Contents need to be included in the Contract
Contract is a written agreement that is signed by both or many parties, to record a specific transaction’s agreement (it can be some normal civil issues such as authorization, deposit, asset transaction, or commercial contract such as sale of goods, agency, outsource…). This is the fundamental ground for parties to claim rights and responsibility; to guarantee the transparency, equality of pirates in the transaction.
According to Clause 385 of Civil Law, Contract is an agreement between parties to form, change or terminate civil rights, responsibility. Based on the contents, there are many types of contracts, such as:
- Sales of goods/ assets contract
- Hire/borrow assets contract
- Services contract
- Outsourcing contract
- Transport Contract
- Deposit Contract
- Promise to buy contract, Promise to sell contract
- Commercial Franchise contract
- Business Collaboration contract
- Technology Franchise contract
- Authorization Contract
Relevant Legal documents:
- Law on Civil 2015
- Law on Commercial
Contract ‘s parties and subject matter
- Contract parties lIs a party in a contract. Party here can be defined as individual (must have complete civil act capacity: more than 18 years old, do not receive court verdict of losing civil act capacity) or organisation (need to have legal representative or authorised by POA).
- Subject matter is the content that both parties desire, for instance asset is the subject matter in Sales of assets contract; in the brokerage contract an act brokerage is the subject matters…. The subject matter must be lawful, the parties in the contract must have the right to execute the content in contract. For instance, in the services contract, the pledger shall own all the responsibility for pledging.
- The value shall be transferred to the other parties in a transaction relationship. Theoretically, contract value that is negotiated between parties and the contract itself can have the value of “0 dong” (for instance, authorization contact without fees); However, in some situation, the contract value must be suitable with market value – especially the contract related to financial responsibility of competent authority (For instance real property sales)
- This value also must be suitable with the contract subject matter, especially when the contract’s value depends on the performance which is conducted by both parties and written in the contract. For instance, contracts for hiring assets must be specific about the hire fees, charge monthly or daily; goods processing contracts must be specific about the processing fees…
Time, timeline to perform contract
Is the timeline for both parties to perform their duty in the contract. For instance, in the transportation contract, it must be clear from which date to which date, how long, how many hours per day for transportation. In a consignment contract, then the time for consigning must be clear (1 month, 1 quarter or 1 year…).
Payment terms, methods
- Both parties can negotiate to choose the most suitable payment method, for instance: By cash, bank transferring, escrow…
- Besides that, payment terms are also an important content, it can be payment after receiving goods; partial advance payment; payment 30, 45 days after completing duty; instalment payment…
Rights and Responsibilities
- Depending on the subject matter, contract value and different content as well as the demand, desires of both parties, there will be different responsibilities, commitments.
- For instance, the processing contract might request for specific goods quality, design confidentiality, intellectual property…
- At this section, both parties’ responsibility and commitments prescribed at the previous section can be repeated again with more commitment details (if necessary). For instance, on time payment commitments, commitments on delivering the correct type of goods, warranty and maintenance commitments, commitments on interest for late payments.
This is a discretionary clause, not compulsory (but without those terms there will be no base to apply). Depending on the purpose, demands of both parties these terms can be negotiated or not. However, according to Law on Commercial 2005 the violation penalty will not exceed 8% of the contract duty value
The negotiation of dispute settlement (should any). However, if both parties wish to choose to settle the disputes by commercial arbitration then both parties should negotiate and write it in contract.
- Besides the matters negotiated above, there will be other issues for negotiation in the contract, for instance the shipment of goods, “monopoly” issues, human resources management… Regardless of the negotiation the equality in rights and responsibility should be guaranteed; avoid giving too much privilege for one party this could make the contract unperformable.
- Contract is an important document, both parties need to be conscious before signing.
- If necessary (especially for a contract with big value, or contract in a new business field with less prior experience) the individual, enterprise should contact a professional agency with ability, experience in consulting.
An Luat Viet Nam with professional lawyers with long experience in consulting, alway available to offer our clients with suitable advice in contract fields such as drafting, providing sample contract, reviewing contract, checking the eligibility of contract terms.
In special situation, we willing to accompany clients in solving conflicts arising from contract executions, filing a complaint with suitable jurisdiction court or at commercial arbitration centre… to guarantee the legal safety and lawful benefits of our client business activity