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Posted in: Contract Law
The new Civil Code 2015 allows a party to a contract to (i) request the other party to re-negotiate the contract; or otherwise (ii) request the court to decide terminating or amending the contract if the circumstance has been substantially changed. A circumstance could be invoked as substantially changed if it satisfies the following conditions:
“Consumer” is defined to mean “a person purchasing or using goods and services with the aim of consumption for daily needs of individuals, families or organizations. The term “person” here could mean either an individual or an organization. Therefore an organization under Vietnamese law may also be treated as a consumer. The only distinction is that a consumer uses the goods for consumption purpose. However, for a business entity which purchases various inputs during its operation in order to provide goods or services to its clients, the inputs could be treated either as “consumption purpose” or as “business purpose”.
The new Civil Code 2015 has substantially limited the caveat emptor rules in Vietnam. The Civil Code 2015 requires a party before entering into a contract with another party to disclose to the other party information that may affect such other party’s decision to enter into the contract. Failure to notify will be subject to compensation for damages. On the other hand, the normal caveat emptor rule does not require a seller to disclose information about the seller’s goods to a buyer unless the buyer specifically asks for such information (e.g. by way of a contractual representation).
In December 2015, Vietnam decided to join the United Nations Convention on Contracts for the International Sale of Goods (CISG) with effect from 1 January 2017. Vietnam reserves provisions regarding formality of contracts under Articles 11, 29 and Section II of CISG. Vietnam is an active trading country. Therefore, from a legal perspective, CISG will have major impact on all international sale of goods involving Vietnam and other countries, which are also CISG members (e.g. Japan, China, and US).
Under Commercial Law 2005, where provisions of CISG are inconsistent with the provisions of the Commercial Law 2005, the provisions of CISG will apply. Therefore, if a sale of goods contract involving a Vietnamese party does not exclude CISG expressly then CISG will presumably apply to such contract. In view of this, one more thing that lawyers practicing in Vietnam have to consider now is whether to exclude or include the provisions of CISG in cross-border sale of goods contracts. In case of inclusion, one should decide which language version of CISG should be used since CISG has many different official texts.