What Makes A Civil Contract Invalid?

Pursuant to Article 407 of the Civil Code 2015, an invalid civil contract will be governed similarly to an invalid civil transaction specified from Article 123 to Article 133 of this Code. This is because the civil contract is one of the forms of a civil transaction[1].

As per the above regulations, civil contracts will be invalid in the following cases:

1. Invalid civil contract due to breach of legal prohibitions or contravention of social morals:

Civil contracts are assumed to breach legal prohibitions or contravene social morals when their objective or contents breaches legal prohibitions or contravene social morals. Legal prohibitions mean provisions of the law which do not permit a subject to perform specific acts. Social morals are standards of general behaviour in social life, which are recognised and respected by the community.

2. Invalid civil contract due to falsification:

Where parties enter into a civil contract falsely for the purpose of concealing another civil transaction, such false contract shall be invalid; and the concealed transaction shall still be valid unless it is also invalid pursuant to provisions of law.

Where a civil contract is falsely entered into for the purpose of evading obligations to a third party, such a civil contract is also invalid.

3. Invalid civil contract due to being established and performed by minors, persons having lost their capacity for civil acts or having had their capacity for civil acts restricted, or persons having difficulty in awareness and control of their own acts.

Where a civil contract is entered into and performed by a minor, a person who has lost their capacity for civil acts or has restricted capacity for civil acts, or a person who has difficulty in awareness or control of his or her acts, if the law provides that such contract must be entered into, performed or agreed by the representative of such person, a court shall, at the request of the representative of such person, declare such contract invalid.

Of note, the above-mentioned civil contract will not be invalid in the following cases:

• Civil contracts of persons under 6 years of age or persons who have lost the capacity for civil acts in order to meet their daily essential needs;
• Civil contracts which only give rise to rights or only releases obligations of the minors, the persons who have lost their capacity for civil acts or have restricted capacity for civil acts, or persons who have difficulty in awareness or control of their acts in respect of the person who has established or performed the civil contract with the former;
• Civil contracts are recognised by the person establishing them after he or she becomes an adult or has the capacity for civil acts restored.

4. Invalid civil contract due to misunderstandings:

Where an established civil contract involves a misunderstanding failing by one or more parties to reach the objective of the contract establishment, the misunderstanding party has the right to requested that the court declare the civil contract invalid. However, an established civil contract involving a misunderstanding shall not be invalid in the case the objective of the civil contract establishment of the parties has been achieved or the parties may immediately rectify the misunderstanding, thus achieving the objective of the civil contract establishment.

5. Invalid civil contract due to deception, threat, or coercion:

Any party participating in a civil contract as a result of deception, threat, or coercion has the right to request that a court declare such civil contract invalid.

6. Invalid civil contract due to being established by a person incapable of being aware of or controlling their acts:

A person who has the capacity for civil acts but has entered into a contract at a time when he or she was incapable of being aware of or controlling his or her acts has the right to request that a court declare such civil contract invalid.

7. Invalid civil contract due to non-compliance with form:

A civil contract in breach of the provision that its form is a condition for its validity shall be invalid, except for the following cases:

• Where the civil contract established was required to be in writing, but the written documents do not conform to the provisions of laws, but one or more parties have performed at least two-thirds of the obligations in the contract, the court shall, at the request of one or more parties, issue a decision to recognise the validity of such contract.
• Where the civil contract established in writing is in breach of compulsory provisions on notarisation or certification, but one or more parties have performed at least two-thirds of the obligations in the contract, the court shall, at the request of one or more parties, issue a decision to recognise the validity of such contract. In this case, the parties are not required to carry out notarisation or certification.

The above is an overview of the invalid civil contract. If you have trouble with legal issues regarding the invalid civil contract, please contact us: Phuoc & Partners is a professional consulting firm established in Vietnam which currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners. It is rated as one of the leading consulting firms specializing in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Merger and acquisition, Litigation. We are confident in providing customers with optimal and effective service.

[1] Article 116 of the Civil Code 2015.