Society is increasingly developing, increasing the need to produce and process goods to optimize its supply chain. When it is necessary to order the processing of goods, the parties involved need to establish a goods processing contract. So what is a goods processing contract? Viet An Law Firm offers the following article about drafting goods processing contracts to answer clients’ questions.
Pursuant to the provisions of Article 542 of the Civil Code 2015, a processing contract is an agreement between the parties, accordingly, the processing party performs its work to create the product according to the request of the ordering party, from which the ordering party receives the product and pays the processing contractor.
In addition, according to the provisions of Commercial Law, a processing contract is an agreement between the parties. Accordingly, the processing party will use part or all of the raw materials and materials of the ordering party to carry out one or more stages in the production process of goods at the ordering party’s request to receive remuneration, the ordering party will receive the product and pay remuneration according to the agreement.
Under the provisions of civil law, goods processing contracts must be made in writing or other forms with equivalent legal value.
Pursuant to the provisions of the Civil Code 2015, the parties to a processing contract have the right to agree on the content of the contract, accordingly, the contract can have the following contents:
The subject matter of the processing contract is the processed goods, the name of the processed product, and the quality and quantity of the product.
According to Article 180 of the Commercial Law 2005, the types of goods that can be processed are as follows:
According to the provisions of Article 183 of the Commercial Law 2005, the processing price and payment method must meet the following conditions:
In addition, the processing contract needs to clarify payment regulations, including:
The processing party has the following rights:
Obligations of the processing party:
Rights of the ordering party:
Obligations of the ordering party:
Either party will be responsible for serious violation of the contract in the following cases:
The terms of the processing contract can be mutually agreed upon by the two parties to implement the contract.
Clauses on applicable law and dispute resolution methods are standard clauses in contracts. During drafting and negotiating contracts, the parties will often not pay attention to this clause. If the contract does not regulate clearly, the potential arsing dispute can lead to adverse legal consequences for one or more parties in the contract.
Accordingly, when a dispute occurs, the two parties need to proactively notify each other of the progress of contract implementation. In case an unfavorable problem arises, the parties promptly notify each other and proactively discuss and resolve it based on negotiation to ensure mutual benefit for both parties.
It is possible to stipulate terms for resolving processing contract disputes in Vietnamese courts and arbitration, foreign courts, and arbitration. Especially for processing contracts with foreign elements. For example, if the ordering party is a foreign company or has foreign capital… the parties can choose foreign law to govern the contract and a foreign dispute resolution agency.
Accordingly, in cases where there is a dispute that cannot be negotiated on its own, the two parties agree to refer the case to the court, which has the authority to resolve these disputes.
In addition, the costs of inspection or verification and other fees are usually borne by the at-fault party.
The processing contract will be terminated in the following cases:
Clients need advice on drafting goods processing contracts, please contact Viet An Law Firm for our best support!
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