Interest on late payment in 2016 precedent

Assoc.Prof.Dr. DO VAN DAI – Dean of the Faculty of Civil Law – City Law University. Ho Chi Minh City – In 10 published case precedents, there is a case related to interest due to late payment (late payment) of an amount. That is Case Law No. 08/2016/AL (built on the basis of Cassation Decision No. 12/2013/KDTM-GDT dated May 16, 2013 of the Council of Judges of the Supreme People’s Court) and the Court of Justice of the Supreme People’s Court. Law No. 09/2016/AL (built on the basis of Cassation Decision No. 07/2013/KDTM-GDT dated March 15, 2013 of the Council of Judges of the Supreme People’s Court).

Revolving around these two precedents, we have some notable questions as follows: First , what amount of money can generate interest on late payment? Second , how long does it take to calculate interest on late payment? Third , how much is the interest rate to calculate late payment interest?

I- About the amount that generates interest on late payment

1) The amount of money that is allowed by precedent to generate interest on late payment

* Repayment from loan contract

Currently, we have two types of loans: credit loans [1] and ordinary civil loans [2] . Both types of loans generate an obligation to repay the borrowed property (usually a sum of money) and in the event the borrower fails to repay the loaned property on time, the borrower must bear interest on late payments.

In Case Law No. 08/2016/AL, the content of the selected precedent affirmed: “… For loans from banks and credit institutions, in addition to the principal amount, due interest, and interest. If the loan is overdue, the fee that the borrower must pay to the lender under the credit contract up to the date of the first-instance trial, from the next day of the first-instance trial, the borrower must continue to bear the loan amount. overdue interest on the unpaid principal amount… ”.

The above content shows that the late payment of credit loans generates interest on late payment and this is also true for ordinary civil loans.

* Refund due to non-performance of the contract

        According to Article 306 of the Commercial Law 2005: “In case the breaching party is late in paying for goods or late in paying service fees and other reasonable expenses, the aggrieved party has the right to demand payment interest on such amount of late payment according to the average overdue debt interest rate on the market at the time of payment corresponding to the period of late payment, unless otherwise agreed or otherwise provided by law” . The above regulation refers to late payment interest and has the governing scope as “delay in payment of goods or delay in payment of remuneration for services and other reasonable expenses” for relationships within the scope of this Law. Commerce. In fact, there are often cases where the seller receives money but does not deliver the property (goods) in accordance with the contract (such as not delivering, not delivering enough or delivering but not ensuring the quality) and must return the money received. The question is, does this amount (receiving party must repay) generate interest on late payment? Currently, the text is not really clear on this content, but Case No. 09/2016/AL has the answer. Specifically, the content of the above-mentioned precedent affirmed: “For the amount of advance without receiving goods of 4 economic contracts, the first-instance court determined the exact amount and forced Hung Company to Yen must be returned to Viet Italy Company is correct. However, when calculating interest for late payment of the above-mentioned amount, the first instance court, although applying Article 306 of the 2005 Commercial Law, did not take the average overdue interest rate on the market at the time of payment. (first-instance trial) to calculate, but apply the basic interest rate announced by the State Bank at the time of first-instance trial at the request of the plaintiff to apply the overdue interest rate (which is 10.5 %/year) is incorrect. In this case, the Court needs to take the average overdue interest rate of at least three local banks…”. The above content shows that late payment interest is applied to both the seller’s refund of the goods due to the buyer’s failure to receive the goods as the contract and the calculation of interest is applied on the basis of Article 306 of the Commercial Law.

The content of the above precedent is convincing. Regarding the scope of application, the above precedent was formed on the basis of an economic contract, but the same solution should be applied to a contract that is not an economic contract like a civil contract on the basis of Clause 2 of Article 2. 8 Resolution No. 03/2015/NQ-HDTP dated October 28, 2015 of the Council of Judges of the Supreme People’s Court, according to which: “When adjudicating, judges and jurors must study and apply case precedents. to settle similar cases, to ensure that cases with similar circumstances and legal events must be handled equally…” . This precedent is formed on the basis that the seller refunds the advance when the buyer does not receive the goods in accordance with the contract and the same solution should be applied to the case of contract cancellation due to a breach, because in this case, there is also an obligation to refund (according to the Civil Code [3] as well as the Commercial Law [4] , the payee must return the money received when the contract is cancelled) and there has been a decision to supervise The Court of Appeal of the Council of Judges (described in the following section) follows this direction [5] (in France, there is also a Court in this direction such as the Metz Court of Appeal in 2011 [6] ). When the contract is invalidated, the money-receiving party must also return the money received and the court of our country in the direction of the refunding party must also bear interest on the money received as in the case of the People’s Court of Binh Duong province . ] and we should maintain this direction for consistency with the analyzed Case No. 09/2016/AL. In order to show the persuasion of the above-mentioned direction, we would like to note, adding that the French judicial practice also has a Court in this direction such as the Court of Appeal of Toulouse in a 2014 judgment [8] and the new France. Amendments to the law on civil obligations also stipulate in the direction that the party who refunds an amount due to the contract’s invalidity, cancellation or other reasons must pay interest on late payment in addition to the refund of the amount. : According to Article 1352-6 of the French Civil Code amended in 2016, “ The return of an amount including interest according to the law ” and this provision “applies to all cases of contract cancellation even though this cancellation is retroactively or non-retroactively such as invalidity, cancellation of contract or voided contract” [9] .

2) The amount that is not allowed by precedent to generate interest on late payment

* Penalties for breach of contract 

Our current law recognizes a breach of contract penalty mechanism. Specifically, according to Article 300 of the Commercial Law as well as Article 422 of the 2005 Civil Code (Article 418 of the 2015 Civil Code), “A fine for a breach is a request by the aggrieved party to pay a fine for breach of the contract if in the contract agreement” and ” Breaching penalty is an agreement between the parties in the contract, whereby the breaching party is obliged to pay a sum of money to the aggrieved party” . With the above provisions, the penalty for breach of contract is shown by the breaching party paying the aggrieved party a sum of money and the question is, in addition to the fine, does the violating party have to bear interest on late payment? The answer is contained in Case Law No. 09/2016/AL with the content: “The first-instance court accepted the request for a penalty for breach of contract of Viet Italy Company to be grounded, however, it charged interest on the amount of money. penalty for breach of contract is not correct”. Thus, Case Case No. 09/2016/AL has followed the direction that the penalty for breach of contract does not generate interest.

* Compensation for damage caused by breach of contract

        When a breaching party causes damage such as breach of contractual obligations, causing damage, they must be responsible for compensating for damage. This liability to compensate for damage is recognized in Clause 1, Article 302 of the Commercial Law, whereby: “ Damage compensation is the compensation by the violating party for the losses caused by the breach of contract to the aggrieved party. offense” . The Civil Code 2005 also recognizes the liability to compensate for damage in Article 302 et seq. Today, the 2015 Civil Code affirms in Articles 13 and 360 that “Individus and legal entities whose civil rights have been infringed shall be compensated for all damages, unless otherwise agreed by the parties or otherwise provided for by law. ” and “In case of damage caused by breach of obligation, the obligor must compensate for all damage, unless otherwise agreed upon or otherwise provided by law” .

Usually, compensation is made by paying a sum of money and the question is, will this compensation generate interest? In other words, in addition to paying the damages, will the party who has to pay the damage pay interest on late payment? In Case Law No. 09/2016/AL, we have the answer. Specifically, in the content of the case law, we see that “The first-instance court also included interest on the compensation amount, which is inconsistent with the provisions of Article 302 of the 2005 Commercial Law”.

* Unpaid interest 

It is possible for the parties to agree on interest on an amount (such as the borrower having to pay monthly interest or the buyer having to pay monthly interest in the case of late payment of the purchase price) and the obligor to pay interest late (besides the purchaser). late payment of principal). Here, does unpaid (unpaid) interest generate interest? The answer is already in the Case Case Content of Case Law No. 08/2016/AL. Specifically, in the content of the case law, we see that “For loans from banking and credit institutions, in addition to the principal amount , due interest, overdue interest , and fees that customers borrow must pay the lender under the credit contract up to the date of the first-instance trial, from the next day of the first-instance trial, the borrower must continue to bear the overdue interest on the principal amount. unpaid ”. With the content of the above case law, late payment interest is only calculated on the “unpaid principal amount” and not on the unpaid interest. This direction excludes the possibility that the mother’s interest is the child’s interest.

However, for loan contracts, Civil Code 2015 has changed on this topic. Specifically, according to Clause 5, Article 466 of the Civil Code 2015: “In case a loan has interest but when due, the borrower does not pay or pays in full, the borrower must pay interest as follows: a) Interest on the principal at the agreed interest rate in the contract corresponding to the loan term but not yet paid by the due date; In case of late payment, interest must also be paid at the rate specified in Clause 2, Article 468 of this Code; b) Interest on overdue principal that has not been paid is equal to 150% of the loan interest rate according to the contract corresponding to the delayed payment period, unless otherwise agreed . This regulation allows the application of interest on the unpaid interest [10] , so for the case that falls within the scope of application of the above clause of the 2015 Civil Code, Case Law No. 08/2016/AL is not valid on the basis of prescribed in Clause 3, Article 8 of Resolution No. 03/2015 NQ-HDTP, according to which: “In case there is a change in the Law, Resolution of the National Assembly, Ordinance, Resolution of the Standing Committee of the National Assembly, If the precedent is no longer relevant to the Government’s decree, the judge or juror shall not apply the precedent.

II- Interest rate to calculate late payment interest and late payment interest period

1) Interest rate to calculate late payment interest

* How to determine the prescribed interest rate 

The law provides for the interest rate in case of late payment without an agreement on the interest rate. According to Clause 2, Article 305 of Civil Code 2005: “In case the obligor is late to pay, that party must pay interest on the late payment amount at the basic interest rate announced by the State Bank corresponding to the period of late payment. at the time of payment…” . The Civil Code 2015 has changed with the provisions in Clause 2, Article 357 that: “The interest rate arising from late payment is determined by agreement of the parties but must not exceed the interest rate specified in Clause 1 of Article 3. 468 of this Code; if there is no agreement, the provisions of Clause 2, Article 468 of this Code shall apply. Meanwhile, Clause 2, Article 468 of the Civil Code 2015 affirms: “In case the parties have an agreement on interest payment, but the interest rate is not clearly defined and there is a dispute over the interest rate, the interest rate shall be determined equal to 50% of the interest rate. limited interest rate specified in Clause 1 of this Article at the time of debt repayment” , ie 10%/year of the loan amount. On its side, the Commercial Law in the other direction in Article 306 mentioned above is the interest rate equal to “the average overdue debt interest rate in the market at the time of payment” .

With the 2015 Civil Code, determining the prescribed interest rate (without agreement) is relatively easy, but the interest rate under the Commercial Law is still quite general. Here, “the criteria for determining the late payment interest rate in the Commercial Law are not clear. We do not know how many banks need to take the average interest and in what territory (commune, ward or district or province, city?). We also do not know which bank’s interest rate to take to calculate the average interest. Because of this ambiguity, the reality shows that the application of provisions of the Commercial Law is not uniform among the Courts” [11] . On this topic, Case Law No. 09/2016/AL specified the above interest rate with the content: “ The court needs to take the average overdue interest rate of at least three local banks (Agriculture Bank and Vietnam Commercial Joint Stock Bank). Rural Development Vietnam, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Joint Stock Commercial Bank for Industry and Trade of Vietnam, etc.) to recalculate the interest due to late payment in accordance with the provisions of law”.

The content of the above case law is in the direction of needing to take the average interest rate “of at least three banks”, so we can take the average interest rate of 3 or more 3 banks like taking the average interest of 5, 6 or 7 Banks: The above precedent only gives the minimum number, not the maximum number, so if the plaintiff gives 3 different banks than the defendant’s 3 banks, the jurisdiction can completely take the average amount. average of all 6 banks. Still according to the above case law, we take the average interest rate of at least 3 “local” banks but it is not clear which locality. Here, we do not take the locality of the plaintiff or the defendant but should take the locality where the Court is dealing with the case (for Arbitration, it is at the Arbitration place to settle the dispute as we still do in framework of VIAC).

* Time to determine the prescribed interest rate 

The above shows how to determine the average interest rate on overdue debt in the market, but the interest rate in the market changes over time, so the question is when to determine the above interest rate? According to Article 306 of the Commercial Law 2005, this interest rate is the interest rate “at the time of payment”. Similar provisions also exist in the 2005 Civil Code, because Clause 2, Article 305 of the 2005 Civil Code stipulates: “In case the obligor is late to pay, that party must pay interest on the amount of late payment at the basic interest rate due to The State Bank shall announce the corresponding delay time at the time of payment” . The re-determination of the level “at the time of payment” is still maintained in the Civil Code 2015. However, this is impossible because, when settling disputes, the Court as well as the Arbitrator cannot know the exact time. at which point the person is obligated to pay. In fact, the time of payment takes place after the time the Court or Arbitration makes the decision. That is to say, the time of payment is a time in the future, so at the time of dispute resolution, the jurisdiction cannot know how the future interest will be?

On the above topic, Case Law No. 09/2016/AL followed the direction of “ The first instance court, although applying Article 306 of the 2005 Commercial Law, did not take the average overdue interest rate on the market at the time of application of Article 306 of the Commercial Law. payment (first-instance trial) for calculation, but apply the base interest rate announced by the State Bank at the time of first-instance trial at the request of the plaintiff to apply the overdue interest rate (which is 10 .5%/year) is not true”. With the above content , we understand that, ” not taking the average overdue interest rate on the market at the time of payment (first-instance trial) to calculate (…) is not correct” so let it be “correct”. must take the interest rate at the ” time of payment (first instance trial)”. The above direction of the case law is acceptable (if the word “first instance” is omitted, it will be more convincing to allow the interest rate at the time of appeal if there is a change). Because, the direction as written is impossible as shown (for this reason, the Civil Code 2015 has changed in the direction of fixing a fixed interest rate, so no matter the time of payment, a certain amount will be applied). profit [12] ).

* Interest before and after trial 

In the case forming Case Law No. 08/2016/AL, after the trial, the local court followed the direction of applying the basic interest rate, while it seemed that before the trial time was a different interest rate.

The content of Case Case No. 08/2016/AL, we see that: “The Court of First Instance and the Court of Appeal decided: “From the date the judgment takes legal effect and the judgment creditor has an application request judgment enforcement, the judgment debtor must also pay interest on the amount of late judgment execution at the basic interest rate announced by the State Bank corresponding to the delayed judgment execution time” is also incorrect. For loans from banking and credit institutions, in addition to the principal amount, due interest, overdue interest, and fees that borrowers must pay to the lender under the credit contract, up to the date of the first-instance trial, from the next day of the first-instance trial, the borrower must continue to bear the overdue interest on the unpaid principal amount, at the interest rate agreed upon by the parties in the first-instance trial. contract until the principal is fully paid. The direction as the content of the case law above is convincing. Because, “the decision of the judicial authority does not “build” a new interest rate, but only has the role of “confirming” and “maintaining” the existing interest rate . In other words, the Court only has the role of confirming an existing but disputed situation, but not the role of transforming an existing relationship before the trial into another relationship after the trial. Therefore, it is necessary to maintain a pre-trial interest rate for the entire post-trial period.

* Negotiable interest rate 

According to Clause 5, Article 474 of the Civil Code 2005: “In case of a loan with interest but when due, the borrower fails to pay or fails to pay in full, the borrower must pay interest on the principal and overdue debt at the basic interest rate set by the Bank. The State shall announce corresponding to the loan term at the time of debt repayment” . The above regulation discusses the overdue interest of the loan contract with interest and in the direction that the applied interest rate is “the basic interest rate announced by the State Bank corresponding to the loan term at the time of debt repayment” without specifying Can the parties agree on the interest rate in case of late payment? On this topic, Case Law No. 08/2016/AL follows the direction: “ For loans from banking and credit institutions, in addition to the principal amount, due interest, overdue interest and fees, the borrower must pay the lender under the credit contract up to the date of the first-instance trial, from the next day of the first-instance trial, the borrower must continue to bear the overdue interest on the loan amount. the unpaid principal at the interest rate agreed upon by the parties in the contract until this principal is fully paid .

In the above content, Case Law No. 08/2016/AL was in the direction of accepting the agreed-upon interest rate (not necessarily equal to the basic interest rate announced by the State Bank). This direction is compatible with the amendments in the 2015 Civil Code. Point b, Clause 5, Article 466 of the Civil Code 2015 stipulates: “In case of a loan with interest but when due, the borrower fails to pay or fails to pay in full, the borrower must pay interest as follows: Interest on unpaid overdue principal is equal to 150% of the loan interest rate according to the contract corresponding to the late payment period, unless otherwise agreed . However, we believe that the parties are not completely free to set the interest rate and the ceiling interest rate should be applied to prevent one party (strength) from abusing the freedom of contract to impose give the other party too high a profit.

* The right to decide of the person having the right 

In the obligation to pay (or repay), does the obligee determine the interest rate that the obligor must bear? If the obligee claims a higher rate of interest than is legally stipulated or agreed, this request will not be accepted because it negatively affects the interests of the obligor. If the right holder requests a lower level than the legally agreed or stipulated level, will this request be accepted? On the basis of the right of self-determination, we need to accept such a request, because we respect the discretion of the obligee and the claim is more favorable to the obligor. However, in Case Law No. 09/2016/AL, we see that there are content that can lead to a different treatment.

Specifically, in the Contents of the case law, it states: “ The first instance court, although applying Article 306 of the 2005 Commercial Law, did not take the average overdue interest rate on the market at the time of payment (first-instance trial). court) to calculate, but apply the base interest rate announced by the State Bank at the time of first-instance trial at the request of the plaintiff to apply the overdue interest rate (which is 10.5%/year). is not true ”. Here, we should understand that the above precedent just wants to send a message that once Article 306 of the 2005 Commercial Law is applied, it is not possible to automatically apply the basic interest rate announced by the State Bank. However, if the right holder claims this interest rate and has a basis for determining the base interest rate lower than the average market overdue interest rate, we accept the interest rate that the obligee (plaintiff) ) request.

2) Time to bear interest on late payment

* Time to start taking interest 

To know the late payment interest rate, we must know the time at which the amount of late payment interest generates interest. If the parties have an agreement on when to pay an amount, this time is used to calculate the date of starting to bear interest on late payment. Difficulties arise when the parties do not have an agreement on this time, such as in the case of refund (due to non-delivery, contract cancellation, invalid contract…) mentioned above. In the content of the case law on refunding above, we only know that this amount generates interest, but have not yet stated when is the time to start calculating interest. For cases within the scope of Case Law No. 09/2016/AL, we should follow the direction that the time of starting to bear interest on late payment is the time when the payer receives the money.

In fact, there was a decision of the Judicial Council of the Supreme People’s Court in the above direction. Specifically, in a 2014 decision, the Judges’ Council considered that “Vinashin Company violated its payment obligations under the new agreement, leading to the failure of the new agreement on the transfer contract. The appellate court declared that the contract was canceled, forcing Ms. Dau to return VND 45,000,000,000 to Vinashin Company, but it did not force Vinashin Company to return to Ms. Dau 18,448 shares received; at the same time, it is incorrect to not properly assess the faults of the parties during the performance of the contract but think that Vinashin alone is at fault, here, both Mrs. Dau and Vinashin Company are at fault, but . belongs to Mrs. Dau as mentioned above. Vinashin Company has transferred to Mrs. Dau many times with a total amount of 45,000,000,000 VND, Ms. Dau has used this 45,000,000,000 VND of Vinashin Company from 2007 to present. When re-solving the case, in addition to forcing Ms. Dau to be responsible for returning to Vinashin Company 45,000,000,000 VND of the money received under the contract and contract appendix, it is also necessary to force Ms. Dau to be responsible for paying the money. interest on the amount received, from the date of receipt (on October 25, 2007, November 30, 2007, May 21, 2008, May 28, 2008 and May 30, 2008)” [14] (if conditions permit, the Supreme People’s Court should also precedently precedent this decision regarding the time to start calculating interest on late payment of the amount to be repaid).

* The last time to bear interest 

Here, the content of the case precedent of Case No. 08/2016/AL affirms that “The first-instance court and the appellate court decide: “From the date the judgment takes legal effect and the person to be executed. If the judgment debtor has a written request for judgment enforcement, the judgment debtor must also pay interest on the amount of late judgment execution at the basic interest rate announced by the State Bank corresponding to the delayed period of judgment enforcement. incorrect. For loans from banking and credit institutions, in addition to the principal amount, due interest, overdue interest, and fees that borrowers must pay to the lender under the credit contract , up to the date of the first-instance trial, from the next day of the first-instance trial, the borrower must continue to bear the overdue interest on the unpaid principal amount, at the interest rate agreed upon by the parties in the first-instance trial. contract until the principal is fully paid. Thus, there is no period when the late payment does not generate interest and the end of interest calculation is “when payment is completed”.

Case precedent 08/2016/AL was formed on the basis of a dispute about credit loans, but there is no reason not to apply similarly to non-credit loans (civil loans) and there is no reason that The same applies to late payment of a non-loan amount such as in case of late payment of property purchases (purchase of goods), late payment of services, late payment of rent, late payment of wages, etc. In fact, the Council The judge of the Supreme People’s Court has made a decision in the direction mentioned above. For example, in a decision in 2013, after asserting that “The first instance court again forced the Plastic House Company to bear interest due to late payment for the amount of VND 6,166,600,000 from July 1, 2004 to The time of the first instance trial on February 23, 2005 with the interest rate of 1.5%/month was incorrect. The Court of Appeal based on the date the State Bank issued the decision to announce the basic interest rate to determine the date of payment and the applicable interest rate to force the Plastic House Company to bear interest due to late payment. The payment for the amount of VND 6,166,600,000 from July 1, 2004 to the time of the 3rd first instance trial on January 7, 2009 is also illegal, causing damage to the Plastic House Company”, the Association said. The Council of Judges of the Supreme People’s Court considered that “when re-resolving the case, the first-instance Court should base on the dates the Plastic House Company paid money to Tien Dat Company (directly or through the Agency). Long An Provincial Civil Judgment Enforcement Agency) as mentioned above to determine the time and amount that Plastic House Company has paid to Tien Dat Company. On that basis, the Court based on the provisions of Clause 2, Article 313 of the Civil Code 1995, forced the Plastic House Company to pay interest from July 1, 2004 for the amount of late payment according to the overdue interest rate. The time limit prescribed by the State Bank corresponds to the time of late payment at the time of payment” [15] . Here, the Judicial Council of the Supreme People’s Court in the direction of calculating interest on the amount not derived from the credit loan contract up to the time of first-instance trial is wrong but must calculate interest “corresponding to the delay time”. paid at the time of payment” (The Judges’ Council relied on Clause 2, Article 313 of the 1995 Civil Code, but this content is similar to the above provisions of the 2005 Civil Code, the 2015 Civil Code or of the Commercial Law regarding the time interest on late payment because this article in the Civil Code 1995 also stipulates that “In case the obligor is late to pay, he/she must pay interest on the amount of late payment at the interest rate of overdue debt set by the State Bank of Vietnam. determined corresponding to the time of late payment at the time of payment, unless otherwise agreed or otherwise provided by law” ).

The above direction in Case Law No. 08/2016/AL and in the cassation decision in 2013 mentioned above [16] is convincing. Because the European Code of Conduct for Contracts defines the last day for interest calculation as the “payment date” (Article 9.508). Similarly, under Article 7.4.9 of the Unidroit Principles, in the event of nonpayment of an amount due, the obligee is entitled to demand interest from the other party on the amount “until the date of payment”. However, it must be acknowledged that the content of the above case law is not an addition to the provisions of the Law. Because, the provisions in the Civil Code as well as in the Commercial Law, there is no interruption in the calculation of interest. Specifically, the Civil Code in the direction of late payment interest must be “corresponding to the time of late payment”, that is, as long as the amount to be paid or not paid, that amount will still be subject to late payment interest. Article 306 of the Commercial Law also has similar provisions when affirming that late payment interest “corresponds to the time of late payment”. During the dispute resolution process at VIAC, we also followed the direction of no interruption even for the money that did not come from the credit contract. For example, in a 2013 Judgment, we considered that “With the content that the aggrieved party is entitled to claim late payment interest for a period of time “corresponding to the late payment period ”, Article 306 of the 2005 Commercial Law shows that, as long as the payment obligation has not been fulfilled, late payment interest will still arise. Similarly in a 2015 Judgment: Here, we considered that “With the above provision, as long as the Respondent has not paid the principal, the Respondent must bear interest, from the time of payment to the time of payment. done math”. Looking from the current situation of trial at the Court, case law is in fact necessary to re-establish the existing order in the Law (the Civil Code and the Commercial Law).

[first] Clause 16, Article 4 of the Law on Credit Institutions 2010 stipulates “Lending” is a form of credit extension whereby the lender assigns or commits to hand over to the customer a sum of money for use for a specified purpose within a certain period of time as agreed upon with the principle of repayment of both principal and interest. “.

[2] Article 471 of the 2005 Civil Code (Article 463 of the 2015 Civil Code) stipulates: “A property loan contract is an agreement between parties whereby the lender hands over the property to the borrower; when the repayment is due, the borrower must return to the lender property of the same type in the correct quantity and quality and only pay interest if so agreed or prescribed by law.

[3] Clause 3, Article 425 of the 2005 Civil Code stipulates: “When a contract is canceled, the contract becomes invalid from the time of signing and the parties must return the property received to each other; If it is not possible to return it in kind, it must be paid in cash.” The same provision is also maintained in the Civil Code 2015 in Clause 2, Article 427 with the content: “The parties must return to each other what they have received after deducting reasonable costs in contract performance and preservation costs, property development. Refund is made in kind. In case it is not possible to return in kind, the money value will be refunded. Where both parties are obliged to return, the refund must be made at the same time, unless otherwise agreed upon or otherwise provided by law.

[4] Clause 2, Article 314 of the Commercial Law regarding the legal consequences of contract cancellation states: “The parties have the right to reclaim benefits resulting from the performance of their part of their obligations under the contract; if both parties are obliged to repay, their obligations must be performed simultaneously; In case it is not possible to repay with the benefits received, the obligor must repay in cash.

[5] See Decision No. 04/2014/KDTM-GDT dated April 17, 2014 of the Council of Judges of the Supreme People’s Court.

[6] Specifically, after canceling the sale and purchase contract established in 2004 due to the fault of the seller, this Court of Appeal followed the direction of forcing the seller to “return to Mr. is 2800 euros, plus interest at the statutory rate as of 11/11/2004” (CA Metz, 18 October 2011, 09/00565).

[7] For example, according to Judgment No. 166/2016/DSST dated August 12, 2016 of the People’s Court of Binh Duong province, “the advance payment confirmation dated February 12, 2015 is the payment for the performance of the contract. rather than a deposit. Ms. Diem’s refusal to enter into and perform a civil contract according to the signed agreement was due to Ms. Diem’s fault making the contract invalid, so Ms. Diem had to return the amount to Mr. Hai and pay compensation. damage to Mr. Hai under Article 137 of the 2005 Civil Code. Because Mr. Hai’s claim is a dispute over the deposit contract, there is no basis, so in this case Ms. Diem must return the received amount and pay the money. the basic interest rate prescribed by the State Bank for the amount received by Mr. Hai”.

[8] Regarding the property transfer contract established on April 15, 2011 which the Court declared null and void, the Tououse Court of Appeal followed the direction of “forcing Mr. D to return Ms. F a sum of 29,000 euros together with the prescribed interest rate from April 15, 2011” (CA Toulouse June 25, 2014, April 12, 904).

[9] Seube Jean-Baptiste, Le juge et les restitutions , Revue des contrats 01 juin 2016 n°2.

[10] On this topic, see Do Van Dai (editor), Scientific commentary on new points of the Civil Code 2015, Publishing House. Hong Duc-Vietnam Bar Association 2016 (second edition), part 382.

[11] Do Van Dai, Vietnam Contract Law – Judgment and Commentary, Volume 2 (2014), Publishing House. National Program, (fourth edition), Judgment No. 120-122 (comments 17 and 18).

[12] According to Clause 2, Article 357 and Article 468 of the Civil Code 2015, the interest rate is 10%/year of the late payment amount.

[13] Do Van Dai, Vietnam Contract Law – Judgment and judgment commentary, Volume 2 (2014), Publishing House. National Program, (fourth edition), Judgment No. 120-122 (comment section no. 19).

[14] Decision No. 04/2014/KDTM-GDT dated April 17, 2014 of the Council of Judges of the Supreme People’s Court.

[15] Decision No. 15/2013/KDTM-GD dated June 10, 2013 of the Council of Judges of the Supreme People’s Court.

[16] In fact, there is also a local court that charges interest continuously (without interruption) on non-loan payment obligations: See Do Van Dai, Vietnam Contract Law-Judgment and commentary project, Volume 2 (2014), Publishing House. National Program, (fourth edition), Judgment No. 120-122 (commentary section no. 11).

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Post Author: Nguyen Thi Tam