Sunday, December 11 2016

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5 contract terms you should know

Update: August, 03/2016 - 11:06

Terms of content conflict resolution, validity of the contracts, and transfer of contractual obligations are basic terms that often get overlooked, but they can help enterprises minimize serious damage when entering into contracts.

Terms of content conflict resolution

During the negotiation of the contract, especially the complex ones, the parties often refer to other documents such as product manuals, memos and annexes. This might contain hidden risks leading to the conflict between the terms of the contracts and those of the documents. Therefore, the parties should agree upon the documents that will prevail in case of the conflict.

Terms of contract validity

Unless otherwise agreed, if a contract terminates, the terms of the contract will consider to have expired, except in some cases such as the terms of dispute resolution.

Some provisions remain effective regardless of the contract’s validity, such as terms of confidentiality, warranty, damage compensation and contractual penalties. Enterprises should clearly state such contents in the contracts to bind the parties after the contract expires.

Terms of tranferring contractual obligations

In the process of implementing contracts, the law does not prohibit the transfer of all or part of the obligations to perform the contract to other organizations or individuals. The transfer of such obligations may affect the interests of the remaining party. Thus, to protect their own interests, the parties should be aware of the terms limiting the transfer of contractual obligations to third parties.

Terms of dispute resolution costs

The process of resolving contractual disputes through arbitration or court may incur costs for the parties. Under the provisions of the laws of Việt Nam, in addition to court costs which shall be borne by the losing party, other costs - such as lawyer’s fees and travel expenses, etc. - shall be applied in accordance with the principle that the party which has the costs incurred shall bear such costs.

Agreeing on the principle of sharing costs of dispute resolution will help the winning party to partially offset the costs and expenses payable to the dispute. At the same time, this provision of sharing costs will encourage the parties to reach mutual agreement when a conflict occurs, limiting the dispute since the petitioners may be subject to risks of bearing legal expenses if they lose.

Terms of notice

In commercial contracts, each party is obliged to inform the other when the contract is violated, unilaterally terminated or its contents changed.

By clearly identifying the contents - including notification forms, how and when to send and receive notice - enterprises can guarantee the rights of the parties receiving notice, as well as clarify the responsibilities of the parties being informed, especially since the time of notice receipt will affect the clarification, alteration or termination of contractual obligations.

For example, one party has an obligation to make the payment to the other party within five days commencing on receipt of the notice. — PLF LAW FIRM

 

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