What Should Everyone Do If They Could Not Afford To Compensate For Damage?

In principle, when someone causes damage to another person, they have to compensate for the occurred damage and loss. However, if the amount of compensation is fundamentally big, what should everyone do if they could not afford to compensate for damage? To answer the question “what should everyone do if they could not afford to compensate for damage?”, first of all, people need to know how the current law of Vietnam regulates compensation for damage?

What does compensation for damage mean? Generally, people can understand that compensation for damage is the fact that an individual, organisation, or property owned or possessed by an individual or organisation causes damage to life, health, honour, personality, prestige, property, other legitimate rights and interests of other people, they must compensate damage occurred[1].

Currently, what do the principles of compensation for damage consist of? According to Article 585 of Civil Code 2015, the principles of compensation for damage consist of (i) Actual damage must be fully and promptly compensated. The parties are free to agree on the amount of compensation, the form of compensation, and the method of compensation. However, this agreement must not be contrary to the law regulations, and (ii) The person responsible for compensation may be entitled to a reduction of the amount of compensation, in case there is no fault or unintentional fault, and the amount of compensation is very large in comparison with their financial position; and (iii) When the amount of compensation determined becomes unrealistic, the parties have the right to request a court or another competent authority to change it; (iv) When the aggrieved party is partly at fault for causing the damage, such a party is not entitled to compensation for the part caused by its fault; and (v) The aggrieved party shall not be compensated if the damage occurs because such a party is at fault for not applying necessary and reasonable measures to prevent or limit the damage.

When can the amount of compensation be reduced? Based on the above-mentioned principles of compensation for damage, the amount of compensation is reduced if:

The two parties agree to reduce the amount of compensation;
The person responsible for compensation is not at fault, and the amount of compensation is very large in comparison with their’s financial position;
The person responsible for compensation is unintentionally at fault, and the amount of compensation is very large in comparison with their financial position;
The amount of compensation determined becomes unrealistic;
The aggrieved party is partly at fault for causing the damage

To sum up, to answer the question “what should everyone do if they could not afford to compensate for damage?”, the party being liable for damage compensation should pay attention to the following point:

Negotiate with the party being damaged for reducing the amount of compensation;
Request a court or another competent authority to change the amount of compensation when there is no fault or unintentional fault and the damage is too large for his/her financial position or when the amount of compensation determined becomes unrealistic, or the party being damage is also at fault.

Above is a general answer to the question “what should everyone do if they could not afford to compensate for damage?”. If you have trouble with finding a law firm providing legal assistance regarding the possibility for non-contractual damage compensation in Vietnam, please do not hesitate to contact us: Phuoc & Partners is a professional consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners is also 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 584 of the Civil Code 2015

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