When is the Contract Formed?

Do you know that at least once a day you have formed a contract? Simply buying a loaf of bread has already established a sales contract between you and the seller. In reality, contracts can sometimes be so simple that they might just be a fleeting phone call, a brief order, or even a parking ticket. However, there are also numerous complex contracts with hundreds of pages of content.

Illustration

What is a contract? According to Article 388 of the Civil Code 2005, a contract is an agreement between two or more parties to establish, change, or terminate the rights and obligations of the parties. From this definition, we can see that a contract is formed when three elements are present:

1. Formation of an agreement, that is, the parties have a mutual consensus on whether to perform or not to perform a specific task. To unify the will, the parties must have the opportunity to express their will; these wills must coincide, agreeing on certain content (such as the subject of the contract, quantity, quality, price, payment method, term, place of contract execution, etc.).
2. The parties in the contract must have civil act capacity as prescribed by law. A contract can be established between individuals, between an individual and an organization, or between organizations.
3. The content of the contract must clearly express the obligations of the parties. According to Article 280 of the Civil Code 2005, an obligation is understood as one or more parties (the obligor) must transfer properties, goods, items, and other things, transfer rights, pay money, provide valuable papers, perform or refrain from performing certain tasks for the benefit of one or more other parties (the obligee).

Additionally, for the contract to be valid, it must satisfy the conditions (According to Article 122 of the Civil Code 2005):

- The person entering into the contract has civil act capacity;- The purpose and content of the contract do not violate the prohibitions of the law, and are not contrary to social ethics;- The person entering into the contract does so voluntarily;- Compliance with the formality requirements of the law (if any). For instance, mandatory bidding.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE