A contract for the sale of goods, also known as a commercial contract, is one of the most common types of contract in daily life. The performance of the contract is according to the contractual agreement between the parties when entering into each other. However, in the process of performing, it is quite common for one party to deliver the goods not according to the agreement. So what responsibility does the party that fails to deliver on time have to take?  Apolo Lawyers - Solicitors & Litigators (Tel: (+84) 903.419.479) will help you determine the responsibility in this case.

Contract penalty due to delay in delivery is one of the sanctions of the contractual relationship. Contractual penalties are applied when both parties have an agreement on the contract. As follows:

1. Obligations about the delivery time by Vietnamese law

According to the provisions of Article 37 of the Commercial Law 2005, the seller must deliver the goods at the time of delivery as agreed in the contract.

2. Forced the correct performance of the contract

The contract performance process cannot avoid errors such as late delivery, missing delivery, violation of the terms of quantity and quality of goods, technical requirements of the work, and incorrect provision of services contract, etc. The aggrieved party has the right to require the infringing party to deliver the goods in full, in the right quantity and quality, and to provide services as agreed upon in the contract; the aggrieved party has the right to require the infringing party to eliminate the defects of the goods, to deliver the goods in full or to deliver the goods instead.

The compulsory performance of a contract is specified in Clause 1, Article 358 of the Civil Code 2015, specifically: “Where an obligor fails to perform an act which it must perform, the obligee has the right to request the obligor to perform the act, or the obligee may perform the act or assign the performance of the act to another person and require the obligor pay reasonable expenses incurred and compensate for any damage".

>>> Read more: Note of signing a contract for the international sale of goods

Liability for compensation on late delivery

3. Liability when violating delivery time

In a commercial contract, the parties will agree with each other on the rights and obligations of the contract as well as when breaching the contract the responsibility between the parties. In case the parties do not stipulate the penalty for breach of contract, the penalty for this violation will be implemented by the provisions of law.

When violating the delivery time limit, delivering goods on time but not falling into one of the cases of liability exclusion mentioned above, the violating party will be responsible for fines for violations according to the provisions of Article 300 of the Commercial Law 2005. Penalty for breach is the fact that the aggrieved party requests the violating party to pay a fine for breach of contract if so agreed in the contract, except for the cases of liability exemption specified in Article 294 of this Law.

4. Penalties for violations and compensation for damage when one party violates the delivery time

According to the provisions of Article 301 of the Commercial Law 2005, the fine level for a breach of a contractual obligation or the aggregate fine level for more than one breach shall be agreed upon in the contract by the parties but must not exceed 8% of the value of the breached contractual obligation portion.

In addition to the penalty for breach, the breaching party also has to pay compensation for the damage caused by the breaching party to the breached party. Compensation value includes the value of the actual, direct loss suffered by the aggrieved party caused by the violating party and the direct benefits that the aggrieved party would have been entitled to if there were no acts of violation according to the provisions of Clause 2, Article 302 of the Commercial Law 2005.

>>> Read more: Difference between cancellation of contract and invalidation of contract

Liability for compensation on late delivery​

5. Consulting services for drafting contracts for lawyers

When consulting a contract, a lawyer not only considers the interests of the parties in the contract but also has to anticipate the risks that will occur in the future.

With a team of lawyers who are knowledgeable in business and commercial law and have a lot of practical experience in the business activities of enterprises, Apolo Lawyers will provide comprehensive support to clients in consulting and drafting contracts for clients in the process of negotiating, signing and performing business contracts. The scope of work of Apollo Lawyers includes:

• Consult the provisions of the law and the application in practice related to the terms in all kinds of contracts of enterprises;
• Drafting the contract based on the requirements of the enterprise and by the law, ensuring maximum benefits for the customer and balancing the interests of the parties in the contract;
• Appoint a lawyer to advise and join the business in the process of negotiating contracts with partners.
• Legal assessment of the contents of the draft contract of the enterprise with its partners according to the requirements of the enterprise and according to the provisions of law;
• Check the content, review and edit the contract offered by the partner;
• Drafting necessary contract terms, negotiating with partners to protect important terms and ensuring the legal rights of enterprises.

Thus, for the enterprise not to suffer disadvantages, as well as to limit the risks that may occur when performing the contract, especially the liability for compensation and fines for violations in the contract, the enterprise needs to be consulted by a lawyer before signing with partners. If you have any questions, please contact us via email at contact@apolo.com.vn or Hotline (+84) 903 419 479.

APOLO LAWYERS