Scope of authorization and exceeding the scope of authorization in Vietnam

1. Regulations on authorization contract

Article 562 of Vietnam's Civil Code 2015 stipulates authorization contracts:

"Authorization contract means an agreement between parties whereby an attorney has the obligation to perform an act in the name of a principal. The principal shall only be required to pay remuneration if so agreed or so provided by law.”

Regarding the scope of authorization, the scope of authorization is part of the scope of general representation specified in Article 141 of the Civil Code. Referring to the scope of authorization means only considering the scope of representation in the type of authorized representation. The scope of authorization is clearly expressed in the content of the authorization, it is the limit that the authorized person acts to bring rights and obligations to the principal.

The authorization period shall be agreed upon by the parties or prescribed by law; If there is no agreement and no law, the authorization contract is valid for 1 year from the date of establishment of the authorization.

2. Exceeding the scope of authorization

Representation beyond the scope of authorization is when the authorized person performs a legal act beyond the authorized scope of authorization.

Article 143 of the 2015 Civil Code stipulates the consequences of civil transactions entered into and performed by representatives beyond scope of authorization as follows:

A civil transaction entered into and performed by a representative beyond his or her scope of representation shall not give rise to rights and obligations of the principal with respect to that part of the transaction which exceeded the scope of representation, except for any of the following cases:

- The principal gives consent;

- The principal knows it without any objection within an appropriate time limit;

- It is the principal's fault that the other party does not know or is not able to know that the person entering into and performing the civil transaction therewith was beyond his/her scope of representation.

If a civil transaction entered into and performed by a representative beyond his/her scope of representation does not give rise to rights and obligations of the principal with respect to that part of the transaction, the representative must fulfill the obligations owning to the person with which he/she transacted in respect of the part of transaction which is beyond the scope of representation, unless such person knew or should have known that the scope of representation was exceeded.

A person having transacted with such representative has the right to terminate unilaterally the performance of or to terminate the civil transaction with respect to that part which is beyond the scope of representation or with respect to the entire transaction and to demand compensation for any damage, except where such person knew or should have known that the scope of representation was exceeded or the case prescribed in Point a Clause 1 of this Article.

Where a person and a representative enter into and perform a civil transaction deliberately beyond the scope of representation of the representative and thereby cause damage to the principal, they shall be jointly liable to compensate for the damage.

Please refer to the judgment related to the issue of going beyond the scope of authorization below:

Judgment 726/2019/DS-PT on authorization contract dispute 

Mr. D T D and Mrs. N N A established an authorization contract. Due to a dispute between the two parties, Mr. D asked the Court to cancel the authorization contract established between him and Mrs. A. At the Court of First Instance, Mr. D T D's authorized representative, Mr. N D T, changed the plaintiff's lawsuit claim from requesting the cancellation of the authorization contract to requesting the court to declare the authorization contract established on March 4th 2011 at A B notary agency in Ho Chi Minh City between Mr. Mr. D T D and Mrs. N N A is invalidated due to violation against the prohibition of the law.

At the Court of Appellate, the People's Court of Ho Chi Minh City indicated as follows: At the Court of First Instance, the authorized representative of the plaintiff could not produce a document signed by Mr. D T D on changes of the content, request for the lawsuit. Meanwhile, according to the scope of the authorization contract dated May 10, 2016 at the GD notary agency, Mr. N D T is only entitled to act on behalf of and in the name of Mr. D T D to participate in the dispute settlement proceedings on the dispute over the authorization contract according to the petition mentioned above. This defines the authorization limit to participate in dispute resolution on the cancellation of the authorization contract between Mr. D T D and Ms. N N A. The acts of arbitrarily changes the lawsuit claim at the Court of First Instance, without the consent of Mr. D T D, showed that the plaintiff's authorized representative had not complete the task and had exceeded the scope of authorization.

The Court of Appellate decided to annul the entire first-instance judgment. Hand over all case files to the Court of First Instance for re-trial in accordance with general procedures.

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