VIETNAM NATIONAL UNIVERSITY SCHOOL OF LAW GRADUATION THESIS CONDITIONS IN THE LAW OF CONTRACT: A COMPARATIVE PERSPECTIVE AND IMPLICATIONS FOR VIETNAMESE LEGAL REFORM Author: Supervisor: NGUYEN MINH CHAU NGUYEN THI PHUONG CHAM A thesis submitted in partial fulfillment of the requirements for the degree of Bachelor of Laws May 2022 ACKNOWLEDGEMENT Throughout my thesis writing process, I have benefited from the support and endorsement of many people. First and foremost, I wish to thank my supervisor, Dr. Nguyen Thi Phuong Cham, who has kindled my enthusiasm for civil law throughout her classes at school, which later has incentivised me to undertake this research project. Notably, this thesis would not have been possible without her spending a lot of time, energy, and patience in helping me clarify issues, shaping ideas, and giving me insightful comments.
On top of that, her role is vital and decisive in my decision to become who I want to be and what I will do later in life. Though words cannot fully convey my indebtedness, I still want to express my deepest gratitude to cô Châm, who has always wanted the best for me. I am also grateful to many friends who have supported me during my undergraduate life and this research project in particular. They are anh Tôm, chị Quanh (Vietnam National University), who have loved me unconditionally and supported me during my four-year undergraduate studies; it is em Cự (Vietnam National University), who has spent time carefully reading earlier drafts of my thesis and giving me insightful comments, and my dearest Tuấn (National University of Singapore), who has helped me access valuable resources from his school’s library and has provided mental support for me.
Finally, I would like to take the opportunity to express my heartfelt gratitude to my father for his relentless encouragement and unconditional support for my studies, to my mother for her soft and sweet care for the family, to my brother for not teasing me when I am writing this thesis, and to my sister-in-law and baby Miso for bringing joy to the family. i TABLE OF CONTENTS ACKNOWLEDGEMENT. i LIST OF FIGURES. viii LIST OF ABBREVIATIONS.
ix CHAPTER ONE INTRODUCTION 1. RESEARCH OBJECTIVES AND QUESTIONS. Research Question 1: To What Extent Does Vietnamese Legal Framework Provide an Appropriate Legal Regime for Conditions?. Research Question 2: How Should the Regime on Conditions in Vietnam be Reformed?.
Research on Conditions in Foreign Jurisdictions. Research on Conditions in Vietnam. 8 CHAPTER TWO THEORETICAL ANALYSIS OF CONDITIONS IN THE LAW OF CONTRACT INTRODUCTION. CONTRACT AND ITS LEGAL EFFECT.
Contract As A Basis Giving Rise to Obligations. The Concept of Legal Effect. Time for the Arousal of Legal Effect. Time of Conclusion of the Contract.
Time Agreed by the Parties. Time Imposed by the Law. Time for the Performance of Contractual Obligations. Bases for the Termination of Legal Effect.
Termination by the Completion of the Contract. Termination by the Parties’ Agreement. Termination by Breach. CONDITIONS IN THE LAW OF CONTRACT.
Concept of a Condition. History of Conditions. Early Modern Concepts of Conditions. The Significance of Conditions.
Classification of Conditions. Suspensive Conditions - Resolutory Conditions. Express Conditions – Constructive Conditions. Promissory Conditions – Contingent Conditions.
Subsidiary Obligations Pending the Fulfillment of the Conditions. The Obligation Not to Withdraw from the Agreement. The Obligation Not to Prevent the Occurrence of Conditions. The Obligation to Make Reasonable Efforts.
Legal Consequences of the Failure to Perform Subsidiary Obligations. Non-fulfillment of Conditions and Its Legal Consequences. Consequences for Non-fulfillment of Conditions. Mitigating the Consequences of the Non-fulfillment of Conditions 41 CHAPTER CONCLUSION.
44 iii CHAPTER THREE CONDITIONS IN INTERNATIONAL CUSTOM AND IN DIFFERENT JURISDICTIONS INTRODUCTION. CONDITIONS IN INTERNATIONAL AND EUROPEAN CODIFICATIONS. Principles of European Contract Law (PECL) and Draft of a Common Frame of Reference (DCFR). Introduction to PECL and DCFR.
Concept of Conditions in PECL and DCFR. Interference with Conditions in PECL and DCFR. Effect of the Fulfillment of Conditions in PECL and DCFR. UNIDROIT Principles of International Commercial Contracts 2016.
Introduction to the UNIDROIT Principles of International Commercial Contracts 2016. Concept of a Condition. Effect of Conditions. Interference with Conditions.
Obligations Pending Fulfillment of a Condition. Restitution in Case of Fulfillment of a Resolutive Condition. CONDITIONS IN NATIONAL LEGAL SYSTEMS. United States’ Restatement (Second) of Contracts.
Introduction to the Restatement (Second) of Contracts. Concept of a Condition. Classification of Conditions. Effects of the Non-occurrence of a Condition.
German Civil Code. Concept of a Condition. Subsidiary Obligations before the Fulfillment of Conditions. 63 iv CHAPTER FOUR CONDITIONS IN THE CONTRACT LAW OF VIETNAM INTRODUCTION.
CONDITIONS IN THE VIETNAMESE CIVIL CODE. The Historical Development of The Regime on Conditions in The Vietnamese Legal Framework. Conceptual Framework of Conditions. Conditional Contract: Two Contrasting Approaches.
Conditional Performance of Obligations: Are They Synonymous with Conditional Obligations?. Requirements of a Condition. Categorisation of Conditions. Suspensive Conditions – Resolutory Conditions.
Express Conditions – Conditions Implied by Law. Interference with Conditions. CONDITIONS IN VIETNAMESE TRIAL PRACTICE. Cases Before the Advent of Precedents.
Dung and Huyen: Failure to Perform Obligations After the Occurrence of Suspensive Conditions. Thoa: Effect of the Occurrence of Resolutory Conditions. Tai Nguyen LLC v. TPBank: Conditional Performance of Obligations.
Ngo: Requirements of a Condition. 14/2017/AL: When Conditions Are Not Provided in the Contract. Contributions of the Precedent to the Formal Expression of Conditions. Limitations of the Precedent.
39/2020/AL: Legal Consequences of the Non-occurrence of Conditions. Contribution of the Precedent to the Effect of the Occurrence of Suspensive Conditions. Contribution to the Assessment of the Condition Fulfillment. Limitation of the Precedent: The Theory of Voidness and Why the Precedent Should Not Void the Contract.
CONDITIONS IN VIETNAMESE ARBITRATION PRACTICE. Contract Enforcement before the Fulfillment of Conditions. Contract Enforcement with the Interference with Conditions. 84 CHAPTER FIVE PROPOSAL TO REFORM THE REGIME ON CONDITIONS IN THE CONTRACT LAW OF VIETNAM INTRODUCTION.
REDEFINE THE CONCEPTUAL FRAMEWORK OF CONDITIONS 86 5. Refining the Definition of ‘Conditional Contract’ From a Single Approach. Construing ‘Conditional Obligations’ from the Provision on ‘Conditional Performance of Obligations’. Elaborate on the Characteristics of a Condition.
ADOPT A SUITABLE TREATMENT FOR SUBSIDIARY OBLIGATIONS BEFORE THE FULFILLMENT OF CONDITIONS. Supplement Other Subsidiary Obligations Pending the Fulfillment of Conditions. Adopt the ‘Awarding Damages’ Approach for Breach of Subsidiary Obligations. CLARIFY THE LEGAL CONSEQUENCE FOR THE NON- OCCURRENCE OF CONDITIONS.
Short-term Solution: Explain About the Legal Consequence of The Non- Occurrence of Conditions in Precedent No. Long-term Solution: Recognise the Contract to be Ineffective as the Legal Consequence of the Non-occurrence of a Suspensive Condition. RECOGNISE THE RESTITUTION IN CASE OF THE OCCURRENCE OF A RESOLUTIVE CONDITION. 93 vii LIST OF FIGURES Figure 1- Three Possible Points for A Contract to Come into Effect.
14 Figure 2- Time for The Performance of Obligations. 17 Figure 3- Bases for the Termination of the Legal Effect of a Contract. 18 Figure 4- When Is A Condition?. 21 Figure 5- The History of Conditions in The Contract Law of Vietnam.
67 Figure 6- The Approach to Conditional Contracts Under Article 402. 67 Figure 7- The Approach to Conditional Contracts Under Article 120. 68 viii LIST OF ABBREVIATIONS DCFR Draft of a Common Frame of Reference LLC Limited Liability Company PECL Principles of European Contract Law UNIDROIT International Institute for the Unification of Private Law UNIDROIT Principles UNIDROIT Principles of International Commercial Contracts 2016 US United States ix CHAPTER ONE: INTRODUCTION 1. RESEARCH BACKGROUND The contract life cycle can be outlined as follows: First, preliminary inquiries and negotiations with no legal consequences; second, a communication by one party called an offer - an act operating to create a legal power in the offeree while usually leaving the offerer with a power of revocation; third, acceptance by the offeree, resulting in what we call a contract; fourth, performance or breach; and finally, discharge.
The topic of this thesis is within the scope of the fourth head - performance or breach. Acceptance makes a contract, and it creates a bunch of legal relations. However, in these relations, we may not find an immediate duty of performance. Some significant facts, human behaviour or other events may be a condition precedent for such obligations.
Therefore, a contract whose effect is dependent upon such conditions is known as a conditional contract. These days, parties to complex and high-value business transactions such as Share Purchase Agreements and Loan Agreements that involve prolonged negotiations frequently provide for the “Conditions Precedent” clause, listing conditions that must be satisfied at a certain point in time. Widely used as it is, however, the concept of a condition is still open to debate. The scholars have remained divided on whether a conditional contract means (i) a contract has been formed, yet its performance is suspended until the condition is fulfilled or (ii) one which has not yet been constituted as a contract at all, such constitution depending upon the occurrence of an uncertain future event.1 As to its characteristics, jurisdictions seem to differ on whether a condition needs to be a future and uncertain event and to what extent can an event be considered a condition.
In Vietnam, it was not until the 1995 Civil Code that the conditional contract was recognized.2 However, the regime back then was still rudimentary and lacked 1 Martin Hogg, Obligations: Law and Language (Cambridge University Press 2017) 77. 2 The 1995 Vietnam Civil Code, Art. 1 provisions on several problems revolving around a conditional contract. The 2005 Civil Code made a progressive move as it stipulated the interference with conditions3 based on the principle of good faith, and this provision has undergone little change in the 2015 Civil Code.
Fortunately, with the advent of the precedent in Vietnamese jurisdiction,4 especially Precedent No. 14/2017-AL and Precedent No. 39/2020-AL have begun to fill the gap in the Civil Code. In the context where the concept of a condition has yet been unanimously affirmed, what is the appropriate concept that can be adopted in Vietnam's legal framework? Given the current Vietnam Civil Code and newly enacted precedents, is it necessary to follow other countries’ models? Seeking a suitable approach, one needs to look at international best practices and other jurisdictions.
Thus, the thesis focusing on “Conditions in the Law of Contract: A Comparative Perspective and Implications for Vietnamese Legal Reform” aims to fill the conceptual gap of conditional contracts and propose a suitable solution to better this regime in the Vietnamese context. RESEARCH OBJECTIVES AND QUESTIONS This research project set out two purposes. The first is academic: to facilitate investigation and discussion of the condition – an area of contract law that is of great importance and in equally great confusion. The second is pragmatic: to examine the effectiveness of the Vietnamese regulations on conditional contracts and to consider appropriate solutions which may improve it.
To achieve those objectives, this thesis addresses the two following research questions: 3 The 2005 Civil Code, Art. 4 The precedent marked its official recognition in Vietnamese jurisdiction in the 2015 Civil Code, the 2015 Procedure Code, and the Resolution No. This comes from the fact that Vietnam is not an exception to the global diffusion of precedents - the signature of the common law system - into civil law and socialist law jurisdictions. See Harlan Grant Cohen, ‘Theorizing Precedent in International Law’ in Andrea Bianchi, Daniel Peat and Matthew Windsor (eds), Interpretation in International Law (Oxford University Press 2015).