Cases in which contracts are canceled under Vietnamese law

Cases in which contracts are canceled under Vietnamese law

Today, contract is an important and popular form of transaction in society. However, the signed contract is not always fully and smoothly implemented. In some cases, the contract can be canceled after signing. The following article will help you better understand contract cancellation from a legal perspective.

What is contract cancellation?

Contract cancellation is the cancellation of performance of obligations in a signed contract. Cancellation of contract includes cancellation of the whole and part of the contract.

Cancellation of the entire contract is the cancellation of all obligations agreed in the contract.

Cancellation of a part of a contract is the cancellation of a part of an obligation as agreed in the contract, the remaining parts of the contract are still valid.

Grounds for contract cancellation under Vietnamese law

A party has the right to cancel a contract and shall not be liable to compensate for damage in any of the following cases:

– A violation of contract by the other party gives rise to cancellation as agreed by the parties;

– The other party seriously violates the obligations in the contract. Serious violation means the failure to fulfill obligations properly by a party leading the failure to achieve the purposes of entering into contract by the other party.

Cancellation of contract in some specific cases under Vietnamese law

Cancellation of the contract due to late performance of obligations

– Where the obligor fails to perform the obligations that the obligee requests in a reasonable period of time but the obligor still fails to perform, the obligee may cancel the contract.

– If, due to the nature of the contract or by the will of the parties, the contract will not achieve the objective if it is not performed within a certain time limit, but the obligor fails to perform that contract upon the expiry date of such time limit, the obligee has the right to cancel the contract.

Cancellation of the contract due to inability to perform

Where the obligor cannot perform part or all of its obligations to make the purpose of the obligee may not be reached, the obligee party can cancel the contract and claim damages.

Cancellation of the contract in the case of lost or damaged property

Where a party losses or causes damage to property being the subject of a contract that cannot be refunded or compensated by other property or cannot be repaired or replaced with the same type of property, the other party may cancel contract. The violating party shall compensate in cash equal to the value of lost or damaged property.

Cancellation of contracts in case of delivery of goods or provision of services in installments

– Where there is an agreement on delivery of goods or provision of services in installments, if one party fails to perform its obligation for the delivery of goods or provision of services and such failure constitutes a substantial breach in that time of delivery of goods or provision of services, the other party shall have the right to declare the cancellation of the contract for such delivery of goods or provision of services.

– Where the failure of a party to perform its obligation for a delivery of goods or a provision of services serves as the basis for the other party to conclude that a substantial breach of the contract shall happen in subsequent deliveries of goods or provisions of services, the aggrieved party shall have the right to declare the cancellation of the contract for subsequent deliveries of goods or provisions of services, provided that such party must exercise that right within a reasonable period of time.

– Where a party has declared the cancellation of a contract for a single delivery of goods or provision of services, such party shall still have the right to declare the cancellation of the contract for a delivery of goods or provision of services that has been conducted or will be conducted subsequently if the interrelation between the deliveries of goods makes the delivered goods or provided services unable to be used for the purposes intended by the parties at the time they enter into the contract.

Consequences of cancellation of contracts under Vietnamese law

When a contract is canceled, the contract is void from the time of signing; the parties do not have to fulfill the obligations agreed upon, except for agreement on fines against violations, compensation and settlement of disputes.

The parties must return to each other what they have received after deducting from the reasonable costs of contract performance and cost of preservation and development of property.The refund is made in kind. In case it cannot be returned in kind, it is worth the money to repay. Where the parties are jointly obliged to refund, the refund must be made at the same time, unless otherwise agreed or otherwise provided by law.

The aggrieved party shall be compensated due to breach of obligations of the other party.

Notice of contract cancellation

A party cancelling a contract must notify the other party immediately of the cancellation [and] must compensate if the failure to notify causes damage.

Prescriptive period for initiating legal action with respect to contracts in Vietnam

The prescriptive period for initiating legal action to request a court to resolve a dispute relating to a contract is three years from the date on which the party entitled to request knows or should know that their lawful rights and interests are infringed.