Scope of authorization and exceeding the scope of authorization in Vietnam

1. Provisions on Authorization Contracts in Vietnam

Article 562 of the Civil Code 2015 of Vietnam stipulates the authorization contract:

"An authorization contract is an agreement between parties, whereby the authorized party is obliged to perform work on behalf of the authorizing party, and the authorizing party only has to pay remuneration if agreed upon or if provided by law."

Regarding the scope of authorization, the scope of authorization is part of the overall scope of representation as stipulated in Article 141 of the Civil Code. The scope of authorization specifically refers to the scope of representation in the form of authorization. The scope of authorization is explicitly stated in the content of the power of attorney, which limits the actions that the authorized person can perform to create rights and obligations for the authorizing party.

The term of authorization shall be agreed upon by the parties or provided by law; if there is no agreement and no provision by law, the authorization contract is effective for one year from the date of establishment of authorization.

2. Exceeding the Scope of Authorization in Vietnam

Representation exceeding the scope of authorization occurs when the authorized person performs legal acts beyond the scope of the authorization granted.

Article 143 of the Civil Code 2015 regulates the consequences of civil transactions established and performed by representatives exceeding their scope of representation as follows:

A civil transaction established and performed by a representative exceeding the scope of representation does not create rights and obligations for the represented party regarding the portion of the transaction performed beyond the scope of representation, except in the following cases:

- The represented party agrees;

- The represented party knows and does not object within a reasonable time

;- The fault of the represented party causes the transacting party to be unaware or unable to be aware that the person they are transacting with has established and performed a civil transaction exceeding the scope of representation.

In cases where the civil transaction established and performed by the representative exceeds the scope of representation and does not create rights and obligations for the represented party regarding the portion of the transaction established and performed beyond the scope of representation, the representative must perform obligations towards the person they transacted with regarding the portion of the transaction exceeding the scope of representation, except when the transacting party knows or should have known about the exceeding but still transacted.

The transacting party with the representative has the right to unilaterally terminate or cancel the civil transaction for the portion exceeding the scope of representation or the entire civil transaction and demand compensation for damages, except when they knew or should have known about the exceeding but still transacted or in cases specified at point a, clause 1 of this Article.

In cases where the representative and the transacting party intentionally establish and perform a civil transaction exceeding the scope of representation, causing damage to the represented party, they shall be jointly responsible for compensating for the damage.

Readers are invited to refer to the following judgment related to the issue of exceeding the scope of authorization:

Judgment on Authorization Contract Dispute No. 726/2019/DS-PT in Vietnam

Mr. D T D and Mrs. N N A established an authorization contract. Due to a dispute between the two parties, Mr. D requested the court to annul the established authorization contract. At the trial court, Mr. D T D's representative, Mr. N D T, changed the plaintiff's claim from seeking to cancel the authorization contract to requesting the court to declare the authorization contract established between Mr. D T D and Mrs. N N A on March 4, 2011, at A B Notary Office, Ho Chi Minh City, null and void due to violations of legal prohibitions.

At the appellate trial, the People's Court of Ho Chi Minh City found that: At the trial court, the representative of the plaintiff did not present a document with Mr. D T D's signature concerning the change in the claim. Furthermore, according to the scope of the authorization contract dated May 10, 2016, at the G D Notary Office, Mr. N D T was only authorized to represent and act on behalf of Mr. D T D in resolving the dispute over the authorization contract according to the aforementioned lawsuit. This defines the limit of authorization in resolving the dispute over the cancellation of the authorization contract between Mr. D T D and Mrs. N N A. The plaintiff's representative unilaterally changing the claim at the trial court without Mr. D T D's consent was an improper act exceeding the scope of authorization.

The appellate court decided to annul the entire trial court judgment. The case file was returned to the trial court for a retrial under the general procedures.

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