Seven Types of Remedies in Commercial Transactions
First, Compulsory Performance of the Contract.
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Compulsory performance of the contract means that the aggrieved party requests the breaching party to perform the contract as agreed or take other measures to ensure performance of the contract, and the breaching party shall bear the costs incurred.
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In case the breaching party delivers insufficient goods or provides services inconsistent with the contract, it must deliver the full quantity of goods or provide services in accordance with the agreement. If the breaching party delivers defective goods or provides substandard services, it must remedy the defects, deficiencies, or deliver substitute goods/provide services in accordance with the contract. The breaching party may not use money, other types of goods, or different services as substitutes without the consent of the aggrieved party.
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If the breaching party fails to comply with the above, the aggrieved party has the right to procure goods or services of the same type from another supplier as stipulated in the contract, and the breaching party must pay any price difference and related expenses, if any; the aggrieved party also has the right to remedy the defects or deficiencies itself, and the breaching party must reimburse reasonable actual costs.
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The aggrieved party must accept goods or services and make payment if the breaching party has duly performed its obligations.
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Where the breaching party is the buyer, the seller has the right to require the buyer to pay for the goods, accept delivery, or fulfill other obligations as stipulated in the contract and this Law.
Second, Contractual Penalties.
Contractual penalties mean that the aggrieved party requires the breaching party to pay a penalty for breach of contract if the contract contains such an agreement, except for cases of exemption from liability under Article 294 of the Commercial Law 2005 (Exemptions from liability: a) Occurrence of an event of exemption as agreed by the parties; b) Force majeure; c) The breach is entirely due to the fault of the other party; d) The breach results from execution of a decision of a competent state authority which could not have been known at the time of contract conclusion).
Third, Compensation for Damages.
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Compensation for damages means that the breaching party must compensate for losses caused by its breach of contract to the aggrieved party.
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The value of compensation includes actual, direct losses suffered by the aggrieved party due to the breach, and the direct benefits which the aggrieved party would have enjoyed if the breach had not occurred.
Fourth, Suspension of Contract Performance.
Except for cases of exemption under Article 294 of the Commercial Law 2005, suspension of contract performance means that one party temporarily ceases to perform its contractual obligations in any of the following cases:
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A breach occurs which the parties have agreed to be a condition for suspension of performance;
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A party commits a fundamental breach of contractual obligations.
Legal consequences of suspension:
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The contract remains valid during the suspension.
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The aggrieved party has the right to claim compensation in accordance with this Law.
Fifth, Termination of Contract Performance.
Except for cases of exemption under Article 294 of the Commercial Law 2005, termination of contract performance means that one party ceases to perform contractual obligations in any of the following cases:
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A breach occurs which the parties have agreed to be a condition for termination;
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A party commits a fundamental breach of contractual obligations.
Sixth, Rescission of the Contract.
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Rescission of the contract includes total rescission and partial rescission.
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Total rescission means the annulment of all obligations under the contract.
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Partial rescission means the annulment of part of the obligations under the contract, with the remaining parts continuing to be valid.
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Except for cases of exemption under Article 294 of the Commercial Law 2005, rescission of the contract applies in the following cases:
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A breach occurs which the parties have agreed to be a condition for rescission;
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A party commits a fundamental breach of contractual obligations.
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Legal consequences of rescission:
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Except as provided in Article 313 of the Commercial Law 2005 (Rescission in case of partial delivery or service provision), upon rescission, the contract is invalid from the time of its conclusion. The parties are not required to continue performing contractual obligations, except for agreements regarding rights and obligations after rescission and dispute resolution.
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The parties have the right to reclaim benefits obtained from their partial performance under the contract; if both parties are obliged to return benefits, such return must be made simultaneously; if restitution in kind is not possible, monetary compensation must be made.
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The aggrieved party has the right to claim compensation for damages under this Law.
Seventh, Other Measures.
Other measures as agreed by the parties, provided that such measures do not contravene the fundamental principles of Vietnamese law, international treaties to which the Socialist Republic of Vietnam is a party, and international commercial practices.
(Legal basis: Articles 292, 297, 300, 302, 308, 309, 310, 312, 314 of the Commercial Law 2005)
