Introduction

As detailed in a prior post, in our opinion, representations and warranties (warranties) should constitute obligations of the person giving it under Vietnamese law. They could imply an obligation on the part of the person providing them (Warrantor) to guarantee that the stated facts and matters are true. In this post, we will try to examine the consequences of breaches of representations and warranties under Vietnamese law. As discussed further below, depending on the context, a breach of warranties might give rise to:

·        liabilities for breach of warranties as independent obligations; or

·        liabilities for breach of obligations to deliver conforming goods; or

·        liabilities for breach of obligations to provide information to contracting parties; or

·        indemnity (or reimbursement) of losses to the extent the parties have agreed for an indemnity (or reimbursement) of losses arising from a breach of warranties.

Given that “representations and warranties” are exclusively common law concepts and no specific legal framework for them is provided under Vietnamese law, it is important that Vietnamese law contracts should have provisions dealing with the above in order to achieve the intended outcome of the parties.

Based on the discussion below, probably, the preferable approach is to have specific wording in the share sale and purchase agreement that warranties form part of the description and quality of the sale shares so that, among other things, seller could be subject to the remedies applicable to breach of obligation to deliver non-conforming goods.

Representations and warranties constitute an important building block in a contract. Unfortunately, Vietnamese contract law does not have a separate regime on representations and warranties. Accordingly, this gives rise to various questions concerning representations and warranties under Vietnamese law. The first question would be whether representations and warranties are considered as obligations of the person giving it.

In a book on Vietnam contract law, the author, a well-known business lawyer, considers that representations and warranties are statements of facts and are not undertaking to perform or not perform a specific task. Therefore, representations and warranties are not obligations under Vietnamese law. We have a different view on this.