law stipulates that the total penaltyfor a commercial contract must not exceed 8% of the value of the violated contractual obligation, except for the case of a breach of an assessment service contract

Some typical types of contracts in commercial activities:

- Commodity trading contracts

- Service contract

 Promotion service contract

 Commercial advertising service contract

 Service displaying goods and services contract

 Representation for trader contract

 Trust contract

 Agency contracts

 Processing contract

 Goods auction service contract

 Transit service contract

 Franchise contract

And in fact there are many other types of commercial service contracts inconsulting, transportation, finance, post and telecommunications, tourism, education,entertainment

II Legal risks arising from signing and performing a commercial contract

When drafting a contract, the subjects should pay attention to the risks in enteringinto a goods sale and purchase contract, including:

Risk of the subject signing the contract

Risk of the formality of the contract

Risk of contract object

Risk of no provisions on the basic contents of the contract

Risk of price, payment methods

Risk of guarantee letter

Sanction risks apply in case the parties violate the contract

Risks related to provisions on force majeure events

Risk of dispute resolution

1 Risk of the subject signing the contract

- Partners without civil act capacity to perform the contract;

- The partner has no legal status;

- The representative of the partner is not authorized to sign the contract;

- The contracting party is beyond the scope of authorization;

- The subject does not have the qualifications and conditions to perform theobject of the contract

For example: a company with a large number of contracts with customers, the

Director did not have enough time to sign contracts with small customers, so themanager voluntarily signed a number of contracts while the Director of the companyhas not authorized the head of the department to sign the contracts under his authority.When customers have disputes that need to be resolved, the company will not solvethem In this case, there is a risk of the representative of the partner who is notauthorized to sign the contract

2 Risk of the formality of the contract

Some common types of contractual risks are:

- The two parties establish a non-written contract with respect to contracts thatmust be made in writing in accordance with the law

- The contract is not notarized or authenticated at a notary office competent toconduct notarization or authentication activities

For example: Company A trades with Company B, A assigns a shipment to

Company B, the two parties do not have a business contract because the two parties dolong-term business so they trust each other But by the time we provide goods to Party

B, Party A will not deliver them In this situation, Party B cannot sue Party A becausethere is no contract to authenticate

3

Risks of contract object

The object of a commercial contract is goods and services

Some risks may be encountered during contract performance:

- Disputes over goods that are not in the agreed subjects

- Disputes over the quality of goods are incorrect, do not meet the standards forimplementation (restricted) or prohibited by law;

- Dispute unit calculation

- When drafting a contract, the two parties do not specify and detail leading tomisunderstanding or due to a party taking advantage of a loophole to not perform itsobligations