Cases of cancellation of the contract without compensation in Vietnam

Cases of cancellation of the contract without compensation in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Cases of cancellation of the contract without compensation in Vietnam

According to Article 423 of the Civil Code 2015, a party has the right to cancel a contract and shall not be liable to compensate for damage in any of the following cases:

- A violation of contract by the other party gives rise to cancellation as agreed by the parties;

- The other party seriously violates the obligations in the contract;

- Others circumstances as provided by law.

Serious violation means the failure to fulfill obligations properly by a party leading the failure to achieve the purposes of entering into contract by the other party.

A party cancelling a contract must notify the other party immediately of the cancellation [and] must compensate if the failure to notify causes damage.

2. Other cases eligible for cancellation of the contract in Vietnam

2.1 Cancellation of the contract due to late performance of obligations

- Where the obligor fails to perform the obligations that the obligee requests in a reasonable period of time but the obligor still fails to perform, the obligee may cancel the contract.

- If, due to the nature of the contract or by the will of the parties, the contract will not achieve the objective if it is not performed within a certain time limit, but the obligor fails to perform that contract upon the expiry date of such time limit, the obligee has the right to cancel the contract without adherence to Clause 1 of Article 424 of the Civil Code 2015.

(Article 424 of the Civil Code 2015)

2.2 Cancellation of the contract due to inability to perform

Where the obligor cannot perform part or all of its obligations to make the purpose of the obligee may not be reached, the obligee party can cancel the contract and claim damages.

(Article 425 of the Civil Code 2015)

2.3 Cancellation of the contract in the case of lost or damaged property

Where a party losses or causes damage to property being the subject of a contract that cannot be refunded or compensated by other property or cannot be repaired or replaced with the same type of property, the other party may cancel contract.

The violating party shall compensate in cash equal to the value of lost or damaged property, unless otherwise agreed or stipulated in Clause 2, Clause 3, Article 351 and Article 363 of the Civil Code 2015.

(Article 426 of the Civil Code 2015)

3. Consequences of cancellation of contracts in Vietnam

- When a contract is canceled, the contract is void from the time of signing; the parties do not have to fulfill the obligations agreed upon, except for agreement on fines against violations, compensation and settlement of disputes.

- The parties must return to each other what they have received after deducting from the reasonable costs of contract performance and cost of preservation and development of property.

The refund is made in kind. In case it cannot be returned in kind, it is worth the money to repay.

Where the parties are jointly obliged to refund, the refund must be made at the same time, unless otherwise agreed or otherwise provided by law.

- The aggrieved party shall be compensated due to breach of obligations of the other party.

- The settlement of the consequences of the cancellation of the contract relating to personal rights shall comply with this Code and other relevant law provisions.

- In case of canceling the contract without grounds specified in Articles 423, 424, 425 and 426 of the Civil Code 2015, the cancellation of the contract is determined as the violating party to perform its obligations and responsibilities to comply with its obligations under the provisions of this Code, other relevant laws.

(Article 427 of the Civil Code 2015)

Nguyen Ngoc Que Anh

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