Civil contracts and commercial contracts are two prevalent types of agreements in practice. What are the similarities and differences between these two contract types in Vietnam?
1. General
The term “civil” can be understood in two contexts: first, in a narrow sense, referring to purely civil matters such as inheritance and family relationships; and second, in a broader sense, encompassing areas like investment, labor, business activities, insurance, and more. In the broader context of civil transactions, business-commercial contracts are viewed as civil transactions alongside civil contracts. However, a closer examination reveals that, while they share similarities, civil contracts and business-commercial contracts also have distinct differences.
In Vietnam, commercial contracts are specifically regulated under the Commercial Law, which provides a legal framework for business activities. These contracts typically involve the exchange of goods and services between businesses and are characterized by their profit-oriented nature. Key elements of commercial contracts in Vietnam include the obligation to deliver goods, payment terms, and liability clauses. Given the dynamic nature of the Vietnamese market, understanding these contracts is crucial for businesses to navigate the legal landscape effectively.
2. Similarities and differences
| Criteria | Content | |
| Civil contract | Business-commercial contract | |
| Elaborating Law | Civil Code 2015 | Commercial Law 2005 Civil Code 2015 |
| Contract purposes | Purpose of consumption, donation,… not necessarily for profit purposes | Purpose of profit |
| Form of contract | Verbal or specific behavioral agreements are common in some common and simple transactions | Most of them are concluded in the form of a written form as a basis for determining the legal value due to the large transaction value |
| Contents of the contract | There are no terms on freight and insurance as in commercial contracts | In addition to the basic provisions, there are also specific provisions on freight and insurance provisions |
| The parties of the contract | in a civil contract the parties are an individual to legal entity, an individual to an individual, and legal entity to legal entity. | The party entering into the contract must have at least one legal entity |
| Breach of contract and contract compensation | Compensation and fines against violations of civils contract, priority shall be agreed upon in advance by both parties. If no agreement is reached, the settlement shall be settled according to the civil law. | Commercial contract shall impose a penalty for breach which not more than eight percent of the contract value, and the contract compensation shall be calculated in monetary terms according to the fact that the claimant party can be determined. |
| Dispute resolution | The dispute settlement agency is the Court | Courts and arbitrators can be selected as agreed upon by the parties |
In conclusion, while civil contracts and commercial contracts share foundational similarities, such as voluntary establishment and common structural elements, they differ significantly in key areas. Civil contracts can involve individuals and legal entities and serve a wider range of purposes beyond mere profit, including consumer relations and labor agreements. In contrast, commercial contracts specifically require at least one legal entity and focus solely on profit-driven transactions involving the sale of goods and services.
Additionally, the mechanisms for addressing breaches and dispute resolution differ, with civil contracts typically resolved through civil law and commercial contracts often utilizing arbitration or specialized commercial courts. Understanding these distinctions is crucial for parties engaging in contractual agreements in Vietnam.
3. Frequently Asked Questions about Civil Contracts and Commercial Contracts?
What are the common elements that must be included in a commercial contract?
A commercial contract in Vietnam must include essential elements such as the identification of the parties, a clear description of the goods or services involved, terms of payment, delivery conditions, risk mitigation, rights and obligations of each party and provisions for dispute resolution, evidence and enforceability…
How are disputes resolved in civil contracts?
Currently, contract disputes are primarily settled through four main methods:
Settling Disputes through Negotiation: This is often the first method chosen by the parties. Most business and commercial disputes are resolved through self-negotiation, with the state encouraging this approach based on the principle of respecting the parties’ right to agree.
Settling Disputes through the Court: This method involves the parties submitting their disputes to a judicial body for resolution. The court conducts proceedings to make a legally binding decision.
Settling Disputes through Arbitration: In this method, the parties agree to submit their disputes to an arbitration center. An arbitrator reviews the case and issues a judgment that is enforceable.
Settling Disputes through Mediation: Mediation involves an intermediary (mediator or mediation center) facilitating discussions between the disputing parties. Together, they work towards a mutually agreed solution, which they voluntarily implement.
What penalties apply for breach of a commercial contract in Vietnam?
In Vietnam, Under Article 300 of the 2005 Commercial Law, a penalty for breach of contract allows the aggrieved party to demand compensation from the breaching party if agreed in the contract, unless exempted by law. For this remedy to be valid, there must be a penalty clause in the contract. However, penalties do not apply in certain situations, including:
- Agreed exemptions by the parties.
- Force majeure events.
- Breaches entirely due to the other party’s fault.
- Breaches resulting from actions taken under a decision of a competent authority unknown at the contract’s conclusion.
Article 301 states that the penalty amount for a breach or multiple breaches cannot exceed 8% of the value of the breached obligations, except in cases of incorrect assessments.
With the above article, TLA Law Firm has provided readers with essential information about civil contracts and commercial contracts. If you have any related questions, please contact us for promptly advice and support.
CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
-Doan Huyen My-