Because of many reasons that make the contract impossible to perform, people will raise the issue of compensation for damages. So how to determine the compensation for damages for the breach of contract? The below article by Apolo Lawyers (Hotline: (+84) 903.419.479) will help you answer this question.

According to Article 301 of the Commercial Law 2005, compensation for damage means that the party that causes damage or breaches an obligation to perform in a contract must compensate the aggrieved party for any loss or damage.

1. Types of damages for the breach of contract must be compensated

Types of damages that the breach of contract must compensate for include:

• Economic value, the actual contract value that the aggrieved party has to bear due to the breaching damage-causing behavior of party.
• Profits and interests that the aggrieved party would have been entitled to if no breach had occurred.

In addition, Article 419 of the 2015 Civil Code also stipulates that the damage sufferer has to claim the following amounts:

• The value of benefits that the person should have received from the contract
• Expenses incurred due to non-fulfillment of contractual obligations

At this time, liability to compensate for damage arises when all of the following factors are present:

• There is a breach of contract
• Has actual damage occurred
• The breach of contract is the direct cause of damage

In which, if there is a force majeure reason, due to the fault of the breached party, agreed upon by the parties, or decided by a state agency, but at the time of signing the contract, the parties do not know, then the shall be liable for damages.

Note: The aggrieved party is obliged to prove the loss and damage suffered by its party when there is a breach of contract. That is, the party in breach of the contractual obligations must also prove the reason for being exempt from liability for damages.

2. How to determine the compensation for damages for the breach of contract?

Because a contract is an agreement between parties on the establishment, change or termination of civil rights and obligations. Therefore, the level of compensation for damage caused by breach of contract is also part of the content of the contract.

When one of the two parties violates the contract, in principle the two parties will settle through the agreement method. At this time, the amount of compensation will be agreed and decided by the two parties.

In addition, if the Contract specifically states the compensation, as well as the level of compensation, the provisions of the Contract, will be followed. Provided that the terms are in accordance with the provisions of law.

In addition, according to Article 360 ​​of the 2015 Civil Code, if there is damage due to a breach of the obligation, the obligor must compensate for the entire damage unless otherwise agreed or otherwise provided by law.

However, if the breaching party is only partially at fault for causing the damage due to the breach of contract, it must only pay compensation corresponding to the extent of its fault (Article 363 of the Civil Code 2015).

Therefore, the calculation of the compensation level will be based on the agreement of the parties in the contract or the actual damage value of each specific case. To learn more about the provisions on compensation for damage, readers can refer here.

>>> Read more: The dispute settlement of the international contract for the sale of goods in Vietnam

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3. Legal service about the commercial contract at Apolo Lawyers

There is the overview information of the compensation for damages for the breach of contract. In case clients get in trouble with determining the compensation for damages for the breach of contract in Vietnam, feel free to contact us. We are confident in providing Clients with optimal and effective legal service. Using our service, Apolo Lawyers will help you no limited but include the following:

• Consulting on the right and obligation of the parties in the contract sale of goods;
• 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;
• Guide customers to collect documents and evidence, provide information;
• Authorized representative lawyers meet and discuss with Arbitration, Courts, and judgment enforcement agencies to protect the legitimate rights and obligations of clients

Apolo Lawyers is proud to be a law firm with many years of experience in business consulting that will support clients in the field of commercial contracts. In case you need advice related to a commercial contract, 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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