What is an economic contract in Vietnam?

Economic Contract is a written agreement, transaction document between the signing parties regarding the implementation of production, exchange of goods, services, research, application of scientific and technical advancements, and other agreements with business purposes with clearly defined rights and obligations of each party to establish and implement their plans. This concept was regulated in the Ordinance on Economic Contracts of 1989, currently, there are no specific documents defining the concept or characteristics of this type of contract.

In practice, the term “economic contract” is quite commonly used, and we can generalize some of its characteristics as follows:

- Participating entities: At least one party must be a legal entity

- Purpose: Business

- Form: In writing

- Principles of contract signing based on:

- Voluntariness: The signing of the contract must be based on the voluntary agreement of the parties, without imposition by any organization or individual;

- Equality and mutual benefit: The parties involved in the contract signing are equal in rights and obligations regardless of economic component or management level, ensuring mutual benefits based on the agreement and must bear material responsibility if there is a breach of contract obligations;

- Direct asset responsibility: The parties involved in the contract must bear asset responsibility themselves, including contract penalties and compensation for damages when there are acts violating the economic contract policies;

- Not contrary to law: The agreements establishing the rights and obligations of the parties in the economic contract must be in accordance with the law, customs, and manners, and social ethics, and must not exploit the economic contract for illegal activities;

- Basis for signing economic contract:

- The demand for selling and buying goods of the parties;

- The capability of developing business and production activities;

- Measures ensuring contract performance:

- Asset mortgage;

- Asset pledge;

- Asset guarantee;

- Basic contents in the contract:

- Rights and obligations of the parties involved in the contract;

- Quantity of goods, work;

- Quality of goods, work;

- Time, place, method of goods delivery;

- Payment price;

- ...

Currently, the law no longer uses the concept of an economic contract, but depending on the type of goods or services, the provisions of the Commercial Law 2005 or the Civil Code 2005 and related guiding documents can be applied.

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