Postponement due to non-performance of contract in Vietnamese law
Concept. To postpone in the Vietnamese dictionary is to move from a scheduled time to do something to another, later time [1] In legal science, postponement is often understood to temporarily not perform, proceed with what must be done. , must proceed. Thus, a postponement of performance of a contractual obligation (referred to simply as a postponement of contract performance) is a case where an obligation is due for performance but is temporarily not performed. Postponement of contract performance has many causes: Postponement may be agreed upon by the parties, postponement may also be due to the obligee giving the obligee an additional period of time [2] etc….
In the scope of this study, we only study the postponement of contract performance for the reason that one party does not perform properly. At the time a party exercises this right of postponement, the contract still exists, is still valid, and therefore still binding on the parties; only contract performance is suspended. For example, when the seller postpones the obligation to deliver the property, the sales contract is still valid, only the delivery of the property is suspended, so the seller cannot sell his or her property to another person. Deferring performance of the contract does not terminate the obligation or give rise to a new obligation. Viewed from the deferred side, this subject is in a state of expecting the performance of the other party and does not fulfill its obligations. This is a self-protective measure because it does not require the intervention of a public authority. As long as the postponement of contract performance is legally valid, the obligations of the deferred party shall not be performed and the postponement party shall not be liable for this failure. Seen from the side of the deferred party, this is a sanction to direct them to continue doing if they want to get something from the deferring party. Overall, we can understand the delay caused by one party’s failure to properly perform the contract is built from the following idea: If you want to receive, you should give, if you don’t give, you will not receive.
The institution of adjournment due to one party’s failure to perform properly did not exist in Roman law but is today recognized in many legal systems. This institution originates from the religious law which is formed on the idea: There is no need to keep promises to those who do not keep their own promises [3] . In France, this regulation does not exist in the Civil Code (BLDS) as a general regulation for all contracts but only limited to a few specific contracts such as purchase, sale and exchange. Case law and legal science have exploited these provisions and developed it into a general rule that applies to all bilateral contracts. For example, French trial practice holds that the lessor is entitled to postpone the repair and maintenance of the leased property when the lessee has not yet paid the rent. Belgium also has a similar situation to France: The document is only recorded in a few scattered provisions, but the Court and legal science have developed for other contracts. According to a document published in 1994, Germany also recognized this provision in the Civil Code: If it is not performed in advance, a party has the right to refuse to perform its obligations until the other party’s obligations have been performed ( Clause 1, Article 320). Article 82 of the Swiss Civil Code also recognizes this provision. Similarly, in Article 1460 of the Italian Civil Code, which provides for a broader scope, many arbitral awards adjourned due to one party’s failure to properly perform are one of the principles of international trade. The European Code of Conduct for Contracts and the Unidroit Code of Conduct also recognize this provision.
In Vietnam, the Commercial Law uses the term “suspended” for this institution. In the Commercial Law, “suspension” of contract performance is a temporary failure by one party to perform an obligation (Article 308) and “when the performance of a contract is suspended, the contract is still valid” (Article 309). . For its part, the Civil Code uses the term “postponement” and allows a party to postpone a contract when certain conditions are met (Article 415). The law recognizes the “right to postpone performance”. That is to say, the party with a due obligation that should have performed is allowed not to. Failure to comply with this deadline is recognized by law. Therefore, the delaying party’s failure to perform the contract on time does not entail sanctions. According to Article 4 of the Civil Code, “lawful commitments and agreements are binding on the parties”. Thus, postponing the performance of a contract goes against the effect of compulsory performance for the parties: Article 4 forces the parties to perform the contract, while the statute of postponement allows a party not to perform even though the obligation has been fulfilled. due. Therefore, in order for this postponement to be accepted, certain conditions must be met. We will study under what circumstances a party is entitled to postpone the performance of a contract.
I – Postponement due to the risk of non-performance of the contract
The concept of non-performance risk. Normally, the suspension of the contract as a sanction is only implemented when the non-performance of the contract has occurred. But in practice law, one party can postpone the performance of a contract when the other party is in danger of non-performance.
In practice it can happen that: After entering into the contract and before the time for performance comes, one party finds that the other party is in danger of not performing better than the contract when it comes due. For example, party A agrees to lend party B 500 million dong within 03 months and A must hand over this money to B on July 15. But at the end of June, A finds B has not paid the due debt for The other partners should think that, when the debt is due, B may not pay its debt as agreed. Here, A is not certain that B will not perform properly when the contract is due because B’s failure to perform properly to other parties does not mean that B will definitely not fulfill its commitment to A. But A may think that there is a high risk that B will not fulfill its contract.
The following example also shows the case of the risk of non-performance. Mr. T and Mrs. Th signed a contract to build a house for Ms. Th. According to the contract, within 8 months from the date of commencement, Mr. T is obliged to invest all materials and complete the construction of a five-storey apartment on an area of 100m2 of residential land for Ms. Th. When the first floor of the apartment was completed, Ms. Th was sued for breach of contract and compensation for non-contractual damages with others. Ms. Th had her assets frozen at the bank and had to mortgage her house and used car. Here, Mrs. Th’s assets are reduced and it is likely to lead to the inability to pay Mr. T when the house is finished [4] .
The Commercial Law does not have a general provision on contract postponement because there is a risk that the contract is not performed properly.
Clause 1, Article 415 of the Civil Code stipulates that “the party that has to perform the obligation first has the right to postpone the performance of the obligation, if the other party’s assets have been severely reduced to the extent that it cannot perform the obligation as committed to the other party. until the other party is able to perform the obligation or has a guarantor. With this provision, when there is a risk of non-performance of the contract because the obligor has a serious decrease in assets, the party that must perform first has the right to postpone the performance of the contract.
Compared with the French Civil Code (Napoléon Code 1804), our country’s Civil Code has made many progress, because, in France, in the general section on contracts, the Civil Code does not have provisions to regulate the risk of non-performance [5] as In our country, there is only one article in a separate section related to the contract of sale [6].
Although it is more advanced than the French Civil Code because there has been an adjustment on the risk of non-performance of the contract, our country’s Civil Code still shows some shortcomings.
The Civil Code only allows the party that has to perform before the contract to postpone the performance of the obligation if the other party’s assets are severely reduced to the extent that it cannot perform the obligation as committed. In practice, a default risk can occur when the asset is not severely impaired. For example: A, manufacturing a boat with only one undercarriage, promises B to deliver to B a boat no later than August 1st. A few days later, B learns that, also at this stage, A has promised to deliver C a ship. In this case, it is difficult to say that A’s assets are seriously impaired, but B may consider there is a risk that A will not perform properly. Similarly: Singer A accepts to sing for a tea room (B) on Saturday night and both parties agree that B will pay A part of the remuneration on Friday night. However. B learns that A has been hospitalized and has not been discharged by Friday afternoon. Here, B is not sure that A will not sing on Saturday, but B can think that, up to this point, there is a chance that A may not be able to sing yet. For B, there is a high risk that A will not be able to sing on Saturday.
The Civil Code states that the party that has to perform the contract first has the right to postpone the performance of the obligation if the other party’s assets are severely reduced to the extent that it cannot perform the obligation as committed until the other party is able to perform the obligation. perform the obligations or have a guarantor. However, the Civil Code does not state that the party who postpones the performance of an obligation has the right or not to cancel or terminate the contract when the other party is still unable to perform the obligation or does not have a guarantor.
Many countries have allowed or tend to allow the right to perform prior to the right to cancel or terminate the contract when the other party fails to restore the ability to perform well even though the contract has been postponed and the party postponed the contract. has given the other party a reasonable amount of time to restore this ability.
Before 1999, in China, the risk of non-performance was only mentioned in the Law on economic contracts with foreign countries; Other contract documents such as the Law on Economic Contracts or the Law on Technology Transfer do not address this issue. The law on economic contracts with foreign countries deals with the risk of non-performance of the contract but does not allow the contract to be canceled but only suspends the performance [7] . With the determination to integrate into the International Trade Organization [8], in 1999, China abolished the above Laws and introduced the Single Contract Law and the issue of contract cancellation due to the risk of non-performance. has been mentioned. According to Article 68 of the 1999 Chinese Contract Law, “the party that has to perform first has the right to postpone the performance of its obligations, if it is proven that the other party falls into one of the following circumstances: The business situation has deteriorated seriously. ; Transfer of assets, withdraw capital in order to evade the performance of obligations; Loss of business reputation; Other cases of loss or possible inability to perform obligations. And according to Article 69 of the above Law, “after the postponement of the contract, the adjourning party has the right to cancel the contract when the other party still fails to restore its ability to perform and fails to provide an adequate security within a reasonable period of time. physical”. The French Civil Code does not have a similar rule, but according to some authors, French law should also allow the party to postpone the cancellation of the contract when the other party has not made any changes and also does not provide a measure of performance guarantee. reasonable [9] .
Some modern international documents on contracts also provide the above. For example, according to Article 7.3.4 of the Unidroit Principles of International Commercial Contracts, “when a party can believe that the other party will seriously breach the contract, it has the right to require the other party to provide practical security measures. good performance of the contract and, in the meantime, have the right to postpone performance of its obligations. They may cancel the contract if the above security measures are not provided within a reasonable time.” Similarly, under Article 8:105 of the European Principles of Contracts, “when a party can believe that the other party will be in material breach of contract, it has the right to require the other party to provide security measures for good performance. contract and in the meantime has the right to postpone performance of its obligations until no longer feels the above. If the above security measures are not provided within a reasonable time, the party requesting such measures shall have the right to cancel the contract while it can still believe that the other party will be in material breach of the contract. .
Request. We should also expand the case of non-performance risk. A party is at risk of non-performance when falling into one of the following situations: Serious deterioration of business situation such as serious deterioration of financial condition; Serious loss of assets such as damaged or lost assets; transferring assets, withdrawing capital in order to evade the performance of obligations such as the creation of a new enterprise by an individual or enterprise and transferring capital there to evade the performance of obligations; loss of business reputation such as dishonesty, goodwill in business or frequent failure to perform contractual obligations; other non-performance risks such as the situation where a singer becomes ill a few days before a performance. Please add that, the new Commercial Law has also followed this direction.
A contract is an agreement between parties that creates, changes or terminates rights and obligations in order to achieve the lawful benefits they desire when entering into it [11]. In other words, the contract was born not to be canceled but to be performed in order to bring the expected legitimate benefits to the parties. So, we need to minimize the permission to cancel or suspend the contract. Song. Nor should we force the first performer to wait without results when the other party still does not have measures to ensure good performance of the contract even though the contract has been postponed. In the event that the party that had to perform first has postponed performance, but the other party has not been able to restore the ability to perform the contract or has no further measures to ensure the good performance of the contract, we should follow the laws of other countries and modern international documents mentioned above. We should allow the deferring party to cancel or suspend the contract in order to find another partner soon to ensure that what is not achieved with the other party.
- Postponement due to non-performance of the contract
Clause 2, Article 415 of the Civil Code stipulates: “The party that is obligated to perform a later obligation has the right to postpone the performance of the due obligation if the previous obligor has not yet performed its obligation when it is due.” Here, the latter party has the right to postpone the performance of its obligation. For example, A sells B a property and the two parties agree: Pay, then deliver the property. If B has not paid, then A has the right to suspend performance of its obligation, even though A’s obligation has come due. Similarly, A leases out to B a property. If A does not repair the property, then B has the right not to pay the rent.
According to Clause 2, Article 415, the obligee is entitled to postpone performance when the previous performer has “not yet” performed its obligation when it is due. The above provision is not convincing. Example: A sells B a property. A has delivered the property and B has not yet paid because it is not yet due. However, after receiving the property, B discovered that this property was defective in comparison with the contract. Here A has performed but improperly performed the contract. If properly applied according to the provisions of the Civil Code, B is not entitled to postpone payment because A has already done it. However, we should allow B to postpone performing his obligation.
Therefore, the concept of “not yet” performing should be understood as “not performing the obligations” or having already performed but “not in accordance with the contract content”.
When amending the Civil Code, we propose to replace the term “not yet” with the term “failure to perform” the obligation.
According to current legal regulations, there are two obligations, one that is due for performance but has not been properly performed and one that is not yet due.
That means. we have not foreseen a situation where both obligations must be performed at the same time while these situations are not uncommon: “In case the parties do not agree on which party to perform the obligation first, the parties must simultaneously perform obligations towards each other (Clause 2, Article 414). Such as. A sells B a property; The obligation to deliver the property and the obligation to pay are performed at the same time. Let me add one more case to prove that it is not uncommon for the parties to perform their obligations at the same time. Specifically as follows: The owner of the motorcycle shop Th (Mrs. L) and the owner of the motorbike shop D (Mr. If you get a car, you have to pay for that car. Some time later, the two sides had a dispute and one of the contents of the dispute related to Ms. L still holding a number of motorcycle registration papers. The court said that it was legal for Ms. L to hold the above documents. In addition, the Court also decided that “Mr. Q and Ms. L must jointly pay Ms. L the total amount of capital and interest on all the motorbikes that Ms. L has delivered and at the same time, Ms. L must hand it over to Mr. Q and Mrs. L. L 05 ex-factory quality check sheets” [12] .
In the above example, we see, the Court forces the two parties to perform their obligations “simultaneously”. If Ms. L is willing to return the registration form but Mr. Q and Ms. L are not ready, can she delay the delivery of the above documents? The current law does not foresee this situation. Meanwhile, many legal systems allow the application of postponement of contract performance when one party is not ready to perform an obligation in the event that the parties have to perform the obligation at the same time. According to Article 9: 201 of the European Code of Conduct on Contracts, “a party that is required to perform at the same time as the other party may suspend performance of its obligations when the other party is not ready to perform its obligations”. Likewise, according to Paragraph 1 of Article 7.1.3 of the Unidroit Code of Conduct. The Pre-Draft European Code on Contracts also follows this direction in Clause 2, Article 108. Perhaps we should move towards allowing the suspension of contracts to apply not only to “before and after” obligations as today. but also to the obligation to perform at the same time.
In order to apply postponement of contract performance, there must be a commensurate relationship of obligations between the parties involved. The delay regime we are studying exists in many systems, but its scope is not the same.
In France, this postponement is extended by case law to bilateral contracts. Here, case precedent applies the provision of postponement of contract performance to property lease or agency contracts [13]. In Germany and Switzerland, legislators went even further and recognized the postponement of performance as a general principle of civil law [14] . With this approach, the postponement is not limited to the bilateral contractual relationship, but can also apply to other bilateral relationships, obligations not derived from a contract.
Our law is closely related to French substantive law and this deferred institution is mentioned in the performance section of the contract and in relation to a “bilateral” contract: Obligation is not performed properly and the obligation is denied. deferred are two obligations under the same lawful bilateral contract.
Thus, we do not have regulations on the obligations of the same two parties but come from two different contracts.
Similarly, we do not have regulations on the case where the parties have to perform the repayment obligation because the contract is declared invalid because, according to the provisions of Clause 2, Article 137 of the Civil Code, “when the civil transaction is invalid, the parties will restore to original condition, return to each other what was received; If it is not possible to return it in kind, it must be refunded in cash. Similarly, we do not have regulations that allow postponement of performance of obligations in case the parties have to return to each other what they have received when the contract is canceled because “when the contract is being cancelled, the contract has no takes effect from the time of signing and the parties must return to each other the property received” (Clause 3, Article 425).
For cases like the one just mentioned, we should probably apply the same law (Article 3 of the Civil Code) and thus the postponement is not limited to a bilateral contractual relationship. In the future, when there are conditions to amend the Civil Code, we should expand the provision of postponement of implementation. We should move Clause 2 of Article 415 to the part of performing civil obligations. When we turn to civil obligations, this provision obviously applies to bilateral contractual relationships and also applies to bilateral relationships but not from the performance of a bilateral contract.
Note, according to the Commercial Law, one party can only suspend the performance of its part when the other party “fundamentally violates the contract” (Clause 2, Article 308). Thus, minor violations do not allow the aggrieved party to apply the measure of postponement of contract performance. This is also the solution in the common law system [15]. In our country, similar provisions do not exist in the civil law, so minor violations or serious violations all allow the application of contract suspension. However, the use of this regulation can lead to abuse.
Therefore, we need to combine the postponement of contract performance with the good faith principle in contract performance specified in Article 6 of the Civil Code.
When the failure to properly perform the contract is due to a force majeure event, can the latter expressly postpone the performance of its obligations? For example, under a contract, A must deliver the property to B before B pays. If B fails to deliver on time due to a force majeure event, can A postpone the payment obligation?
According to the Commercial Law, a temporary suspension of contract performance is applied “except for the cases of liability exemption specified in Article 294 of this Law” while under Article 294 “the party violating the contract is exempted from liability in the following cases: the following cases: A force majeure event occurs.
Similar provisions do not exist in civil law. It is thought that when A does not deliver the property due to a force majeure event, B is entitled to postpone the performance of his obligations. This is also the solution in French law [16].
Deferred is understood as temporarily stopping execution. That means. This measure only lasts for a period of time. However, the current law does not have specific provisions on the period of postponement of the contract.
Postponement is a defense measure taken by one party when the other party fails to perform properly under the contract and has the purpose of directing this party towards the correct performance of the contract. Therefore, if the non-performing party has performed in accordance with the contract, the adjournment is no longer relevant so it will terminate and the deferred party must perform its obligation. It also means that the adjournment is extended until the obligor fulfills its obligation. For example, when no remuneration is paid, architects can postpone their work. However, if the client pays the remuneration as the contract, the architect must carry out his work, the architect’s postponement has ended.
After the postponement, if the other party still fails to perform the contract properly, the postponement party may apply other measures. The deferred party may request the cancellation of the contract or combine it with a claim for damages or enforce the correct performance of the contract.
* Doctor, Vice Dean of Civil Law Faculty, University of Law, Ho Chi Minh City. HCM.
[first] . Institute of Linguistics, Common Vietnamese Dictionary, Publishing House, Orient, 2002, p.397.
[2] . For example, under Clause 2, Article 287 of the Civil Code, the obligor is entitled to postpone the performance of the obligation, if so agreed by the obligee.
[3] . Ph. Malaurie, L. Aynès and Ph. Stoffel-Munch, Les obli-grations, Deftré, 2004, part no. 859.
[4] . For an example, see Pham Minh Luong, Do Thi Hoa and Ta Manh Tan, Civil contract law Q&A and civil contract dispute resolution. Nxb. People’s Public Security 2006, pp.41 and 42.
[5] . See A.Pinna, Postponement of contract due to risk of non-performance, RTD.civ.2003, p.31 et al.
[6] . According to Article 1613 of the French Civil Code, “the seller is under no obligation to deliver the property, even though it has given the buyer a period of time for payment, if, after the conclusion of the contract, the buyer falls into such a state of bankruptcy that the buyer becomes insolvent. the seller risks not being paid, unless there is a guarantor for the timely performance of the contract”.
[7] . Article 17, Law of the People’s Republic of China on economic contracts with foreign countries allows one party to suspend the performance of a contract when it considers that the other party will likely not perform the contract.
[8] . China joined the International Trade Organization in 2001.
[9] . See A.Pinna, Postponement due to risk of non-performance, Journal RTD.civ.2003, p.48 et 49.
[ten] . The above texts use the term une partie croit raisonnablement. Please translate here as a party can believe.
[11] . See Articles 130, 132 and 394 of the Vietnamese Civil Code. According to the Scientific Commentary on the Vietnam Civil Code, National Political Publishing House, 2001, volume I, p.271, “whether it is an act of unilateral declaration of a person, or the act of establishing a civil contract, , the subjects are oriented towards a certain purpose. Although the goals that the parties are aiming for are different, they are all to meet their material interests or spiritual interests.
[twelfth] . Judgment No. 81/2009/DSST dated May 15, 2009 of the People’s Court of Long Khanh town, Dong Nai province.
[13] . F. Terré, Ph. Simler, Y. Lequette, Les obligations, Dalloz 2002, parts 632 and 634.
[14] . F. Terré, Ph. Simler, Y. Lequette, Les obligations, Dalloz 2002, part no. 632.
[15] . See G. Rouhette (editor), European Code of Conduct on Contracts, Publishing House. Sociétéde législation comparee, 2003, p. 368.
[16] . F. Terré, Ph. Simler, Y. Lequette, Les obligations, Dalloz 2002, part no. 638.
Source: Refer to the article of Assoc. Do Van Dai
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