Things you should know before concluding contract for lease of a vehicle in Vietnam

Hello, Lawnet would like to answer the following:

1. What is contract for lease of a vehicle?

According to Article 472 of the Civil Code 2015, contract for lease of property means an agreement between parties whereby a lessor delivers property to a lessee for use during a fixed term and the lessee is required to pay rent.

It can be seen that a car is an asset, so a contract for lease of a vehicle is also considered a property lease contract. Thus, the lessor delivers the vehicle to the lessee for use within a certain period of time, and at the same time, the lessor must pay the rental according to the agreed rental price.

2. Mandatory contents of the contract for lease of a vehicle in Vietnam

According to Clause 2, Article 398 of the Civil Code 2015, contents of the contract include:

- The contracting parties may agree on the contents of a contract.

- A contract may have the following contents:

+ Subject matter of the contract;

+ Quantity and quality;

+ Price and method of payment;

+ Time limit, place and method of performing the contract;

+ Rights and obligations of the parties;

+ Liability for breach of contract;

+ Methods of settlement of disputes.

Thus, the contract for lease of a vehicle also has the same basic contents as above.

3. Things you should know before concluding contract for lease of a vehicle in Vietnam

According to Section 5, subsection 1 of the Civil Code 2015, things to keep in mind when concluding contract for lease of a vehicle in Vietnam include:

- Regarding rent

+ Rent for a lease of property shall be as agreed by the parties or determined by a third party at the request of the parties, unless otherwise prescribed by law.

+ Where parties reach no agreement or reach an agreement with unclear terms about the rent, it shall be determined according to the market price at the time and place of entering into the contract.

- Regarding lease term

+ The term of a lease shall be as agreed by the parties. If there is no agreement, the term of the lease shall be determined according to the purpose of the lease.

+ Where parties have not agreed on the term of a lease or where the term of a lease is not able to be determined according to the purpose of the lease, the lease shall terminate when the lessee has achieved the purpose of the lease.

- Regarding sub-leases

+ A lessee may sub-lease leased property with the consent of the lessor.

- Regarding delivery of leased property

+ A lessor must deliver property to the lessee strictly in accordance with the agreed quantity, quality, type and condition and at the agreed place and time, and must provide information necessary for use of the property.

+ Where a lessor is late in delivering property, the lessee may extend the time for the delivery of the property or may cancel the contract and demand compensation for damage. If the leased property is not of the quality agreed, the lessee has the right to require the lessor to repair the property or reduce the rent, or to cancel the contract and demand compensation for damage.

- Regarding payment of rent

+ A lessee must pay rent in full and on time as agreed.

++ If there is no agreement on the time for payment of rent, the time shall be determined in accordance with the customary practice at the place of payment.

++ If it is not possible to determine the time of payment in accordance with such customary practice, the lessee must make payment when the lessee returns the leased property.

+ Where the parties have agreed on payment of rent in instalments, if the lessee fails to make payment for three consecutive instalments, the lessor has the right to terminate unilaterally the performance of the lease contract, unless otherwise agreed or otherwise provided by law.

- Regarding return of leased property

+ A lessee must return leased property in the same condition in which it was received, normal wear and tear excepted, or in the condition agreed. If the value of the leased property has decreased in comparison with its condition at the time it was received, the lessor has the right to demand compensation for any damage, normal wear and tear excepted.

+ Where leased property is moveable property, the place for returning the leased property shall be the place of residence or head office of the lessor, unless otherwise agreed.

+ Where leased property is livestock, the lessee must return both the leased livestock and any offspring born during the term of the lease, unless otherwise agreed. The lessor must reimburse the lessee for expenses incurred in caring for the offspring.

+ Where a lessee is late in returning leased property, the lessor has the right to require the lessee to return the leased property and to pay rent for the period of delay and the lessee must compensate for damage. The lessee must pay a penalty for the late return of the leased property if so agreed.

+ The lessee must bear the risk in relation to the leased property during the period of delay.

In addition, there are other basic obligations of the lessee with respect to the leased asset, including: Obligation to assure utility value of leased property; Obligation to take care of leased property; the obligation to use the leased property for the right use and for the purpose of the lease;

From the above provisions, if during the leasing period, the lessee does not take good care of the car, causing damage or accidents, etc., they have to compensate for the damage.

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