Trading is a common commercial activity in which the seller is obliged to deliver, transfer ownership of the goods to the buyer and receive payment; The buyer is obliged to pay the seller, receive and own the goods as agreed. International law and Vietnam law both appreciate the agreements of parties to the sale contract as long as they are not agaisnt the law. Currently, sales contracts are governed primarily by the Civil Code 2015 and Commercial Law 2005.
Form of contract:
According to Article 24 of The Commercial Law 2005, a sale contract can be expressed either verbally, in writing or in a specific manner. However, there are some legal cases which must be made in writing (in order to facilitate tax administration or customs procedures, protect legitimate rights and interests of involved parties …).
Contents of sale contract (for reference only):
In general, the contents of the contract are terms that the parties discuss and approve to ensure the rights and obligations arising from both parties. These contents are also influenced partly by the law of the country where the contract is formed or the country where one or all the parties have nationality. In Vietnam, the parties may agree to the following terms:
- Information of the parties to the contract: name, address of buyer and seller, intermediary, transportation (if any).
- Valid time of the contract
- Information on goods: the goods must not be on the list of commondities banned from commercial business. To the goods falling into the list of commondities allowed for commercial business under certain conditions, the goods must fulfill all the requirements of law.
- Quantity, quality of products, conditions for preservation (if any)
- Deposit (if any)
- Price of the product, method of calculation and payment, payment term, level of compensation in case of late payment
- Rights and obligations of the parties
- Penalties for breach of contract: the total penalty shall not exceed 8% of the contract value
- Additional terms, changes or cancellations
- Other terms agreed by the parties that are not against the law
- To the contracts selling special goods such as things attached to land (buildings, trees, buildings) are subject to The Land Law of 2013 and the Housing Act 2014.
- In the case of international sale contracts, the parties should pay attention to the provisions on the selection of applicable law and dispute settlement organisation. Goods entered into in the contract are not on the list of goods banned from exportation or importation in accordance with the regulations of the State of which the parties bear the nationality, or the special place of business there or the country where the contract is effected.
- After drafting the contract, the parties should give it to a lawyer to check for its legal effect to reduce legal risks in the future.