DISPUTES RELATED TO DEPOSITS IN CONTRACTS
As a guarantee for contract performance, the parties often recognize the deposit obligations of the party entitled to receive goods or services in the contracts; for example, contracts for sale and purchase of goods, apartment purchase contracts, land use right transfer contracts, etc. Although Vietnamese laws have adjusted the deposit obligations. However, Vietnamese laws don’t specify the value of the deposit compared to the total value of the sales contract. In the context that the Covid 19 pandemic is uncontrollable in many parts of the world, the implementation of contracts including and not limited to contracts for sale and purchase of goods become quite common. Therefore, the parties in the sales contract also often require the buyer to deposit more money and /or apply heavier sanctions when the deposit has already been made but has not yet performed the contract.
Lac Duy & Associates‘s experienced lawyers and legal experts share some (1) legal provisions related to deposit matters and (2) practical experiences related to the handling of breaches of contract when the parties who have deposited in the sale contract as follows:
1. Provisions of Vietnamese laws
Deposit means a deposit by one party (hereinafter referred to as a depositing party) to the other party (hereinafter referred to as the depositing party) an amount or precious metals, gems or other valuables (hereinafter referred to as deposit assets) for a period of time to secure the conclusion or implementation of the contract (as prescribed in Article 328 of the Civil Code 2015).
The deposit may be entered into an independent deposit contract, or the parties have the right to agree to record the deposit terms in the signed contract. Regardless of the form established, the legal value of the deposit agreement is understood to be the same, the establishment of a separate deposit contract only helps the parties to agree in more detail, clearer on the deposit and the obligations arising from the deposit.
2. Notes to protect the deposit
When depositing in sales contracts, the buyer needs to determine who the seller is? The recipients of our deposit are those who are competent to perform the obligations related to the deposit, are not they? In particular, the competent person shall be the legal representative or the person authorized by the legal representative (if it is an organization) or an individual with full legal capacity and act capacity (if it is an individual). Particularly in case of authorization, in order to prevent risks, proxy transactions are disabled, the parties need to check whether the authorization is legal (whether it is done in writing with authentication, the scope of authorization of the parties) …
It is necessary to record the time of contract execution after receiving the deposit and handling measures if the deposit recipient does not perform the contract (return of deposit, compensation for damages, penalties for breach of contract…);
It should be noted that different contracts; example.e.;, apartment purchase contracts or land use right transfer contracts, Vietnamese law stipulates that the validity of contracts shall be decided by the fact that whether the contract must be recognized. Therefore, the parties shall take into consideration if the deposit contract, in principle, shall also be notarized so as to make it effective. Meanwhile, for sale contracts of ordinary goods such as gloves and masks, the contract, if duly signed and stamped by a competent person, the deposit under this contract has also taken legal effect, without having to be notarized.
Lac Duy & Associates has many years of experience in solving these problems. If you have any questions about deposit contract disputes or need advice on deposit contract disputes or other contract disputes, you can contact Lac Duy & Associates for timely answers and support.