Cases in which civil transactions in Vietnam may be invalid

Cases in which civil transactions in Vietnam may be invalid​ (Illustrative Image)

According to the provisions of Article 117 of the Civil Code 2015, for a civil transaction to take effect, it must meet all the following conditions:

- The subject has civil legal capacity and appropriate civil act capacity for the established civil transaction;

- The subject voluntarily participates in the civil transaction completely voluntarily;

- The purpose and content of the civil transaction do not violate prohibitions of the law and are not contrary to social ethics.

Additionally, the form of the civil transaction is also a condition for its effect in cases where the law stipulates.

Based on the validity conditions mentioned above, a civil transaction will be invalid if it falls into one of the following cases:

1. Civil transaction in Vietnam is invalid due to violation of law prohibitions, contrary to social ethics

According to the provisions of Article 123 of the Civil Code 2015, a civil transaction with the purpose, content that violates the prohibitions of the law, or is contrary to social ethics is invalid.

In which,

- Prohibitions of the law are understood as the provisions of the law that do not allow the subject to perform certain acts.

- Social ethics are general standards of behavior in social life, recognized and respected by the community.

2. Civil transaction in Vietnam is invalid due to falsification

The establishment of a fictitious civil transaction may have the following purposes:

- When the parties establish a civil transaction fictitiously to conceal another civil transaction, the legal consequences will be:

- The fictitious civil transaction will be invalid; and- The concealed civil transaction will remain valid, except in cases where that transaction is also invalid according to legal provisions.

- In the case of establishing a fictitious civil transaction to evade obligations to a third party, that civil transaction is invalid.

Thus, in both cases of establishing a fictitious transaction mentioned above, whether to conceal another civil transaction or to evade obligations to a third party, the result will be the fictitious transaction being invalid.

3. Civil transaction in vietnam is invalid due to the contracting party not meeting the conditions for conclusion

A civil transaction is invalid in this case when:

(1) The contracting party is:

- A minor;

- A person who has lost civil act capacity;

- A person with difficulties in awareness, behavior control;

- A person with restricted civil act capacity.

(2) A request is made by their representative for the Court to declare the transaction invalid.

(3) According to legal provisions, this transaction must be established, executed, or agreed upon by their representative.

When all three factors above are satisfied, the civil transaction that has been concluded will be declared invalid at the request of the representative of those who do not meet the conditions for concluding the contract.

However, there are three exceptions where the civil transaction of the above-mentioned subjects will not be invalid, specifically:

- A civil transaction conducted by a person under six years old or a person who has lost civil act capacity to meet their daily essential needs;

- A civil transaction that only establishes rights or exempts obligations for minors, persons who have lost civil act capacity, persons with difficulties in awareness, behavior control, or persons with restricted civil act capacity with those who have established or performed the transaction with them;

- A civil transaction recognized by the person who established it as valid after they have become of age or after recovering their civil act capacity.

It can be seen that if a civil transaction by those who do not meet the conditions for conclusion does not harm but even benefits them, or if the person who has concluded it acknowledges the conclusion after meeting the conditions, the civil transaction will still take effect.

4. Civil transaction is invalid due to misunderstanding

In the case of a civil transaction being established with a misunderstanding causing one or both parties not to achieve the purpose of the transaction establishment, the mistaken party has the right to request the Court declare the civil transaction invalid.

Exception:

A civil transaction established with a misunderstanding is not invalid in case the purpose of the civil transaction establishment by the parties has been achieved or the parties can immediately rectify the mistake, making the purpose of the civil transaction establishment achievable.

5. Civil transaction is invalid due to deceit, threat, coercion

According to the provisions of Article 127 of the Civil Code 2015, when a party participating in a civil transaction is deceived or threatened, coerced, they have the right to request the Court declare that civil transaction invalid.

To be specific:

- Deceit in a civil transaction is the intentional act of one party or a third party, causing the other party to misunderstand about the subject, nature of the object, or content of the civil transaction, thereby establishing that transaction.

- Threat and coercion in a civil transaction are intentional acts by one party or a third party, forcing the other party to perform the civil transaction to avoid damage to their life, health, honor, reputation, dignity, property, or that of their loved ones.

6. Civil transaction is invalid due to the person establishing it being unable to perceive and control their behavior

A person with civil act capacity but who establishes a transaction at the time of being unable to perceive and control their behavior has the right to request the Court declare that civil transaction invalid.

7. Civil transaction is invalid due to non-compliance with form requirements

A civil transaction that violates the validity condition regarding form is invalid.

Exception:

In the following two cases, a civil transaction that does not comply with form requirements still takes effect:

- The civil transaction was established in writing, as required, but did not conform to the law, and one or both parties have performed at least two-thirds of the obligations in the transaction. At the request of one or both parties, the Court decides to recognize the effectiveness of that transaction.

- The civil transaction was established in writing but violated mandatory provisions on notarization, certification, and one or both parties have performed at least two-thirds of the obligations in the transaction. At the request of one or both parties, the Court decides to recognize the effectiveness of that transaction. In this case, the parties do not have to perform notarization or certification.

Above are the cases where a civil transaction may be invalid if the conditions specified in the Civil Code 2015 are met. Subjects entering into civil transactions need to be aware to avoid invalid transactions, leading to unfulfilled purposes of the parties involved.

Thuy Tram

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