Contracts: Compensation in the event of the overdue payment

Overdue payment is a common violation of the contract of sale of goods. So, how the aggrieved party can claim compensation in the event of the overdue payment? Apolo Lawyers (Tel: (+84) 903.419.479) would like to answer this question for your reference.

According to Article 302 of Commercial Law 2005, compensation for damage means that the party that causes damage or breaches an obligation to perform in a contract must compensate the aggrieved party for any loss or damage.

1. Whether the overdue payment is a breach of contract?

Payment obligation is one of the essential obligations in the contract for the sale of goods. So, the parties often agreed upon the contract of sales of goods on timeframe and progress of payment for the purchase.

In particular, when the seller has fully fulfilled the delivery obligations and delivered the invoice documents, the buyer must fulfill the payment obligations of the buyer. If not, the buyer would violate the contract. So, the delay in payment of the purchase price is a breach of the obligations of the buyer. Then the seller is required to compensate in the event of the overdue payment.

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2. Grounds for liability to pay damages

According to Article 303, Commercial Law 2005, liability to pay damages shall arise upon the existence of all of the following elements:

1. Breach of the contract;

2. Material loss;

3. Act of breaching the contract is the direct cause of the loss.

The liability to compensate for damage only arises when the above three conditions are fully met. Failure to meet the above conditions will not be sufficient grounds for the Court to accept the claim for damages.

Note: The aggrieved party has the obligation to prove the loss and damage suffered by its party when there is a breach of the contract. That is, the party in breach of the contractual obligations must also prove the reason for being exempt from liability for damages.

>>> Read more: Drafting a contract for the sale of goods

3. Level of compensation for damage caused by late payment of purchases

According to Article 360, 2015 Civil Code, liability for compensation for damages when the parties violate obligations:

"With respect to damage caused by the breach of an obligation, the obligor must compensate for the whole damage, unless otherwise agreed or prescribed by law."

Therefore, the offending party must compensate for the whole damage. The damages can arise from a violation of the contract:

According to Article 357 Civil Code 2015; the obligator must pay interest on the unpaid amount
According to Article 306 Commercial Law 2005, the obligator also pays Interest, overdue interest, late payment interest

The level of compensation for damages caused by late payment of purchases can be agreed upon by the parties of the contract, if not, it may be subject to the provisions of the law.

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4. Legal service about the commercial contract of Apolo Lawyers.

Apolo Lawyers is confident in providing Clients with optimal and effective legal service, include the following:

Consulting on the right and obligation of the parties in the contract sale of goods;
Consulting to determine the basis for dispute settlement and legal basis for dispute settlement;
Consulting, and preparing to contact and negotiate with related parties in the settlement of international contract sale of goods disputes;
Guide customers to collect documents and evidence, provide information;
Authorized representative lawyers meet and discuss with Arbitration, Courts, and judgment enforcement agencies to protect the legitimate rights and obligations of clients