Disputes Over Sale and Purchase / Loan Contracts: Conditions and Documentation Required to Exercise the Right to Sue

Disputes over sale and purchase contracts and loan-of-property contracts are among the most common types of civil disputes today; yet a considerable number of statements of claim are still returned by the courts, or made subject to requests for supplementation, for want of adequate legal grounds. Bringing a lawsuit involves more than merely drafting a statement of claim – it requires the correct determination of the limitation period, the competent court, and the accompanying body of documents and evidence. This article examines the conditions, procedure, and documentation to be prepared in order to protect one’s lawful rights and interests when bringing a claim.

1. Determining the Limitation Period – A Prerequisite for a Claim to Be Considered

Pursuant to Article 429 of the 2015 Civil Code, the limitation period for bringing a court claim to resolve a contractual dispute is three (03) years from the date on which the person entitled to make the claim knew, or ought to have known, that his or her lawful rights and interests had been infringed.

For commercial disputes falling within the scope of the Law on Commerce, Article 319 of the Law on Commerce provides for a limitation period of two (02) years from the time at which the lawful rights and interests concerned were infringed, unless otherwise provided by law.

It should be noted that the application of the limitation period is not automatically considered by the court; it applies only upon the request of one or more of the litigants, provided that such request is made before the court of first instance issues its judgment or decision resolving the case (pursuant to Clause 2, Article 184 of the 2015 Civil Procedure Code).

Accordingly, where the defendant does not raise the limitation period, the court may still consider and resolve the case even though the limitation period has expired. This, however, is not a basis on which a claimant may delay bringing a claim; determining and exercising the right to sue within the statutory time limit remains a principle that must be observed in order to ensure legal certainty.

2. Documents and Evidence to Be Gathered

Under the principles of civil procedure, a litigant has both the right and the obligation to proactively gather and submit evidence, and to prove that its claim is well founded and lawful. The dossier for a claim should therefore be prepared together with documents and evidence corresponding to the underlying contractual relationship and the relief sought.

a. For disputes over a loan-of-property contract

Depending on the case, the claimant may need to prepare:

• – The loan receipt or loan-of-property contract (where made in writing);
• – Evidence proving the disbursement and receipt of the loan amount, such as bank transfer statements or receipts signed by the parties;
• – Text messages, emails, or other electronic data evidencing the agreement as to the loan amount, interest rate, and repayment term, as well as any conduct by the borrower acknowledging the obligation;
• – Written demand notices or notices sent to the borrower demanding repayment, serving as a basis for determining the date on which the lawful rights and interests concerned were infringed, for purposes of calculating the limitation period; and
• – Other documents proving that the borrower failed to perform, or did not fully perform, its obligations.

Pursuant to Article 466 of the 2015 Civil Code, a borrower of money is obliged to repay the full amount when due. Where repayment is delayed, the borrower must pay interest on the overdue amount corresponding to the period of delay, at the rate prescribed under Clause 2, Article 468 of the 2015 Civil Code, save where the parties have otherwise agreed or the law otherwise provides.

b. For disputes over a sale and purchase contract

The dossier for a claim in respect of this type of dispute should include:

• – The sale and purchase contract, any contract appendices, purchase orders, invoices, and delivery notes;
• – Handover minutes or acceptance minutes (if any), serving as a basis for establishing performance of the obligation to deliver and receive the goods;
• – Payment vouchers, debt reconciliation minutes, and/or documents proving non-payment or incomplete payment; and
• – Written correspondence or minutes of meetings between the parties concerning the breach of contractual obligations (late delivery, non-conforming goods, failure to make payment, etc.).

3. Determining Interest and the Value of the Claim

The amount claimed before the court should be determined by reference to each specific obligation and its corresponding legal basis, rather than by simply aggregating all sums that have arisen. For a loan-of-property contract, priority should be given to the mechanism under Articles 466 and 468 of the 2015 Civil Code in determining each component of interest.

Pursuant to Clause 1, Article 468 of the 2015 Civil Code, the interest rate on a loan is as agreed between the parties, but may not exceed 20% per annum of the loan amount; where the agreed interest rate is unclear or a dispute arises as to the interest rate, the interest rate is determined as 50% of the above statutory ceiling, applicable at the time of repayment, pursuant to Clause 2, Article 468 of the 2015 Civil Code.

In addition, pursuant to Article 357 of the 2015 Civil Code, where an obligor delays payment of a sum of money, the obligor must pay interest on the overdue amount corresponding to the period of delay; the interest rate is as agreed between the parties, but may not exceed the rate prescribed under Clause 1, Article 468 of the 2015 Civil Code, and where there is no agreement, the rate prescribed under Clause 2, Article 468 of the 2015 Civil Code applies.

Accurately determining the amount of interest and any contractual penalty (where the parties have so agreed) is of considerable importance in determining the value of the claim, which in turn forms the basis for determining the provisional court fee payable under the law on court fees and charges.

4. Determining the Competent Court

Pursuant to Article 26 of the 2015 Civil Procedure Code, disputes over civil contracts fall within the jurisdiction of the courts under civil procedure. As to territorial jurisdiction, pursuant to Article 39 of the 2015 Civil Procedure Code, jurisdiction lies, in principle, with the court of the place where the defendant resides or works (for an individual defendant) or where the defendant has its head office (for a defendant that is an agency or organization), save where the litigants have agreed otherwise in a manner recognized by law, or the law otherwise provides.

An incorrect determination of jurisdiction is one of the grounds on which a court may return a statement of claim under the applicable procedural law, resulting in a prolongation of the time needed to resolve the case.

5. Requirements as to the Form and Content of the Statement of Claim

Pursuant to Clause 1, Article 189 of the 2015 Civil Procedure Code, a claimant is required to prepare a statement of claim satisfying the prescribed content requirements, including:

• – The date on which the statement of claim is made;
• – The name of the court receiving the statement of claim;
• – Information concerning the claimant, the defendant, and any person with related rights or obligations (if any);
• – The facts of the matter and the legal relationship in dispute; and
• – The specific relief sought from the court.

The statement of claim must be accompanied by the documents and evidence available to the claimant, so as to prove that the claimant’s lawful rights and interests have been infringed. Where, for objective reasons, the claimant is unable to provide full documentation at the outset, the claimant is obliged to supplement such documentation as requested by the court during the course of resolving the case.

6. Some Recommendations Before Bringing a Claim

On the basis of the above provisions, in order to ensure that the right to sue is fully exercised and to limit procedural risk, a claimant should bear the following in mind:

• – Retain complete transactional documents and evidence from the time the contractual relationship is established, including in respect of transactions concluded orally or by electronic means (text messages, emails);
• – Send any demand for repayment, or any notice of breach of contract, by means capable of being proven (registered mail, email, or a document with confirmation of receipt), so as to establish a basis for determining the date on which the right to sue arose and for calculating the limitation period; and
• – Consult a lawyer before filing a statement of claim, so as to review the conditions relating to the limitation period, the competent court, and the completeness and validity of the claim dossier, thereby avoiding having the statement of claim returned or requiring repeated amendment or supplementation.

The application of the law to any specific case will further depend on the content of the contract concerned, the contracting parties, the course of performance of the obligations, the conduct constituting the breach, and the actual documents and evidence available. Where you are facing a dispute concerning a sale and purchase contract, a loan-of-property contract, or a payment obligation, you may contact the lawyers at Bizlawyer for a review of your dossier, an assessment of the key legal issues, and a discussion of the course of action appropriate to your particular case.

Should you require further assistance, please do not hesitate to contact:

Consulting – Litigation Lawyer: Hoang Phuong Trang

• – Email: info@bizlawyer.vn
• – Tel: 086.885.1900

Best regards.