When does a civil transaction take effect in Vietnam? Summary of cases of invalid civil transactions in Vietnam

Regarding this matter, LawNet would like to answer as follows: 

1. When does a civil transaction take effect in Vietnam?

According to the provisions of Clause 1, Article 117 of the Vietnam's Civil Code 2015, a civil transaction shall be effective when it satisfies all of the following conditions:

- Participants in the transaction have legal personality and/or legal capacity in conformity with such transaction;

- Participants in the transaction act entirely voluntarily;

- The purpose and contents of the transaction are not contrary to the law and/or social ethics.

Thus, if all three conditions above are met, the civil transaction will take effect. These are the basic conditions to ensure the legality and ethics of civil transactions.

2. Summary of cases of invalid civil transactions in Vietnam

According to the provisions of Article 122 of the Vietnam's Civil Code 2015, civil transactions which fail to satisfy any one of the conditions specified in Section 1 shall be invalid, unless otherwise prescribed.

Cases of invalid civil transactions in Vietnam specified in Articles 123 to 130 of the Vietnam's Civil Code 2015 include:

(1) Invalidity of civil transactions due to breach of legal prohibitions or contravention of social ethics

- Civil transactions with objectives and contents which breach legal prohibitions or which contravene social ethics shall be invalid.

- Legal prohibitions mean provisions of law which do not permit entities to perform certain acts.

- Social ethics are common standards of conduct as between persons in social life, which are recognized and respected by the community.

(2) Invalidity of civil transactions due to falsification

- If the parties falsely enter into a civil transaction for the purpose of concealing another transaction, the false transaction shall be invalid and the concealed transaction remains valid, unless it is also invalid under the provisions of Vietnam's Civil Code 2015 or relevant laws.

- If the parties enter into a civil transaction falsely for the purpose of evading responsibilities to a third person, such transaction shall be invalid.

(3) Invalidity of civil transactions established and performed by minors or legally incapacitated persons or persons with limited cognition and behavior control or persons with limited legal capacity

- When a civil transaction is established or performed by a minor, a legally incapacitated person, a person with limited cognition and behavior control, or a person with limited legal capacity, a court shall, at the request of the representative of that person, declare such transaction invalid, if it is provided for by law that such transaction must be established and performed by or with the consent of the representative of that person, except for the cases prescribed in Clause 2 of Articles 125 of the Vietnam's Civil Code 2015.

- A civil transaction of a person prescribed in Clause 1 of Articles 125 of the Vietnam's Civil Code 2015 shall not be invalid in any of the following cases:

+ The civil transaction of a child less than 6 years of age or a legally incapacitated person established for his/her daily needs;

+ The civil transaction only either arising rights or exempting from obligations for the minor, the legally incapacitated person, the person with limited cognition and behavior control, the person with limited legal capacity and their contracting parties;

+ The civil transaction of which validity is recognized by the person established such transaction that become an adult or restore his/her legal capacity.

(4) Invalidity of civil transactions due to misunderstanding

- If there is a misunderstanding in a civil transaction that make a party or the parties fails to meet the objectives of the transaction establishment, the mistaken party shall have the right to request a court to declare such transaction invalid, except for the case prescribed in Clause 2 of Articles 126 of the Vietnam's Civil Code 2015.

- A civil transaction having misunderstanding shall not be invalid if the parties may meet the objectives of the transaction establishment or the parties may correct the misunderstanding resulting in the achievement of the objectives of the transaction establishment.

(5) Invalidity of civil transactions due to deception, threat or compulsion

- Any party entering into a civil transaction as a result of deception, threat or compulsion has the right to request a court to declare such transaction invalid.

- Deception in a civil transaction means an intentional act of a party or a third person for the purpose of misleading the other party as to the subject, the nature of the entity or contents of the civil transaction which has caused the other party to enter into such transaction.

- Threat or compulsion in a civil transaction means an intentional act of a party or a third person which compels the other party to conduct the civil transaction in order to avoid danger to the life, health, honor, reputation, dignity and/or property or that of its relatives.

(6) Invalidity of civil transactions established by person lacking in cognition and behavior control

A person who has legal capacity but has entered into a civil transaction at the time of he/she is lacking in cognition and behavior control shall have the right to request a court to declare such civil transaction invalid.

(7) Invalidity of civil transactions due to non-compliance with form

A civil transaction violating conditions for validity pertaining to form shall be invalid, except for any of the following cases:

- If the form of a civil transaction, required to be established in writing, does not comply with regulations of law, but a party or the parties has/have fulfill at least two third of the obligations in the transaction, a court, at his/her/their request(s), shall issue a decision on recognition of the validity of such transaction.

- If the form of a civil transaction, required to be established in writing, violates against regulations on notarizing or authorization, but a party or the parties has/have fulfill at least two third of the obligations in the transaction, a court, at his/her/their request(s), shall issue a decision on recognition of the validity of such transaction. In this case, the parties need not perform the notarizing or authorization.

(8) Partially invalid civil transactions

A civil transaction shall be partially invalid when one part of the transaction is invalid but such invalidity does not affect the validity of the remaining parts.

Thus, according to the above regulations, there are 08 cases of invalid civil transactions. These cases aim to protect the legitimate rights and interests of the parties, while preserving legal order and social ethics.

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