How Can a Business Agreement in Vietnam Become Invalid?

Posted 15.09. 2020 by Cekindo

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When doing business in Vietnam, many circumstances will require a business agreement. The most common business agreements found in Vietnam are employment agreement, shareholder agreement, investment agreement, non-disclosure agreement, and sales and services agreement.

Many factors can cause a contract to become invalid. That’s why a professional legal consultant or specialist is mandatory.

When does a Business Agreement Become Invalid?

When doing business in Vietnam, a business agreement can become invalid when it is not drafted properly.

When a contract is invalid, it has no legal value, and all rights and obligations of all parties stated in it are useless. In accordance with Article 117 of the Civil Code, an invalid contract is due to the failure of meeting the following conditions:

1. The agreement violates Vietnam law or is against social morals

When the content or intent of a business agreement goes against the social ethics or prohibition of law, it is regarded as invalid. The law defines social ethics as common standards of social conduct that the community recognises and respects.

2. The agreement is confusing

An agreement is invalid when it has a mistake and causes confusion to either or both parties to realise the goal of the contract.

3. The agreement is fake

A contract is considered as fake when either or both parties fabricate a contract themselves to conceal another valid contract. A fake contract, of course, is invalid by law.

4. The agreement includes minors or other restricted individuals to perform the transactions

If the parties stated in the contract to carry out the transaction do not meet the full civil act capacity required under the law, the contract is deemed invalid.

5. The agreement does not meet the required formats

An agreement is invalid when it does not conform to the legal formats. For instance, it must be in written form and legally notarised or certified.

6. The agreement is deceptive, coercing, and/or threatening

A contract will be declared invalid once it is found that a party was threatened, coerced, or tricked into an agreement.

The Importance of a Legal Consultant or Lawyer to Assist with Agreement Drafting and Legalisation

Again, we need to emphasize the importance of hiring a legal consultant or lawyer to help you draft and legalise your business agreements in Vietnam.

Professional consultants or lawyers will go through comprehensive evaluation and recommendations throughout the drafting process. There are many reasons (as discussed) that can make your agreements invalid and any violations of agreements or contracts can bring severe legal consequences.

With a properly drafted and legalised agreement in place, one party needs to compensate another if the party breaches a contract, causes damages to another party or fails to fulfill the obligations stated in the contract. The court will also help in enforcing the contract if the contract is proved to be valid and effective.

Doing Business in Vietnam with Cekindo’s Assistance

When doing business in Vietnam, Cekindo can assist you to draft all business agreements in English and Vietnamese or other languages that you specify.

We understand that there are still many businesses that prefer spoken agreements, but this practice can be extremely unsafe and put your business at risk. Instead, having a written contract or putting the deal on paper is crucial to help your business mitigate litigation risks.

Cekindo’s team of professionals can prepare business contracts or agreements customised and refined to each client and each specific business type or project to greatly reduce risks.

We will clearly and transparently establish both parties’ expectations with the consideration of different circumstances that companies often face when doing business in Vietnam.

Let’s be preventive and let Cekindo help you to maximise your business success rate. Fill in the form below to discuss your business requirements.