Vietnam: What is purchase and sale of goods by mandated dealers? Can it be entrusted to a third party?

Hello, Lawnet would like to answer as follows:

1. What is purchase and sale of goods by mandated dealers?

According to the provisions of Clause 8, Article 3 of the Law on Commercial 2005, purchase and sale of goods mean commercial activities whereby the seller is obliged to deliver goods, transfer ownership of goods to the purchaser and receive payment; the purchaser is obliged to pay to the seller and receive goods and the ownership thereof as agreed.

According to Article 155 of the Law on Commercial 2005, purchase and sale of goods by mandated dealers mean commercial activities whereby the mandatory conducts the purchase and sale of goods in his/her/its own name under terms agreed upon with the mandator and is entitled to receive mandate commission.

On that basis, the parties in the purchase and sale of goods by mandated dealers activities are defined as follows:

- Mandatories: A mandatory for purchase and sale of goods is a trader dealing in goods which are consistent with the mandated goods and conducting the purchase and sale of goods under terms agreed upon with the mandator.

- Mandators: A mandator of purchase and sale of goods may, or may not, be a trader that authorizes a mandatory to conduct the purchase and sale of goods at his/her/its request and pays a commission.

- Mandated goods: All goods which are lawfully circulated may become the subject matter of a mandated sale and purchase.

- Mandate contracts: Mandate contracts for purchase and sale of goods must be made in writing or in other forms of equivalent legal validity.

Sample contract for purchase and sale of goods: Download

Sample contract for purchase and sale of goods by mandated dealers: Download

(Pursuant to Articles 3, 155, 156, 157, 158 and Article 159 of the Law on Commercial 2005)

2. Can it be entrusted to a third party?

According to the provisions of Article 160 of the Law on Commercial 2005, a mandatory shall not be allowed to sub-mandate a third party to perform the signed mandate contract for purchase and sale of goods, except where it is so approved in writing by the mandator.

A mandatory may accept the mandate for purchase and sale of goods from different mandators. (According to Article 161 of the Law on Commercial 2005)

Thus, according to the above regulations, the mandatories are not allowed to arbitrarily sub-mandate a third party to perform the signed mandate contract there is the consent of the mandators. The mandatories can freely receive entrustment to buy and sell goods from many different mandators.

3. Rights and obligations of parties related to purchase and sale of goods by mandated dealers in Vietnam

Rights and obligations of the mandators

- Rights of mandators

Unless otherwise agreed, mandators shall have the following rights:

+ To request mandatories to supply adequate information on the performance of mandate contracts;

+ Not to bear responsibility in cases where mandatories commit law violations, except for cases specified in Clause 4, Article 163 of Law on Commercial 2005.

- Obligations of mandators

Unless otherwise agreed, mandators shall have the following obligations:

+ To provide information, documents and means necessary for the performance of mandate contracts;

+ To pay mandate commissions and other reasonable expenses to mandatories;

+ To hand over money and goods as agreed upon;

+ To bear joint responsibility in cases where mandatories commit law violations which are attributable to acts of mandators or intentional law-breaking acts of the parties.

(Pursuant to Article 162 and Article 163 of the Law on Commercial 2005)

Rights and obligations of the mandatories

- Rights of mandatories

Unless otherwise agreed, mandatories shall have the following rights:

+ To request mandatory to provide information and documents necessary for the performance of mandate contracts;

+ To receive mandate commissions;

+ Not to bear responsibility for goods handed over to mandators strictly under agreement.

- Obligations of mandatories

Unless otherwise agreed, mandatories shall have the following obligations:

+ To conduct the purchase and sale of goods as agreed upon;

+ To notify mandators of matters related to the performance of mandate contracts;

+ To follow instructions of mandators as agreed upon;

+ To preserve assets and documents assigned to them for the performance of mandate contracts;

+ To keep secret information related to the performance of mandate contracts;

+ To hand over money and goods as agreed upon;

+ To bear joint responsibility for law violation acts of mandators, in cases where such law violation acts are partially attributable to their own faults

(Pursuant to Article 164 and Article 165 of the Law on Commercial 2005)

Thus, the parties involved must comply with the agreement of the purchase and sale of goods by mandated dealers contract, and the mandators and the mandatories can be jointly responsible for each other's violations of the law.

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