Cases of invalid civil transactions in Vietnam (illustrative examples)
Civil transactions as prescribed in Article 116 of the 2015 Civil Code are contracts or unilateral legal acts that create, change or terminate civil rights and obligations. Civil rights and obligations are established and implemented when civil transactions are legal and effective. The unanimity of will and actions of the subjects participating in the transaction is an extremely important factor to achieve the goals of the parties. However, many subjects seriously violate the conditions for validity of transactions, leading to civil transactions being invalidated. Find out with iDLaw through this article.
1. What is a invalid civil transaction in Vietnam?
A invalid civil transaction is an invalid transaction when it is established that the parties (or the subject of unilateral legal action) has violated at least one of the valid conditions prescribed by law. The decision leads to the legal consequences of not creating, changing, or terminating any civil rights or obligations that satisfy the desired purpose of the subject participating in the transaction.
A civil transaction that does not satisfy one of the conditions specified below is invalid, unless otherwise provided in the 2015 Civil Code:
Article 117. Conditions for validity of civil transactions
1. A civil transaction is valid when all of the following conditions are met:
a) The subject has civil legal capacity and civil act capacity appropriate to the established civil transaction;
b) Subjects participating in civil transactions are completely voluntary;
c) The purpose and content of the civil transaction do not violate prohibitions of the law or violate social ethics.
2. The form of a civil transaction is the condition for the validity of the civil transaction in cases where it is prescribed by law.
2. Cases of invalid civil transactions in Vietnam
2.1. Civil transactions are invalid due to violating legal prohibitions and violating social ethics (Article 123 of the 2015 Civil Code)
A civil transaction whose purpose or content violates prohibitions of the law or is contrary to social ethics is invalid. Prohibitions of law are provisions of the law that do not allow subjects to perform certain acts. Social ethics are common standards of behavior in social life, recognized and respected by the community.
Thus, if the will of the parties in the transaction is to establish and perform actions that the law does not allow; violates the object of civil law or the content of the transaction is unethical, the transaction is invalid. In fact, in some cases it is difficult to determine whether the transaction purpose is against social ethics or not because there are no specific standards and cannot be quantified but depends on different perspectives and assessments. of sections of society.
Example 1: Weapons trading and transportation transactions are invalid due to violating legal prohibitions; Specifically, violating the crime of illegally manufacturing, storing, transporting, using, trading or appropriating military weapons and military technical means is prescribed in Article 304 of the 2015 Penal Code.
Example 2: Transaction between children in a family in which an agreement is made with the maid to pay the maid a monthly amount to take care of their elderly parents, and the content of the agreement clearly states not to and the obligation to take care of parents.
2.2. Civil transactions are invalid due to fraud (Article 124 Civil Code 2015)
When the parties artificially establish a civil transaction to conceal another civil transaction, the fake civil transaction is invalid, while the concealed civil transaction is still valid; unless that transaction is also invalid according to the provisions of this Code or other relevant laws. In case a fake civil transaction is established to ainvalid obligations to a third person, that civil transaction is invalid.
Thus, fraud is shown when the parties completely voluntarily establish a transaction but try to express a will that is inconsistent with their true will; There is no unity between will and will expression. Establishing a transaction to conceal another transaction or establishing a transaction to ainvalid obligations to a third party is invalid. A concealed transaction, if it complies with the valid conditions, is still valid.
Example 1: A sells B a house, the parties agree that the value of the house is 1,500,000,000 VND. But the two parties created a contract that only stated the value of the house was 1,000,000,000 VND to fraudulently pay the registration fee to transfer the name. Thus, the contract stating the value of the house is 1,000,000,000 VND is considered a sham contract.
Example 2: A owes the bank 400,000,000 VND but is overdue and has no money to pay. A’s remaining assets are 3 pieces of land. To ainvalid the debt repayment obligation, bank A sold all 3 pieces of land to the owner. other body.
2.3. Invalid civil transactions are established and performed by minors, people who have lost civil act capacity, people with difficulty in cognition and behavior control, and people with limited civil act capacity ( Article 125 Civil Code 2015)
When a civil transaction is established or performed by a minor, a person who has lost civil act capacity, a person with difficulty in cognition or behavior control, or a person with limited civil act capacity, the At the request of that person’s representative, the Court declares that transaction invalid if according to the provisions of law this transaction must be established, performed or agreed to by that person’s representative, except in the following cases: :
(1) Civil transactions of a person under six years old or a person who has lost civil act capacity to meet that person’s essential daily needs;
(2) Civil transactions only give rise to rights or only exempt from obligations for minors, people who have lost civil act capacity, people with difficulty in cognition and behavior control, and people with restrictions. capacity to act civilly with the person who has established and performed transactions with them;
(3) Civil transactions are recognized by the person who established the transaction to be effective after reaching adulthood or after restoring civil act capacity.
For example: Mr. A suffered from mental illness due to an accident in September 2015. On June 15, 2016, knowing that Mr. A owned a piece of land right in the city center, Mr. B (A’s friend) took advantage and seduced Mr. Knowing the incident, Mr. A’s family came to meet Mr. B to talk, but Mr. B not only did not cancel the contract but also threatened to sue Mr. The land has the signature of the owner, Mr. A, but Mr. A has lost civil capacity so the contract is invalid. The land is still owned by Mr. A.
2.4. Civil transactions are invalid due to confusion (Article 126 of the Civil Code 2015)
In case a civil transaction is established with an error that causes one party or parties to fail to achieve the purpose of establishing the transaction, the mistaken party has the right to request the Court to declare the civil transaction invalid. , except for the following cases:
A civil transaction established with confusion is not invalid in case the parties’ purpose of establishing the civil transaction has been achieved or the parties can immediately overcome the confusion, making the purpose of establishing the civil transaction obsolete. Establishing civil transactions is still achieved.
For example: A signs a contract to buy 100 sets of dishes from B, the two parties have agreed on the price and delivery time. On the delivery day, due to regional language differences, instead of receiving cups (small bowls used to eat rice as Southerners call them), A received 100 sets of tea cups (as called cups). of Northerners) from B. In this case, A and B can overcome it by keeping the goods intact and re-unifying the object of the transaction. If both parties do not agree to this, the transaction will be declared invalid.
2.5. Civil transactions are invalid due to deception, threats, or coercion (Article 127 of the 2015 Civil Code)
When a party participates in a civil transaction due to deception, threat or coercion, he or she has the right to request the Court to declare that civil transaction invalid.
Deception in a civil transaction is an intentional act by one party or a third person to make the other party misunderstand the subject, nature of the object or content of the civil transaction, thus establishing the transaction. translate that.
Threats and coercion in civil transactions are intentional acts of one party or a third person that force the other party to perform a civil transaction in order to ainvalid damage to life, health, honor or reputation. , your dignity, your property or that of your relatives.
For example: Mr. A’s parents bought him a new motorbike for 200 million VND. After 1 month, Mr. B offered to buy it back for 100 million but Mr. A did not agree. Mr. B threatened that if he did not sell to him at this price, he would tell everyone that Mr. A’s father was having an affair. Mr. A was afraid of the impact on his family, so he sold the car to Mr. B for 100 million. In this case, the car sale transaction is invalid because Mr. A did not voluntarily perform the contract. Mr. A sold his car because Mr. B threatened to reveal personal information that would negatively affect Mr. A’s family.
2.6. A civil transaction is invalid because the person establishing it is not aware and in control of his or her actions (Article 128 of the Civil Code 2015).
A person who has civil act capacity but has established a transaction at the right time without awareness and control of his or her behavior has the right to request the Court to declare that civil transaction invalid.
For example: While drunk, A signed a contract with B to sell the land use rights that A owned to B for only 1/3 of the market price at that time. In this case, the transaction is invalid because at the time of establishing the transaction, A was not aware and in control of his behavior.
2.7. Civil transactions are invalid due to non-compliance with formality regulations (Article 129 Civil Code 2015)
Civil transactions that violate the conditions for formal validity are invalid, except in the following cases:
(1) Civil transactions that have been established according to regulations must be in writing, but the document does not comply with the provisions of law and one party or parties have performed at least two-thirds of the obligations in the transaction, as required. of one party or parties, the Court issues a decision recognizing the validity of that transaction.
(2) A civil transaction has been established in writing but violates mandatory regulations on notarization and authentication and one party or parties have performed at least two-thirds of the obligations in the transaction, upon request. of one party or parties, the Court issues a decision recognizing the validity of that transaction. In this case, the parties do not have to perform notarization or authentication.
For example: A contributes capital to B’s company using his land use rights. However, the business capital contribution contract only has the signatures of both parties and is not authenticated. In this case, the capital contribution contract is invalid because it does not comply with the provisions on form in Point a, Clause 3, Article 167 of the 2013 Land Law: “Contracts for transfer, donation, mortgage, capital contribution with use rights Land, land use rights and assets attached to land must be notarized or authenticated, except in the case of real estate business specified in Point b of this Clause. So, to ensure your rights as well as ainvalid possible risks in the future, A needs to have this contract notarized/authenticated.