Credit institutions are a special type of business in today’s modern economy. Lending is one of the basic activities of credit institutions. This activity plays an important role, in connecting those who need capital with those who have excess capital, ensuring capital needs for different uses of subjects, promoting production, reproduction, and regulating the macro economy. For this activity to be recognized and have legal value, a credit contract is required. Viet An Law hereby offers an article on drafting credit contracts in Vietnam below.
A contract is an agreement between parties to establish, change, and terminate the rights and obligations of the participating entities.
Credit activity is understood as an agreement for an organization or individual to use a sum of money or a commitment to allow the use of a sum of money on the principle of repayment by lending, discounting, or leasing assets. financing, factoring, bank guarantees, and other credit granting activities.
A credit contract is in fact a type of asset lending contract specified in the Civil Code 2015, with the lender being a credit institution. A credit contract can be understood as a written agreement between a credit institution and clients who are individuals or legal entities that meet all conditions prescribed by law. Accordingly, the credit institution will lend the client a certain amount of money. When the loan is due, the borrower must pay both principal and interest according to the interest rate that the parties have agreed upon.
With the above concept, credit contracts have some basic characteristics as follows:
Some contents in the credit contract
In addition to information about the time and place of signing the contract, information about the lender and the borrower in the credit contract also includes the following content:
Some notes when drafting credit contracts in Vietnam
Does the credit contract require security measures?
Credit contracts do not require security measures, depending on the agreement of the parties, unless otherwise prescribed by law. In case there is a guarantee, the guarantee contract is usually established separately from the credit contract (pledge contract, mortgage contract, guarantee contract).
What is the term of capital use in different types of credit contracts?
Based on the time of capital use, credit contracts include short-term and long-term credit contracts. In particular, short-term credit contracts have a loan period of up to one year, often meeting the business needs of clients in a short period of time. Medium and long-term credit contracts, with a capital usage period of one year or more, usually meet the fixed shopping, consumption, and business needs of clients.
Can all individuals and legal entities participate in credit contracts?
Credit institutions are not allowed to lend capital to commit illegal acts, or lend money in cases where lending is prohibited.
For example: Credit institutions and foreign bank branches are not allowed to lend to parents, spouses, or children of members of the Board of Directors, members of the Board of Members, or members of the Supervisory Board, General Director, Deputy General Director and equivalent positions of credit institutions and foreign bank branches.
Clients who need advice on drafting credit contracts in Vietnam in particular and drafting civil and economic contracts, please contact Viet An Law for the best support.
#3rd Floor, 125 Hoang Ngan, Hoang Ngan Plaza, Trung Hoa, Cau Giay, Hanoi, Vietnam