Things you need to know about cooperation contract in Vietnam

Things you need to know about cooperation contract in Vietnam (Internet image) 

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

1. What is a cooperation contract?

- A cooperation contract means an agreement between natural and/or juridical persons regarding the property contribution, effort to perform certain jobs, the same benefit and mutual responsibility.

- Each cooperation contract must be made in writing.

(Article 504 of the Civil Code 2015)

2. Contents of cooperation contract in Vietnam

Article 505 of the Civil Code 2015 stipulates that the each cooperation contract shall contain the major contents below:

- Purpose and duration of cooperation;

- Full name and place of residence of natural person; name and headquarters of juridical person;

- Contributed property (if any);

- Contributed labor (if any);

- Method of distributing the yield and/or income;

- Rights and obligations of cooperative members;

- Rights and obligations of representatives (if any);

- Conditions for participation and withdrawal from the cooperation contract (if any);

- Conditions for termination of cooperation.

3. Common property of the cooperative members in Vietnam

According to Article 506 of the Civil Code 2015, the common property of the cooperative members is stipulated as follows:

- Property contributed and created by the members and other property as prescribed by law shall be considered as common property part of the cooperative members.

Where there is agreement on the contribution that members fail to contribute money on schedule, they must pay interest on the unpaid portion of the money under the provisions of Article 357 of the Civil Code 2015 and must pay damages.

- The disposition of the property is land use rights, housing, factories, other production materials must have a written agreement of all the members; the disposal of other property shall be decided by the representatives of the members, unless otherwise agreed.

- The common property may not be divided before the termination of the cooperation contract, unless otherwise agreed by all members.

The division of common property shall not change or terminate the rights and obligations established before the division time.

4. Rights and obligations of cooperative members in Vietnam

Cooperative members have the following rights and obligations:

- Enjoy the yield and income gained from cooperation activities.

- Participate in decisions involving issues of performance of cooperation contract and co-operation monitoring.

- Compensate for damages to other cooperative members caused by their faults.

- Perform other rights and obligations under the contract.

(Article 507 of the Civil Code 2015)

5. Civil liability of cooperative members in Vietnam

The cooperative members are responsible for general civil liability by their common property; if the common property is insufficient to fulfill the obligation, the members shall be held responsible by their own property corresponding to its contribution, unless otherwise specified by the cooperation contract or otherwise prescribed by law.

(Article 509 of the Civil Code 2015)

6. Withdrawal from the cooperation contract in Vietnam

(i) A member has the right to withdraw from the cooperation contract in any of the following cases:

- Satisfy the conditions specified in the cooperation contract;

- There is a good reason and the consent of more than half the total cooperative members.

(ii) The member withdrawing from the cooperation contract has the right to reclaim contributed property, divided part of the property in the common property and must pay all obligations under the agreement. Where the division of property in kind affects the cooperation activities, the property are worth the money to divide.

The withdrawal of a member from the cooperation contract does not terminate his/her rights and obligations that are established or performed before the withdrawal time.

(iii) The withdrawal of a member from the contract in a case other than Clause 1 of Article 510 of the Civil Code 2015 shall be defined as the breach of contract and should execute the civil liability as prescribed in the Civil Code 2015 and other relevant laws.

(Article 510 of the Civil Code 2015)

7. Joining cooperation contract

Unless the cooperation contract otherwise specifies, a natural or juridical person shall become a new member of the contract with the consent of more than half the total cooperative members.

(Article 511 of the Civil Code 2015)

8. Termination of cooperation contract in Vietnam

- A cooperation contract shall terminate in any of the following cases:

+ As agreed by cooperative members;

+ The time limit mentioned in the cooperation contract has expired;

+ The purpose of cooperation has been achieved;

+ Pursuant to a decision of a competent authority;

+ Other cases prescribed in the Civil Code 2015 or other relevant laws.

- Upon the termination of the cooperation contract, the debts arising from the contract must be paid; if the common property is insufficient to repay it to private assets of cooperative members to pay under the provisions of Article 509 of the Civil Code 2015.

Where the debt was repaid and the common property still exists, it shall be divided by the cooperative members in proportion to the contribution of each person, unless otherwise agreed.

(Article 512 of the Civil Code 2015)

Nguyen Ngoc Que Anh

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