Cases of invalid civil transactions under the Civil Code in Vietnam

Cases of invalid civil transactions under the Civil Code in Vietnam (Internet image)

1. What is an invalid civil transaction?

According to Article 116 of the Civil Code 2015, a civil transaction is a contract or a unilateral legal act which gives rise to, changes or terminates civil rights and/or obligations.

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.

In addition, the forms of civil transactions shall be the conditions for its effectiveness in cases where it is so provided for by law.

Thus, invalid civil transactions are contractual transactions or unilateral legal acts that do not fully satisfy the conditions as prescribed above, unless otherwise provided for by the Civil Code 2015,.

(Article 117, Article 122 of the Civil Code 2015)

2. Cases of invalid civil transactions under the Civil Code in Vietnam

The cases of invalid civil transactions are mentioned in Article 123 to Article 130 of the Civil Code 2015, specifically as follows:

* Invalidity of civil transactions due to breach of legal prohibitions or contravention of social ethics (Article 123)

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.

* Invalidity of civil transactions due to falsification (Article 124)

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 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.

* 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 Article 125 of Civil Code 2015.

A civil transaction of a person prescribed in Clause 1 of this Article 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.

* Invalidity of civil transactions due to misunderstanding (Article 126)

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 Article 126 of 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.

* Invalidity of civil transactions due to deception, threat or compulsion (Article 127)

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.

* Invalidity of civil transactions established by person lacking in cognition and behavior control (Article 128)

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.

* Invalidity of civil transactions due to non-compliance with form

According to Article 129 of the Civil Code 2015, 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.

* Partially invalid civil transactions (Article 130)

A civil transaction is partially invalidated when a part of the content of a civil transaction is invalidated but does not affect the validity of the remaining part of the transaction.

3. Legal consequences of invalid civil transactions in Vietnam

Specifically, Article 131 of the Civil Code 2015, legal consequences of invalid civil transactions include:

- An invalid civil transaction shall not give rise to, change or terminate any civil rights and obligations of the parties as from the time the transaction is entered into.

- When a civil transaction is invalid, the parties shall restore everything to its original state and shall return to each other what they have received.

If the restitution is not able to make in kind, it may paid in money.

- A bona fide person in receiving yield and/or income is not required to return such yield and/or income.

- The party at fault which caused damage must compensate therefore.

- The settlement of consequences of invalid civil transactions regarding personal rights shall be prescribed in Civil Code 2015 and relevant laws.

Thanh Rin

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