What is representation for traders in Vietnam? What is the duration of representation for traders in Vietnam?
What is representation for traders in Vietnam?
Pursuant to Article 141 and Article 143 of the 2005 Commercial Law of Vietnam as follows:
Representation for traders is defined as an arrangement where a trader is granted authorization (hereinafter referred to as the representative) by another trader (hereinafter referred to as the principal) to perform trades under the name or direction of the former, and earn remunerations for his/her representation service rendered.
In which, contracting parties may reach an agreement where the representative is authorized to represent, whether in part or in whole, trading activities that fall within the remit of the principal.
Where a trader assigns one of his/her employees as his/her representative, the Civil Code shall be applied.
What is representation for traders in Vietnam? What is the duration of representation for traders in Vietnam?
What is the duration of representation for traders in Vietnam?
According to the provisions of Article 144 of the 2005 Commercial Law of Vietnam, the duration of representation for traders is as follows:
Duration of representation for traders
1. Duration of representation shall be agreed upon by contracting parties.
2. In the absence of any agreement, the validity duration of representation ends in either case where the principal or the representative notifies the other of termination of the representation agreement.
3. Unless otherwise agreed, if the principal unilaterally gives notification of termination of an agreement on representation in accordance with Clause 2 of this Article, the representative shall be entitled to claim remunerations paid by the principal for conclusion of contracts with his/her own clients and other payments that (s)he would have received.
4. Where duration of representation ends in such a manner, referred to in Clause 2 of this Article, upon the request of the representative, the representative shall be deprived of the right to claim any remuneration for trades that (s)he would have received, unless otherwise agreed upon by contracting parties.
Thus:
(1) Duration of representation shall be agreed upon by contracting parties.
(2) In the absence of any agreement, the validity duration of representation ends in either case where the principal or the representative notifies the other of termination of the representation agreement.
(3) Unless otherwise agreed, if the principal unilaterally gives notification of termination of an agreement on representation in accordance with (2), the representative shall be entitled to claim remunerations paid by the principal for conclusion of contracts with his/her own clients and other payments that (s)he would have received.
(4) Where duration of representation ends in such a manner, referred to (2), upon the request of the representative, the representative shall be deprived of the right to claim any remuneration for trades that (s)he would have received, unless otherwise agreed upon by contracting parties.
What are the obligations of the parties in representation for traders in Vietnam?
Regarding the obligations of the representative:
Unless otherwise agreed, the representative has the obligations specified in Article 145 of the 2005 Commercial Law of Vietnam, specifically as follows:
- Perform trades under the name, and for the interests of, the principal;
- Inform the principal of opportunities for, and outcomes of, performance of trades which have been authorized;
- Observe the principal’s instructions which are not in violation of laws and regulations.
- Avoid performing trades under the name of his/her own or of any third party within the scope of representation;
- Avoid disclosing or providing any non-party confidential information about his/her trades during the validity duration when his/her representation is rendered and within two years after that representation agreement is terminated;
- Provide safe custody of assets or documents which have been entrusted to perform representation activities.
Regarding the obligations of the principal:
Specifically in Article 146 of the 2005 Commercial Law of Vietnam, unless otherwise agreed, the principal has the following obligations:
- Promptly inform the representative of conclusion of contracts that the representative has negotiated, execution of contracts that the representative has negotiated, approval or rejection of activities which do not fall within the agreed remit of the representative;
- Provide assets, documents and any information necessary for the representative’s contractual representation activities;
- Pay remunerations and other reasonable expenses to the representative;
- Duly inform the representative of possibility that a contract may not be concluded or executed within the stated scope of representation.
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