When is a civil transaction invalid in Vietnam?

When is a civil transaction invalid in Vietnam? Under which circumstances will civil transactions be invalid? How does the Civil Code 2015 stipulate on invalid civil transactions?

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What is invalid civil transaction?

Article 116, Civil Code 2015 stipulates: “Civil transaction is a contract or unilateral legal act that gives rise to, changes or terminates civil rights and obligations.”

Civil transaction in Vietnam is understood as a legal event giving rise to legal consequences. This event must meet 4 basic legal requirements in order to be valid:

  • The parties have civil legal capacity suitable to the established civil transaction
  • Parties participating in civil transaction are completely voluntary
  • The purpose and content of civil transaction do not violate prohibitions of law, not contrary to social morality
  • The form of the transaction is in accordance with the law.

Therefore, when the legal event falls into one of the cases where the law provides for a transaction invalid, this transaction does not give rise to, change or terminate the civil rights and obligations of the parties from the time of Transaction is established.

Cases of invalid transactions

Civil transactions violating prohibitions of law, contrary to social morality (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.

This transaction is of course considered invalid regardless of the will of the parties participating in the transaction. Assets and profits arising from such transactions may be confiscated and transferred to the state fund.

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 this Code 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.

This is quite common when one party avoids the obligation to pay the debt by transferring property (through a donation contract) to another person. However, in reality, the donation contract does not give rise to the rights of the giver. Then that contract is void.

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 (Article 125 )

Except for:

  • Persons under 6 years old, persons with loss of civil act capacity to perform transactions to meet their daily essential needs;
  • For minors, persons with loss of civil act capacity, people with difficulty in understanding, controlling acts, people with limited civil act capacity, civil transactions only give rise to rights. or only waive their obligations;
  • When the party has matured or restored civil act capacity, the transaction will be acknowledged

Invalidity of civil transactions due to mistakes (Article 126)

When there is a mistake in a civil transaction that makes the party or the parties fail to achieve the purpose of establishing that transaction and both parties fail to remedy that, the transaction is invalid.

A mistake is when the parties misunderstand the content of a transaction that they are participating in, causing damage to either party. If the party causing the mistake proves it was unintentional, the transaction may be declared void.

However, if the mistake arises from the will of one party, then the transaction is void due to deception.

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

“Deception” here is the intentional act of one party to make the other party misunderstand about (i) the subject; (ii) nature of the object; (iii) the content of the transaction.

“Threats”, “compulsion” are intentional acts of one party; force the other party to participate in the transaction; otherwise, he/she will have to suffer damage to: life, health, honor, reputation, dignity, property or that of a loved one.

These transactions shall be invalidated only upon the request of the deceived party to the Court and declared invalid by the Court.

Invalidity of civil transactions established by persons who are not aware of and control their own acts (Article 128)

At the time of conducting a civil transaction, the person that is not aware of and controlling his/her actions has the right to request a court to declare that transaction invalid.

Invalidity of civil transactions due to failure to comply with form (Article 129)

Basically, the parties are free to choose the form of the transaction. However, there are a number of transactions that are required by law to be in writing, certified, registered or licensed, but the parties do not comply with this regulation.

Cases of invalid civil transactions are clearly defined by law, ensuring the enforcement efficiency of the law and the legitimate rights of regulated parties.

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