Commercial liability is the consequence that the breaching party must receive when it violates its contractual obligations. In this article, Apolo Lawyers - Solicitors & Litigators (Hotline: +84 903 419 479) will list the cases of exemption from liability due to breach of a contract for the sale of goods.
According to the provisions of the commercial law of Vietnam in Clause 12, Article 3, it is stated that: Breach of contract is when a party fails to perform, performs incompletely or improperly performs obligations as agreed upon between the parties or in accordance with this law. And according to Clause 13, Article 3 of the Commercial Law 2005: A fundamental breach is a breach of contract by one party that causes damage to the other party to the extent that it causes the other party to suffer damage and failed to achieve the purpose of the conclusion of the contract.
Breach of contract is the legal basis for all forms of sanctions for breach of contract. Breach of contract is the conduct of the contract subject incompatible with the obligations committed in the contract. In practice to determine whether or not a breach of a commercial contract has to prove two things. That is, a legal contractual relationship between the parties and an act of non-performance or improper or incomplete performance of contractual obligations.
Disclaimer is the release of the breaching party from legal liabilities that it would have incurred as a result of its breach of contract. The breaching party is exempt from liability if it can prove that it is not at fault, by pointing out objective circumstances that make it impossible for them to perform the contract or to perform the contract properly. Such circumstances are provided for by law, either by prior agreement between the parties, or the breach is entirely due to the fault of the aggrieved party.
Pursuant to Article 294 of the 2005 Commercial Law, the breaching party will be exempted from liability for breach of contract in one of the following cases:
Occurrence of cases of liability exemption as agreed by the parties;
Occurrence of force majeure events;
The breach by one party is entirely the fault of the other party;
A breach by one party due to the implementation of a decision of a competent state management agency that the parties could not have known at the time of entering into the contract.
The cases of exemption from liability due to breach of a contract are cases where the fault element of the violating party is excluded. The basis for exempting the party that violates the contract is that they are not at fault when they do not perform or perform improperly the contract. If the breaching party has the ability to choose any course of action other than the damage treatment, it is considered at fault, and vice versa, if there is no possibility to choose any other remedy, it is considered not to be at fault and not responsible for its violations.
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Pursuant to Article 294 of the 2005 Commercial Law, the breaching party will be exempted from liability for breach of contract in one of the following cases:
Occurrence of cases of liability exemption as agreed by the parties;
Occurrence of force majeure events;
The breach by one party is entirely the fault of the other party;
A breach by one party due to the implementation of a decision of a competent state management agency that the parties could not have known at the time of entering into the contract.
The parties may agree in advance in the contract on cases where the violating party is exempt from liability. Such cases may not be regulated by law but completely by agreement between the parties. The law always respects and encourages the parties to implement the agreement when entering into a contract. It is also a right of the parties in the contract to agree on the terms of exemption from liability for breach. Provisions on disclaimer of liability for breach of contract shall be noted in the contract or its appendix.
Exemption from liability for breach of contract due to a force majeure event is when a party, when performing a contractual obligation, encounters a force majeure event that makes the performance of a contractual obligation impossible.
According to Clause 1, Article 156 of the Civil Code 2015, a force majeure event is an event that occurs objectively, which cannot be foreseen and cannot be remedied, even though all necessary and permissible measures have been applied. According to common practice, force majeure events are often understood as phenomena caused by nature (natural disasters) such as floods, fires, storms, earthquakes, tsunamis... or other phenomena. Social phenomena such as wars, riots, coups, strikes, embargos, changes in government policies, etc. Of course, it is the responsibility of the party that violates the contract to prove the existence of force majeure events but whether that party is exempt or not depends on the violated party or the authorities whether it accepts it as a force majeure event.
The breaching party will not be responsible for its breach in the event that the breach of this contract is due to the fault of the obligee. Error is considered as one of the factors to determine civil liability. This fault may be the act or inaction of the offending party. However, when applying this basis, the breach of contract by one party is only considered as a basis for exempting the other party from liability (also having a breach) when this breach is the direct cause of the violation. The grounds for otherwise are incomplete. It should be determined that the fault of the other party in this case must be the direct cause and premise of the non-performance.
In case a party breaches a contractual obligation compared to implementing a decision of a competent State agency, he/she will be exempt from liability for breach when satisfying the following conditions:
It is impossible to know when the parties enter into the contract to implement a decision of a competent state agency.
Violations and the implementation of decisions of competent state agencies have a causal relationship with each other.
The decision of the competent authority does not originate from the cause of the violating party.
Apolo Lawyers is confident in supporting Clients who have problems with commercial contract, including the following:
Consulting on how to draft the contract that satisfies the provisions of Vietnamese Law about contracts to reduce the risks;
Consulting to determine the basis for dispute settlement and legal basis for dispute settlement;
Consulting, and preparing to contact and negotiate with related parties in the settlement of international contract sale of goods disputes;
Guiding clients to collect documents and evidence, and provide information;
Authorized representative lawyers meet and discuss with Arbitration, Courts, and judgment enforcement agencies to protect the legitimate rights and obligations of clients
For further information, please contact us via email at contact@apolo.com.vn or Hotline (+84) 903 419 479 for the best advice and support.
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