Is it possible to agree to extend the time limit for performance of commercial contracts in force majeure circumstances in Vietnam?
Is it exempt from liability for breach of a commercial contract when a force majeure event occurs in commercial activities?
Pursuant to Article 294 of the 2005 Commercial Law of Vietnam, the cases of exemption from liability for breaching acts are as follows:
Cases of exemption from liability for breaching acts
1. A party that breaches a contract shall be exempted from liability in the following cases:
a/ A case of liability exemption agreed upon by the parties occurs;
b/ A force majeure event occurs;
c/ A breach by one party is entirely attributable to the other party’s fault;
d/ A breach is committed by one party as a result of the execution of a decision of a competent state management agency which the party cannot know, at the time the contract is entered into.
2. The contract-breaching party shall bear the burden of proof of cases of liability exemption.
Besides, Article 295 of the 2005 Commercial Law of Vietnam also stipulates:
Notification and certification of cases of liability exemption
1. The party must promptly notify in writing the other party of cases of liability exemption and possible consequences thereof.
2. When a case of liability exemption no longer exists, the contract-breaching party must promptly notify such to the other party. The breaching party must pay damages if it fails to notify or notifies the other party not in a prompt manner.
3. Breaching parties are obliged to prove their cases of liability exemption to aggrieved parties.
Thus, in the case of a breach of a commercial contract due to a force majeure event, the breaching party will be exempt from liability for the breaching act but must notify in writing the other party and is obliged to prove the force majeure event with the aggrieved party.
Is it possible to agree to extend the time limit for performance of commercial contracts in force majeure circumstances in Vietnam?
Is it possible to agree to extend the time limit for performance of commercial contracts in force majeure circumstances in Vietnam?
Pursuant to Article 296 of the 2005 Commercial Law of Vietnam stipulating the extension of time limit for performance of contracts, or refusal to perform contracts in force majeure circumstances as follows:
Extension of time limit for performance of contracts, or refusal to perform contracts in force majeure circumstances
1. In a force majeure circumstance, the parties may agree to extend the time limit for performing their respective contractual obligations. If the parties do not agree or cannot agree upon such extension, the time limit for performing contractual obligations shall be extended for a period of time equal to the time length of such force majeure circumstance plus a reasonable period of time for remedying consequences, but not exceeding:
a/ Five months for goods or services for which the agreed time limit for their delivery or provision does not exceed twelve months from the date the contract is entered into;
b/ Eight months for goods or services for which the agreed time limit for their delivery or provision exceeds twelve months from the date the contract is entered into.
2. Beyond the time limits specified in Clause 1 of this Article, the parties may refuse to perform the contract and neither party is entitled to request the other party to pay damages.
3. Where a party refuses to perform a contract, it must, within ten days from the expiry date of the time limit specified in Clause 1 of this Article, notify the other party thereof before the latter begins to perform its contractual obligations.
4. The extension of the time limit for performing contractual obligations mentioned in Clause 1 of this Article does not apply to contracts for purchase and sale of goods or contracts for provision of services with fixed time limit for goods delivery or service completion.
Thus, in a force majeure circumstance, the parties may agree to extend the time limit for performing their respective contractual obligations.
If the parties do not agree or cannot agree upon such extension, the time limit for performing contractual obligations shall be extended for a period of time equal to the time length of such force majeure circumstance plus a reasonable period of time for remedying consequences, but not exceeding:
+ Five months for goods or services for which the agreed time limit for their delivery or provision does not exceed twelve months from the date the contract is entered into;
+ Eight months for goods or services for which the agreed time limit for their delivery or provision exceeds twelve months from the date the contract is entered into.
Note: Beyond the time limits as mentioned above, the parties may refuse to perform the contract and neither party is entitled to request the other party to pay damages.
Where a party refuses to perform a contract, it must, within ten days from the expiry date of the time limit specified in Clause 1 of this Article, notify the other party thereof before the latter begins to perform its contractual obligations.
The extension of the time limit for performing contractual obligations mentioned in Clause 1 of this Article does not apply to contracts for purchase and sale of goods or contracts for provision of services with fixed time limit for goods delivery or service completion.
How is force majeure event defined?
According to current regulations, there is no specific regulation on force majeure events, but in Clause 1, Article 156 of the 2015 Civil Code of Vietnam, a force majeure event is defined as follows:
Time periods excluded from prescriptive periods for initiating legal action for civil cases and from prescriptive periods for requesting resolution of civil cases
...
An event of force majeure is an event which occurs in an objective manner which is not able to be foreseen and which is not able to be remedied by all possible necessary and admissible measures being taken.
An objective hindrance is a hindrance which in an objective context results in a person with civil rights or obligations not knowing that his or her lawful rights and interests have been infringed or not being able to exercise his or her rights or fulfill his or her civil obligations;
Thus, a force majeure event is an event which occurs in an objective manner which is not able to be foreseen and which is not able to be remedied by all possible necessary and admissible measures being taken.
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