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Service contract disputes in Vietnam are increasing in both number and complexity. This article aims to provide information about service contracts and the laws applied in resolving service contract disputes.
What is a Service Contract in Vietnam?
According to Article 513 of the 2015 Civil Code, a service contract is an agreement between parties where the service provider performs work for the service user, and the service user pays for the service.
Clause 9, Article 3 of the 2005 Commercial Law also states that providing a service is a commercial activity whereby the service provider is obliged to perform the service for the customer and receive payment, and the service user is obliged to pay for the service and use the service as agreed between the parties.
Characteristics of a Service Contract in Vietnam
Service contracts have the following basic characteristics:
- Subject of the Service Contract: The subject of a service contract is work. This distinguishes it from other contracts such as sales contracts, lease contracts, and loan contracts, which usually involve tangible or quantifiable assets. The subject of a service contract is a specific, intangible task that is difficult to measure in terms of quality using conventional quantifiable means. Therefore, in service contracts, the parties must describe the service in detail, specifying the requirements and objectives they aim to achieve.
- No Transfer of Ownership: Since the subject of a service contract is work, there is no issue of transferring ownership. The obligation of the service provider is to achieve the work results or to perform the work to the best of their ability.
- Feasibility and Legality: The work in the service contract must be feasible and not violate legal prohibitions or social ethics.
- Competent Service Providers: The service provider must be an individual or organization capable of performing the service. This capability is defined by specific legal requirements in relevant specialized laws for each type of service.
- Diversity in Types and Fields: Service contracts vary widely. Based on service goals, they can be divided into distribution services, production services, social services, and personal services. Under the 2005 Commercial Law, service contracts include advertising services, display services, agency services, commission contracts, processing contracts, auction organization contracts, franchise contracts, and more. The 2015 Civil Code includes transportation contracts, insurance contracts, processing contracts, property custody contracts, and power of attorney contracts.
Types of Service Contract Disputes in Vietnam
1/ Disputes Over Contract Invalidity:
- A service contract can be invalid if the signatory representing an organization is unauthorized or exceeds their authority, or if the signatory is a minor, lacks civil act capacity, has limited civil act capacity, or has difficulty in perception and behavior control.
- A contract can be invalid if the work specified is infeasible, illegal, or unethical.
- If specialized laws require a specific form for the service contract and it does not comply, the contract can be declared invalid.
2/ Disputes Over Service Fees:
- The service provider may sue the customer for not paying the agreed service fees.
- The customer may sue the service provider for a refund if the service was not provided as agreed.
3/ Disputes Due to Service Provider’s Breach of Obligations:
- These disputes arise when the service provider fails to perform, performs incorrectly, or does not ensure the quality or quantity of the agreed work.
Legal Framework for Resolving Service Contract Disputes
Service contracts can be either civil or commercial, depending on the parties and the contract’s purpose. Therefore, the applicable legal provisions can be from the Civil Code or the Commercial Law, depending on the specific contract.
In principle, the applicable law for resolving service contract disputes is the law effective at the time of the transaction, i.e., when the service contract was signed.
Additionally, due to the variety of services, dispute resolution may involve not only general service contract regulations but also specific provisions of specialized laws governing that type of service. In resolving service contract disputes, specialized laws take precedence; if the specialized law does not cover an issue, general legal provisions apply.
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DCNH LAW
Address: 38B Tran Nhat Duat, Phuoc Hoa ward, Nha Trang city, Khanh Hoa province.
Phone: (+84) 343320223 – 974278893
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