Notes for businesses in the process of negotiation, signing and implementation of commercial contracts

1. Some mistakes often occur in the process of negotiating and drafting contracts

a. Common types of contracts

• The parties to the contract have the right to freely decide on the form of the contract. Forms can be verbal, written, or specific acts, except for cases where other forms of documents are required to be notarized.

• Documents are recorded in the form of data messages, electronic contracts.

• The contract must be notarized. For example, a contract for the sale and purchase of the right to use land, real estate being an apartment building or purchase and sale of vehicles such as cars, ships, etc.

b. Regulations on contract signing and authorization to sign contract

Regulations on signing contracts.

• Determine the effective date of the contract.

• Determine the authority to authorize the signing of the contract.

• Determine the content of the agreement within the legal framework.

• Determine the statute of limitations for initiating a contract dispute.

Regulations on authorization to sign contracts.

• The authorization to sign contracts must comply with the law to ensure the validity and the right to sign contracts.

2. Common mistakes in signing and performing commercial contracts

a. General note:

- Regulations on the source of law governing and relating to the content of the contract.

- Regulations on the form of the contract.

- Note for the types of contracts that must be notarized.

- Regulations on the content of the contract:

• The content of the contract must be agreed by the parties on the principles of free will, equality and goodwill with each other.

• The content of the agreement must be within the legal framework.

• Contracting parties have full capacity for civil acts as prescribed by law.

- For legal entities:

• The legal entity has full capacity when the legal entity is established and recognized by law.

- Representing of organizations/legal entities and authorized representatives.

• Representation of an organization/legal entity usually be specified in the charter of the legal entity or in the decision on the establishment of the legal entity.

b. Other specific notes

• Table of Contents.

• Terms of explanation.

Depending on specific contract, in the process of drafting, negotiation, counseling contracts, contents such as (i) Regulations on contract adjustment and supplements; (ii) Regulation of the the statute of limitations of the contract; (iii) Notes on Damage compensation terms; (iv) Regulations on specifying the name, address, business license number, authorized representative and trading account number of the parties to the contract; (v) Contractual terms describe the object of contract; (vi) effective date of the contract; (vii) time of ownership transfer; (viii) time of risk transfer; (ix) the language used in the contract; (x) Dispute Resolution Terms, force majeure must be considered as important provisions, which should be noted and negotiate carefully.

3. Common mistakes when negotiating international commercial contracts

Compare with domestic commercial contract, negotiation of international commercial contracts is negotiating with foreign businesses, Vietnamese businesses often make the following mistakes:

• Mistakes due to not knowing foreign language.

• Do not know how to use the art of negotiation.

• Do not understand the law of the customer's country and international law.

• Do not know about international trade.

4. Contracts in the field of investment that often encounter errors

• Capital contribution contract.

• Joint Venture Contract.

• Business cooperation contract (BCC).

• Contract of purchase/sale/transfer of shares/contributing capital.

• Project transfer contract.

When drafting and negotiating contracts, businesses should pay attention to maintaining a professional and accurate working and negotiating style, and keep the habit of using the counsel of the legal department or lawyer to guarantee safety in transactions. Foreign partners often implement and comply with these two factors very well.