Issue 010423 – Objectives and forms of civil transactions

Dear Clients,

The civil transaction is one of the popular and important issues in civil law because it is an effective means to satisfy the legitimate rights and interests of the involved.

In this Legal Article, we would like to provide brief guidance on objectives and forms of civil transactions in accordance with the Civil Code No. 91/2015/QH13 of the National Assembly dated November 24, 2015 (“Civil Code 2015”).

1. Civil transaction concept

A civil transaction is understood as a contract or a unilateral legal act that gives rise to, changes, or terminates civil rights and obligations[1]. From this definition, it can be understood that a civil transaction is a conscious act of the subject to achieve a certain purpose, giving rise to certain legal consequences[2].

2. Objectives of civil transactions

Civil law defines the objective of a civil transaction as legitimate interests which the parties wish to achieve at the time when they enter into such a transaction[3]. That objective will become a reality if the parties to the transaction properly perform their obligations in accordance with the law.

For example, in a motorcycle purchase and sale agreement, the objective of the buyer is to become the owner of the seller’s motorbike, so the seller will perform the payment obligation, and the buyer will receive money and comply with procedures for transfer of ownership rights as agreed. Then the objective of the parties has been achieved and the legal consequences arising from the transaction coincide with the original wishes of the parties. However, there are also cases in which legal consequences arise that are not consistent with the original wishes because the civil transaction is illegal or because the parties themselves do not comply with the obligations arising from the valid transaction[4].

It is important to distinguish between the objective of a civil transaction and the motive for civil transaction establishment. The motive for civil transaction establishment is the cause that motivates the parties involved in the transaction, which does not bear legal element and can be determined or not while the objective of the civil transaction is the legal consequences that will arise from the transaction that the parties want to achieve when establishing the transaction. In other words, the objective is to bear legal elements and is always defined in civil transactions. In addition, if the objective and content of a civil transaction violate the regulations or are against social ethics, then such a civil transaction will be invalidated[5].

3. Form of civil transaction

The form of a civil transaction is a means of expressing the content of a civil transaction. Through this means, the counterparty as well as the third party can know the content of the established civil transaction. The form of civil transactions is especially important in civil proceedings. It is evidence confirming the existed and existing relationships between the parties, thereby determining civil liability when a violation occurs[6].

Civil law stipulates the form of a civil transaction as follows[7]:

(i)        A civil transaction shall be expressed verbally, in writing, or through specific acts. Civil transactions by way of electronic means in the form of data messages prescribed in law on electronic transactions shall be deemed to be written civil transactions.

(ii)       In cases where it is provided for by law that a civil transaction must be expressed in writing, notarized, authenticated, registered, or permitted, such provisions must be complied with.

A civil transaction violating conditions for validity pertaining to form shall be invalid, except for any of the following cases[8]:

(i)       If the form of a civil transaction, required to be established in writing, does not comply with regulations of law, but a party or the parties has/have to fulfill at least two third of the obligations in the transaction, a court, at his/her/their request(s), shall issue a decision on recognition of the validity of a such transaction.

(ii)      If the form of a civil transaction, required to be established in writing, violates regulations on notarizing or authorization, but a party or the parties has/have to fulfill at least two third of the obligations in the transaction, a court, at his/her/their request(s), shall issue a decision on recognition of the validity of such transaction. In this case, the parties need not perform the notarizing or authorization.

As always, we hope you find this Legal Article useful and look forward to working with you in the future.

Kind regards,

ENT LAW LLC

The full version of this Legal Article can be found here.

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[1] Article 116 Civil Code 2015.

[2] LLM Nguyen Van Dien, Civil transactions and effective conditions of civil transactions in accordance with current laws, Ministry of Justice’s web portal, accessed on October 19, 2022 (moj.gov.vn).

[3] Article 118 of Civil Code 2015.

[4] LLM Nguyen Van Dien, Civil transactions and effective conditions of civil transactions in accordance with current laws, Ministry of Justice’s web portal, accessed on October 19, 2022 (moj.gov.vn).

[5] Article 117.1(c), Article 123 of Civil Code 2015.

[6] LLM Nguyen Van Dien, Civil transactions and effective conditions of civil transactions in accordance with current laws, Ministry of Justice’s web portal, accessed October 19, 2022 (moj.gov.vn).

[7] Article 119 Civil Code 2015.

[8] Article 129 Civil Code 2015.