Is the oral property loan agreement legally valid in Vietnam?

Is the oral property loan agreement legally valid in Vietnam?

Pursuant to Article 463 of the Civil Code 2015, there are provisions on property loan contracts as follows:

Contract for the loan of property means an agreement between parties whereby a lender delivers property to a borrower. When the loan falls due, the borrower must repay the lender property of the same type in accordance with the correct quantity and quality, and must pay interest if so agreed or so provided by law.

According to this Article, the law does not provide for the form of property loan contracts in Vietnam. Therefore, even if you enter into an oral property loan agreement, it is still legally valid. The lender and the borrower shall perform their obligations.

Obligations of lenders in Vietnam

Pursuant to Article 465 of the Civil Code 2015 , the lender is obliged as follows:

1. Deliver the property to the borrower in full, strictly in accordance with the quality and quantity, and at the time and place, agreed.

2. Compensate the borrower for any damage where the lender knows that the property is not of the agreed quality but fails to notify the borrower, unless the borrower accepts the property with knowledge that the property is not of the agreed quality.

3. Do not demand the borrower to return the property prior to the due date, except in the cases provided in article 470 of this Code or relevant laws.

Obligations of borrowers to repay loans

Pursuant to Article 466 of the Civil Code of 2015 , the borrower of the property is obliged to repay the debt as follows:

1. Where the property lent is a sum of money, the borrower must repay the lender the loan in full when due. If the property is an object, the borrower must deliver to the lender an object of the same type, quantity and quality, unless otherwise agreed.

2. Where a borrower is not able to deliver an object, it may, with the consent of the lender, repay the value of the borrowed object, in cash, as at the time and place of delivery.

3. The place for repayment of a loan shall be the place of residence or head office of the lender, unless otherwise agreed.

4. If a borrower fails to repay all or any instalment of an interest-free loan, in whole or in part, when payment falls due, the borrower must, if the parties so agree, pay interest on the overdue amount from the due date until the date on which payment is made, at the basic interest rate prescribed in Clause 2 Article 468 of this Code, unless otherwise agreed or otherwise prescribed by law.

5. If a borrower fails to repay, in whole or in part, a loan with interest, the borrower must pay:

a) Interest on the principal as agreed in proportion to the overdue loan term and interest at the rate prescribed in Clause 2 Article 468 in case of late payment;

b) Overdue interest on the principal equals one hundred and fifty (150) per cent of the interest rate in proportion to the late payment period, unless otherwise agreed.

Best Regards!