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Cases of Contract Nullification According to Vietnamese Law. A contract is an agreement between parties regarding the creation, alteration, or termination of rights and obligations within the contract. When entering into a contract, the parties always wish for it to be valid and executed in practice. However, for various reasons, a contract can be declared null and void by the court. This article aims to analyze the cases where a contract may be nullified and the ensuing consequences.
Conditions for a Contract to Be Effective According to Vietnamese Law
According to the 2015 Civil Code of Vietnam, a contract is effective when the following conditions are met:
1/ The parties entering into the contract have the legal capacity and civil act capacity appropriate for the established contract.
2/ The parties entering into the contract are completely voluntary.
3/ The purpose and content of the contract do not violate the prohibitions of the law and are not contrary to social ethics.
4/ In cases where the law requires the contract to follow a specific form, the form of the contract is a condition for its validity.
Types of Contract Nullification According to Vietnamese Law
1/ Complete Contract Nullification: This occurs when the entire content of the contract is null and void.
2/ Partial Contract Nullification: This occurs when part of the contract is null and void, but this does not affect the validity of the remaining parts of the contract.
Cases of Contract Nullification According to Vietnamese Law
A contract is null and void if it does not meet one of the conditions for validity as outlined above, specifically:
1/ Contract Nullification Due to Violation of Law Prohibitions or Social Ethics
A contract with a purpose or content that violates the prohibitions of the law or is contrary to social ethics is null and void. The purpose of the contract is the benefit that the parties to the contract seek to achieve upon entering into it. Law prohibitions are the rules that do not allow individuals or organizations to engage in certain acts. Social ethics are the general behavioral norms in social life recognized and respected by the community.
2/ Contract Nullification Due to Falsification
When parties falsely enter into a contract to conceal another contract, the falsified contract is null and void while the concealed contract remains valid. If parties create a falsified contract to evade obligations to a third party, that contract is null and void.
3/ Contract Nullification Due to Minors or Persons with Limited Capacity
Contracts entered into by minors, persons with cognitive or behavioral difficulties, persons who lack civil act capacity, or persons with restricted civil act capacity, which according to the law must be established or agreed upon by their representatives, are null and void. Exceptions include contracts that satisfy daily essential needs for individuals under 06 years old or persons lacking civil act capacity, contracts that only give rights without obligations or exempt obligations for minors, and contracts recognized as valid by the signatories after reaching adulthood or regaining full civil act capacity.
4/ Contract Nullification Due to Mistake
A contract entered into with mistakes that cause one or more parties to fail to achieve their intended purpose is null and void unless the purpose is still met or the mistake is immediately rectifiable, ensuring the contract’s purpose is achieved.
5/ Contract Nullification Due to Fraud, Threat, or Coercion
If a contract is signed under fraud, threat, or coercion, it is null and void. Fraud involves intentional acts by one party or a third party that cause the other party to misunderstand the subject, nature, or content of the contract. Threat or coercion involves intentional acts by one party or a third party forcing the other party to sign the contract to avoid harm to health, life, honor, dignity, reputation, or assets of themselves or their relatives.
6/ Contract Nullification Due to Lack of Awareness and Control Over Actions
A contract signed by a person with full civil act capacity but at a time when they are unaware and unable to control their actions is null and void.
7/ Contract Nullification Due to Non-compliance with Form Requirements
The form of a contract can be verbal, written, notarized, certified, or registered. Different types of contracts require different forms by law. If a contract does not comply with the required form, it is null and void unless it meets specific conditions such as being partially executed.
8/ Contract Nullification Due to Unachievable Subject Matter
If, at the time of signing, the subject matter of the contract cannot be realized, the contract is null and void. If one party knew or should have known about the unachievable subject matter but did not inform the other party, they must compensate for any damages caused by entering into the contract.
Legal Consequences of Contract Nullification
A nullified contract does not create, alter, or terminate the rights and obligations of the parties from the time the contract was signed. When a contract is nullified, the parties must:
1/ Restore the original state and return to each other what they have received. If physical restitution is not possible, it must be replaced by equivalent value. A bona fide party receiving benefits is not required to return those benefits.
2/ The party at fault must compensate the other party for any damages.
Time Limits for Requesting Contract Nullification by the Court
The time limit for requesting the court to nullify a contract due to minors, cognitive difficulties, lack of civil act capacity, or restricted civil act capacity is 2 years from the date their representative becomes aware of the contract.
The time limit for requesting the court to nullify a contract due to mistake or fraud is 2 years from the date the mistaken or defrauded party becomes aware of the contract.
The time limit for requesting the court to nullify a contract due to threat or coercion is 2 years from the date the threat or coercion ends.
The time limit for requesting the court to nullify a contract due to lack of awareness and control over actions is 2 years from the date of signing the contract.
The time limit for requesting the court to nullify a contract due to non-compliance with form requirements is 2 years from the date of signing the contract.
There is no time limit for requesting the court to nullify a contract due to violation of law prohibitions, social ethics, or falsification.
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