Khoá luận tốt nghiệp: Requirement for a valid contract in American and Vietnamese legal system

These requirements indicate the basic dividingline for enforcement; promise that a part of exchanges is enforceable; othersorts of promises generally are not In terms of Vietnamese legal

HANOI LAW UNIVERSITY

HO VA TÊN: NGUYEN MAI CHI

MSSV: 453610

SYSTEM: A COMPARATIVE

PERSPECTIVE

BACHELOR’S THESIS

Hanoi - 2023

HANOI LAW UNIVERSITY

HO VATEN: NGUYEN MAI CHI

MSSV: 453610

AMERICAN AND VIETNAMESE LEGAL

Confirmation of supervisor

varitten the submitted Bachelor's Thesisindependently, the conclusions and data inthe Bachelor's Thesisis truthful and reliable

Author ofBachelor's Thesis

CHAPTER 1.THEORETICAL ISSUES OF REQUIREMENTS FOR A VALID

CONTRACT

11, CONCEPTION OF REQUIREMENTS FOR A VALID CONTRACT 6LLL Definition of requirements for avaitd contracts 6

112 Characteristics of requirements for a valid contract in American and

etnam legal system 9

12 CLASSIFICATION OF REQUIREMENTS FOR A VALID CONTRACTS BETWEEN

12.1 Classification ofrequirements for a valid contracts tn the American legal

system bà12.2 Classification ofrequtrements for avalid contracts in the Vietnamese legal

system bà13 SIGNIFICANCES OF REQUIREMENTS FOR A VALID CONTRACTIN AMERICAN AND

‘VIETNAMESE LEGAL SYSTEMS 1613.1 Significances of requirements for a valid contract in American legal

system 1613.2 Significanes of requirements for a valid contract m Vietnamese legal

system 1CHAPTER 2REGULATIONS ON CONTRACT REQUIREMENTS IN

EFFECT IN THE UNITED STATES AND VIETNAM 9

2.1 AMERICAN LAWON REQUIREMENTS FOR A VALID CONTRACT 192LL Offers 1

212, Acceptance 2

213 Capacity “4

214 Intention a72.15, Consideration a7

2.2 REGULATIONS ON REQUIREMENTS OF VALID CONTRACTIN VIETNAMESE LEGAL

fom a comparative perspective 532.3.1.1 Regarding the requirements of capacity on a valid contract, 533.3.1.2 Regarding the requirements of legality on a valid contract, 533.3.1.3 Regarding the requirements of voluntarily on a valid contrat 533.3.1.4 Regarding the requirements of consideration on a valid contract 543.3.1.5 Regarding the requirements of formation on a valid contract 542.3.2 Reasons jor similarities and differences 55

CHAPTER 3 RECOMMENDATIONS FOR PERFECTING THE LAW

ON REQUIREMENTS FOR A VALID CONTRACT PERFORMANCE

IN FORCE IN VIETNAM 373.1 GUIDING PRINCIPLES FOR THE PROPOSALS TO IMPROVE PROVISIONS ON

[REQUIREMENTS FOR A VALID CONTRACTIN VIETNAMESE LAW 37

3.2 SPECIFIC PROPOSALS FOR IMPROVING THE PROVISION ON REQUIREMENTS OF A

‘VALID CONTRACTIN VIETNAMESE LEGAL SYSTEM, 583.2.1 Proposals to improve provision on capactty for avalid contract 583.22 Proposals to improve the provision of vohuntartly for a valtd contract 593.23, Proposals to improve the provision of legality for a valid contract 593.24 Proposals to improve the provision of formailtty for avalid contract 60

Contracts are an important means in human life, helping people meetphysical and spiritual needs by exchanging products, services and otherbenefits Itisan important way to organize common life and promote economicand social development

Although contracts are considered as one of the effective methods toestablish property relationships between entities, to meet the needs from basic

to higher needs of individuals and legal entities, however, the contract onlyreally comes to life when the contract has legal effect According to Article 117

of the 2015 Civil Code and relevant legal documents, a contract takes effectwhen certain requirements are satisfied In particular, there are generalmandatory requirements for all types of contracts such as requirements onsubject capacity, voluntarily, and on the purpose and content of the contract Inaddition, formal requirements are only considered as valid requirements ofcertain types of contracts That is, when a law document specifies the form ofestablishing a type of contract, the contracting entity will have to comply with,that regulation Failure to comply with this provision may cause the contract totbe declared invalid, except for the cases specified in Article 129 of the 2015Civil Code compared to previous civil codes These are the brealethroughchanges of the 2015 Civil Code

However, the current legal situation study shows that there are manyremaining limitations related to the effective requirements of the contract

‘Typically, the inconsistency between different legal documents is related to theeffective requirements of a type of contract

Therefore, the contract and the effective requirements of the contractare important provisions in the 2015 Civil Code, which are fundamental to

Starting from the above practice and meaning, as well as to have acomprehensive view of the effective requirements of the contract, the author

‘would like to select the topic: "Requirements of the Valid contract under theAmerican and Vienam legal system: A comparative perspective” as a thesis

topic

In this dissertation, the author focuses on analyzing the regulations onthe effective requirements of the contract under the Vietnamese and Americanlegal systems; and compares the two legal systems to beable to supplement andcomplete the limitations of Vietnamese law

2 Review of previous research related to the Thesis

Up to now, the regulations related to the effective requirements of civiltransactions and the effective requirements of contracts, it have attracted theattention of many authors with different research angles Some research results

of some typical works can be stated as follows

(Nguyen Nhu Bich (2011), Discussing the validh of conditionalcontracts, Journal of the People's Court, No 19, pp 12-20, Hanoi

(Pham Hoang Giang (2007), Bfect of contractal orthogonalrequirements on contract vattdity, Journal of State and Law No 3, pp.47-51, Hanoi

(Nguyen Minh Hang and Nguyen Thi Kim Lan (2016), Bféct on the formofctvil transactions by the provisions of the 2015 Civil Code, Joumal ofJurisprudence, No 12, pp 11-19, Hanoi

(@)Nguyen Van Cu and Tran Thi Hue (co-editors, 2017), Sctentificcommentary on the 2015 Civil Code of the Socialist Repubiic ofVietnam, Hanoi

research and development, first of all, the reference book "UnderstandingAmerican law im the context of Vietnam's regional and world economterfegraon" wnitten by Dr Pham Duy Nghia (2001) and many other scientists.

In addition, some theses, articles, books and textbooks when writingabout contracting under Vietnamese laware comparable to the laws of countriesincluding the United States, such as Nguyen Vu Hoang's doctoral thesis (2008)with the topic "Vietnennese iaw on entering trfo contracts for the sale of goodswith foreign traders" or the book "Establishing contracts in the VietnameseCivil Code" by Dr Nguyen Ngoc Khanh (2007)

However, with a wide range of comparisons or only a few typicalregulations, there is currently no in-depth research on comparisons between

‘Vietnam and the US on the effective requirements of the contract Therefore, itcan be affirmed that the selection and research of this topicis very necessary inthe current context of judicial reform and international integration as well as tohavea more general and in-depth overview of the effective requirements ofthecontract under the law of Vietnam and the law of the United States from a

comparative perspective

3 Scientific and practical significance of the thesis,

‘The study of this thesis aims at the following basic purposes

- Systematize and analyze the most basic theoretical issues about theeffective requirements of the contract according to the legal system ofVietnam and the US asa basis for the study of relevant legal provisions

- Systematize and analyze the most basic theoretical issues about theeffective requirements of the contract according to the legal system of Vietnam.and the US asa basis for the study of relevant legal provisions

4 Objectives of the thesis

research of the American law, identify the progressive and appropriate aspects

of the Vietnamese law to continue to maintain and promote, and propose newpoints of progress under the American law and apply appropriately in thecurrent legal requirements of Vietnam, the author focuses on the issues related

to the effective requirements of the contract, the provisions of the two countries

on the effective requirements of the contract and other contents closely related

to the provisions on the effective requirements of the contract such as the formand content of the contract However, because the author approaches toresearch in a new direction for the first time, while the requirements of timeand qualifications are limited, the thesis will not avoid shortcomings,inadequacies and limitations Therefore, the author is looking forward toreceiving all comments and contributions from teachers

Object and scope of the Thesis

- Objects of the research:

This topic focuses on the theoretical study of the effective requirements

of the contract under the laws of Vietnam and the United States and therecommendations drawn from the comparative study of the effectiverequirements of the contract under the laws of Vietnam and the United States

- Scopes of the research

About the research space: The Legal research report on " Requirementsfora Valid Contract in American and Vietnamese legal systems: A comparativeperspective”

Regarding the time: The thesisis conducted from September of 2023 toDecember of 2023

6 Method used to prepare the Thesis

6.1 Methodology

considered a guideline for the orientation of the author's specific research

‘methods in the course of the thesis, This method is used by the author to studytheoretical issues in the thesis,

6.2 Research method

Specific research methods include analysis, synthesis, comparison,statistics, jurisprudence comparison, historical research, proof, practicalresearch, and scientific prediction These methods can be seen in all chaptersofthe Thesis Among these methods, the analysis and comparison methods arecommonly used to build up scientific arguments for the Thesis Thereby, there

‘will be appropriate and objective assessments and identification to have a morecomplete direction for the provisions of Vietnamese law on the effectiverequirements of the contract in the current context of international integration,

7 Thesis structure

In addition to the Preface, Conclusion and References, the thesis comprises of

three chapters:

Chapter I: Theoretical issues of requirements for a valid contract;

Chapter II: Regulations on requirements for a valid contract in American and

Vietnam;

Chapter II: Recommendations for improving the law on requirements for a

valid contract in Vietnam

11 Conception of requirements for a valid contract

LLL Definition of requirements for a valid contracts

Interms ofAmerican legal system, contracts in countries under

Anglo-‘American law do not distinguish between transactions and contracts Contractsindude unilateral transactions and traditional continental European lawcontracts The classical conception of a contract holds that it is a legallyenforceable obligation created by an agreement between the obligor and the

right owner ?

Inthe United States, contract lawis the term commonly used to describethe content of the rules that apply to the formation, execution, and termination

of agreements agreed upon by private parties The concept of contract is the

“union of the ideas of agreement and obligation” ? Agreement is the

‘manifestation of mutual assent of two or more persons to make an exchange

3U.§ Attomey Steven H Gifis succinctly defines a contract as " a promise to

provide for a remedy: or perform obligations recognized by law; A transactioninvolves two or more individuals having reciprocal rights to demand that the

other party fulfill thetr promises."*

"Contract," as well use that term, usually means an agreement when

‘two or more people about something that will be done in the future by one or

‘both people, Sometimes the word "contract" is also used to refer to a document

- the set of papers in which such an agreement is laid out Or usually used in

See ATIVAH Generl, sgm nate 1, at 10-56 (cricsing the classical conception of « conmact as a enforceable obligato crested by ageemet)

|WELLSTOOD A WATT, THE THEORY OF CONTRACT INITS SOCIAL LIGHT 1 (1897)

"Macneil, an R, Size onthe Nene of Contract,pp_ 371

* 6%, Steven H,Dicticnay of Lege Grosser, Baan’, New Yak, USA, 2008, pp 107

agreement that has legal effect, That is, it creates obligations that some type ofJaw enforcement that would be available is not fulfilledas promised Therefore,itis sometimes necessary to distinguish between three elementsina transaction,each of which can be called a contract

(actual agreement between the parties,

()written agreement (which may correspond or be inaccurate to the actualagreement),

(B)the set of rights and obligations created by (1) and (2) $

In general, the US legal system recognizes a contract as an agreement

‘between two or more parties, based on a mutual promise, to do or not doaparticular thing that is lawful and enforceable The essence of a contract ¡sa

‘binding agreement or promise In American contract law, the primary criteriafor the enforceability of a promise or exchange are the presence of an offer,acceptance and consideration These requirements indicate the basic dividingline for enforcement; promise that a part of exchanges is enforceable; othersorts of promises generally are not

In terms of Vietnamese legal system, a contract is a common civiltransaction in practice, formed based on an agreement, unifying the will

‘between the entities towards legal consequences that give rise to, change, orterminate the rights and obligations of one or the parties Although a contract

is an agreement and agreement of the will of the subject parties, not allagreements established are contracts, only agreements within the scope of thecontract law are considered contracts From a social perspective, “Contracts

9° Allm Pưnowoth (1091), United Sees x Contract lav, anetieul ai Pibicatos, Inc, New Yak,

wi

* Charles Lapp, sues in Connect Law: Cases ea Doctwerts

‘When entering into a contract, the subjects always want to make the

‘best choices to be able to achieve the maximum benefit for them to make thebest choices to be able to achieve the maximum benefit for themselves that thesubject on the other side must comply with However, the expression of the will

of the parties can only become a contract when there is agreement with cach.other In the process of entering into a contract, to achieve the maximumbenefit, the entities not only make requirements to control the interests of theopponent, but in many cases, the entities entering into the contract themselveshave an agreement Despite that agreement, it may infringe upon the interestsofthe state, public interests, and the rights and interests of other entities to seele

‘benefits for themselves This cannot be accepted because the free agreement ofthe subjects cannot infringe on the freedom of another subject In the view ofMontesquieu, “Liberty is the right to do all that the law does not forbid Ifaciticen does something unlawful, he is no longer free because \ƒ he is left fleel4 mm ts tual fil”

Thus, although freedom of agreement is an important principle ofestablishing civil legal relations in general and contractual relations inparticular, any agreement must be within certain limits, which are the rights andinterests of other entities Thus, “in addition to the principle of respecting thefeedom ofagreement ofthe parties In the legal transaction there are also someminimum requirements that the subjects must comply with ~ these are the

effective requirements of the transaction” *

The requirement for a valid contract is to synthesize the Legalrequirements to ensure that the contract is made in its true nature The

‘ay een, Law 11: Bvarything younsed to keo American Lae,

` Hi Law Untrrsty 2018), Chữ Lav ebook (Part pp 42

‘must comply with for the contract to have legal validity The requirement for avalid contract is set out to ensure the rights and interests of the contractingparties and at the same time ensure the interests of the State, public interests,legitimate rights, and interests of other subjects A contract is only binding onthe parties when it is legally established and complies with the requirementsprescnbed by law.

Accordingly, based on the above analysis, itis possible to determine theeffective requirements of the contract as follows “The requirements fora validcontractis the provision of the lawto limit the freedom of agreement by makingthe minimum requirements that the parties to the contract must comply with forthe contract to be legally effective”

1.1.2 Characteristics of requirementsfor a valid contract in American and

Viemam legal system

In terms of American legal system, contract law of Anglo-Americancountries in general and the US in particular does not discriminate betweentransactionsand contracts Contracts are understood in a broad sense, includingunilateral transactions and contracts in the traditional understanding of thecontinental European legal family According to the case law of the US, acontract is understood to be one or several promises, if violated, the law is

required to compensate or enforce the promise as an obligation? Section

1-201(3) of UCC distinguishes between "agreement" and "contract", whereby theagreement is the actual bargaining between the parties expressed verbally or inother forms, and “Contract means the total legal obligation that results from theparties’ agreement as determined by UCC as supplemented by any other

° Restatement (Second) of he Contact §1

applicable laws” In essence, according to the American understanding, the twoconcepts of “contract” mentioned above are similar Because case law is animportant source of law and mainly in the field of contracts, the concept ofcontract under case law is more widely applied.

From the above two concepts, it can be seen that not every promise oragreement becomes a contract Only promises or agreements that areintervened by law when violated shall be considered a contract A contract ismade when a promise is made and voluntarily becomes legally binding Foraparty's promise to have legal validity, it generally needs to be accepted by theother side of the contract by giving a reciprocal obligation (consideration)However, not all contracts are required to have reciprocal obligations

In general, a contract under US law is one or more promises that thefulfillment of which the law provides for recognition as obligations, if violated,the law will have certain sanctions The nature of the contract is a bindingagreement or promise However, notall promisesand agreements are contracts

A promise or agreement is a contract only if the law of acceptance takes effect.Accordingly, American law can recognize some characteristics of therequirements for a valid contract as follows

(1) Must be an agreement between two or more parties,

(2)Must be an agreement established by the parties with full capacity toenter into the contract,

(G)Must have a legitimate purpose and content, which means that thecontract must not be contrary to law or public order,

(4) Must comply with certain formality requirements;

(5)Must be an agreement of a compensatory nature (consideration)

Thus, the requirement for a valid contract in the US has the commoncharacteristics of the customary law system, while the contractual view of

‘Vietnamese lawhas the characteristics of the civil law system, so in some cases,

according to the law of this country isa contract that the law of the other countryisnot considered a contract

In terms of Vietnamese legal system, based on the above analysis,combined with the study of relevant legal provisions, some characteristics ofthe effective requirements of the contract are:

Firstly, the requirements for a valid contract must be prescribed by law.Although the contract is the parties’ agreement, the parties cannot agree on theeffective requirements for the contract they have entered into Because theagreement of the parties is aimed at achieving the maximum benefit forthemselves, it may infringe on the interests of other entities

Secondly, the requirements for a valid contract are stipulated in variouslegal documents The 2015 Civil Codeisa document defining the requirementsfor the validity of civil transactions in general, the contract states However,this is the most general document that stipulates the requirements for thecontract to take effect without specifying how each condition applies to each,object

Thirdly, the requirements for a valid contract are set both to ensure therights and interests of of the entities entering into the contract and to ensure theinterests of the state, public interests, legitimate rights, and interests of otherentities The rewards and benefits of the parties to the contract depend on theagreement and unanimity of the will of the parties Therefore, settingrequirements for a contract affects the protection of the Legitimate rights andinterests of the subjects against the imbalance of interests with the partnerentering into the contract with them

12 Classification of requirements for a valid Contracts betweenVietnamese and American legal systems

12.1 Classification of requirements for a valid contracts in the American

‘There are reciprocal obligations (consideration), except for some exceptions,4) The purpose of the contract must be legal or not contrary to public policy,(5) The form of the contract must be by the law

Secondly, the requirements are govemed by the UCC Today, goodsrental and purchase transactions, security transactions, and other relatedtransactions are regulated by the UCC In general, the law goveming the

‘requirements for a valid contract is flexible and rich in diversity and expressesthe unique characteristics of American law

12.2, Classification of requirementsfor a valid contracts in the Vietnamese

egal system

As indicated in the specification, the requirements of validity of thecontract are specified in various documents Based on the nature of eachcondition, the validity requirements of the contract are divided into two groups

as follows

Group 1: Mandatory requirements for contracts

Thisis the group of effective requirements that any concluded contractmust comply with These are requirements on the subject's capacity,

requirements on the voluntary will of the subject and requirements on thepurpose and content of the contract The determination of these requirementswill solve the problem that any contract must be achieved, whether thereis freewill and unity of will when entering into a contract Whether the agreementestablished in practice exceeds the provisions of law on the limitation of freevwill in entering into contracts,

Group 2: Mandatory requirements for some contracts

A contract is an agreement between the parties to give rise to, change

or terminate books and civil obligations, Although no longer directly recorded

on the principles of entering into contracts as in the 2005 Civil Code, theprovisions of Article 3 of the 2015 Civil Code still recognize the principle offreedom and voluntary commitment Thus, in civil legal science, a contract isunderstood as "an encounter with the will of two or more parties aimed atcreating legal consequences’ Therefore, “all commitmentsand agreements that

do not violate the prohibitions of the law, do not contravene social morals arevalid for the parties and must be respected by other actors." It can be understoodthat, in principle, simply entering into a contract without violating theprohibitions of the law and not contrary to social morals can be effective

Based on the purpose of not humanizing the effective requirements ofthe contract, it can be divided into

Group 1: Requirements affecting the protection of rights and interests

of contracting entrants,

The contract is considered a basic and effective means for subjects toparticipate in civil legal relations to seek benefits for themselves or others.Therefore, benefits are considered the premise of all civil legal relations,induding contractual relations Usually, the parties in the contractualrelationship are aiming at the benefits for themselves and always use all the

‘est measures to achieve the maximum benefits In the contractual relationship,

the interests of the subjects are always in opposition to each other, so the factthat one subject achieves many benefits will make the other subject achievefewer benefits This, if prolonged, may cause conflicts and disputes to arise inpractice Asa tool used to regulate social relations, the law always affects theuse of flowers to the maximum extent possible for the interests of the subjects.

To achieve this, the legislator always considers setting regulations to preventthe influence of the contracting process on the interests of the parties These arethe regulations related to the requirements of the subject's capacity to enter intothe contract and the requirements of voluntariness entering into the contract

Group 2: Requirements affecting the protection of the rights andinterests of other subjects

The excessive abuse of the principle of freedom to enter into a contract

‘may cause the rights and interests of the subjects to be affected In parallel withthe principle of freedom to enter into a contract, the legislator also sets outprinciples to limit this freedom such as "The establishment, implementation,termination of civil rights and obligations must not infringe on the national,national, public interests, legitimate rights and interests of others" Thisprinciple is concretized into the effective requirements of the transaction ingeneral, the contract is said to be as a condition related to the falsification ofthe contract to avoid the performance of obligations to third parties,requirements on the purpose and content of the contract

Group 3: Requirements protecting public order

Any arising legal relations must ensure the use of flowers between theinterests ofthe relational subjects, the interests of other subjects and the publicinterests and interests of the State Therefore, the requirements for contract areaimed not only at protecting the legitimate rights and interests ofthe contractingparties and other related entities but also to protect the interests of the state, andthe public interest These requirements include hypocrisy to conceal another

transaction, the purpose and content of the contract not violating the prohibitionofthe law on social morality and the requirements of the form.

Based on the content of the regulations, the requirements for a validcontract are divided into two categories: general requirements and specific

requirements

According to Clause 1, Article 4 of the 2015 Civil Code stipulatesThis Law ts a common law that appites to civil relations”, so the provisions onthe effective requirements of civil transactions are the general provisions on theeffective requirements of the contract These are the requirements that arerecognized as principles and applied to all equal contracts but do not specify

‘what level of civil act capacity of the contracting entity must be determined to

‘be consistent with the contract that the subject engages in Or the contract isdetermined to violate any regulations Or the contract is entered into inany case

by the provisions of the law Specialized laws will specify the requirements for

a valid contract in each case For example, the Law on Housing stipulatesspecific requirements for housing to be included in the transaction in Clause 1,Article 118 such as having a certificate by the law, not being in dispute, not

‘being distrained for judgment enforcement, etc However, to ensure theconsistency between the provisions of the Civil Code and the provisions ofspecialized laws, the Civil Code notes in Clause 2, Article 4 of the Civil Code

as follows * Any relevant law that appites to civil relations in specific fields

‘may not be contrany to the basic principle of civil law prescribed m Article 3 ofthis Law" Therefore, the effective requirements of the contract are recorded inspecialized laws, if any, it is only the concretization of the provisions on theeffective requirements of the contract in the Civil Code

13 Significances of requirements for a valid contract in American and.

‘Vietnamese Legal Systems

13.1 Significances of requirements for a valid contract in American legal

‘requirements will set the trading rules of the platform; the contracting parties

‘will Imow their position in the transaction; whether the parties are dealing wathfriends or strangers, at home or work, or in any other place; whether theirtransactions are conducted under the protection of the sanction systemprescribed by law etc

Secondly, itis a tool to protect the common interest, protect the weaicparty, and protect the party whose interests are violated in the contractualrelationship, the TOS acts as a protection tool, expressed in three aspects

(1)Protects the common interests of the whole society, the provisions of therequirements for a valid contract in general must be consistent with thepublic interest;

(2)Basic goal of protecting the disadvantaged parties in the contractualrelationship;

(8) Protects the interests of the party whose interests are violated

‘Thirdly, the regulation of the requirements for a valid contract is a tool

to resolve disputes arising from the contract When there is a dispute over thecontract, it is widely acknowledged that one of the objectives of this

‘requirement is to createa mechanism for resolving such disputes The standards

of conduct set by the requirements will be a measure of the legality of the

contractual relationship, a measure of the right and wrongness in the behaviorofthe subjects concemed during the implementation of the contract Therefore,based on the provisions, the Court can make a correct and fair judgment toresolve the dispute arising from the contract brought to the court.

1.3.2 Significances of requirementsfor a valid contract in Vietnamese legal

system

In theory, the law was bom not based on the subjective will of anyindividual but it is associated with the formation and development of socialrelations

In terms ofthe subject entering into the contract, the provisions on therequirements and validity of the contract contribute to the protection of thesubject parties (especially the disadvantaged party) from the oppression of the

counterparty.

Jn terms of the State, stipulating the requirements for a contract will

‘bring about some basic meanings In general, legal provisions on the validityrequirements of contracts in particular are important tools for the State toregulate and manage society most effectively Additionally, the stipulation ofeffective requirements for contracts helps the State ensure consistency betweenlegal provisions and other legal systems, especially tax laws

In terms of other entities, the recognition of effective requirements ofthe contract contributes to limiting infringement acts of contracting entities.However, the freedom of subjects is always associated with the freedom ofother subjects That is, the signing and performance of contracts of each entity

‘must not infringe upon the legitimate rights and interests of other entities This

is enshrined in many regulations, including contractual clauses

‘Sub-Conclusion Chapter I

In the context of Chapter I, the author has studied and analyzed based

on research methods, analysis, and comparison to complete the most basictheoretical issues on the effective requirements for a contract In summary, itcan be seen that the basic contents implemented in this chapter are as follows:(Regulations on the requirements for a valid contract are not the firstregulations recorded in the 2015 Civil Code, and there are also manystudies on this issue However, no work has given the concept ofrequirements for a valid contract Through research and analysis of thelaws of Vietnam and the United States, the author has developed aconcept of the requirements for a valid contract

(2)Based on the analysis, and evaluation of the concept developed, theauthor has analyzed the basic characteristics of the condition of a validcontract under the Vietnamese and the American legal system

(3)Deriving from the role, value, and content of the requirements as well asthe basis for recording the requirements, the author has given andanalyzed how to classify the effective requirements of the contractaccording to the legal system of Vietnam and the United States

CHAPTER2 REGULATIONS ON CONTRACT

REQUIREMENTS IN EFFECT IN THE UNITED STATES

1 An offer is a proposal by one party (the “offeror”) to another party (the

“offeree”) to entera contract An offer has three basic requirements which are(1) The statement must show intent

An offer must be made with the intention of legal obligation.Accordingly, statements made in jest, or that would not be consideredreasonable, typically don’t qualify A proposal that was quite vague would leave

a reasonable recipient believing that the party proposing was inviting furtherthan negotiations rather than inviting a final acceptance On the other hand,where a proposal remains vague, even if the other party agrees, the resultingagreement will not allow a court to determine when the agreement has been

reached or to fashion a remedy if there has been a breach 1!

In addition, it is important to distinguish between an invitation totreatment and an offer Sellers usually have limited merchandise to sell andcannot possibly sell an advertised product to everyone who sees anadvertisement For this reason, most advertisements in newspapers, magazines,and catalogs are treated as invitations to negotiate rather than as offers There

"Restatement econ of the Conract, 524 says the folowing “An afer is expression of wiingness to enter into negotiation to jy nether trang ths conse to such agreements ited and will conclude it"

Resutmamt (Seca) of Conrtet §24

are exceptions to this rule The courts consider some advertisements as offerswhereas the defendant advertised one or two items of each kind — fur coats, etc

— at extremely low prices, with the additional language “first come, first

served" "To make an offer by an offer by an advertisement, there must

ordinarily be some language of commitment or some invitation to tale action

without further communication

(2) The offer must be definitely and certainly

An offer must be definite and certain to be enforceable A landlord of

an apartment with faulty plumbing might agree to pay “a share" of the cost ifthe tenant fixes the plumbing, but the cout would not enforce the contract

‘because it was not possible to determine what the parties meant by “a share”(3) The offer must be communicated to the offeree

‘An expression can take on many forms, ranging from a verbaldiscussion to a formal letter that describes the basic terms The intention is apresumption by both parties that the agreement will be Legally binding and theyintend to uphold their obligations related to it It is frequently stated that anoffer is ineffective until it is communicated to the offeree In case the validityperiod of the offer to enter into a contract is not accepted, it will beautomatically terminated, the offer to enter into the contract shall take effect for

a reasonable period from the time the offeree receives the offer to enter into the

contract.

> Termination of offer

In terms of revocation, revocation is the talking back of an offer by theofferor The CISG prescribes rules for revoking an offer, "an offer becomeseffective whenit reaches the offeree, "but" may be withdrawn if the withdrawal

1ABGUiE Great Mrmeepols Simplus Sore 16 Normest 22 619 (1952,

> statement Second) of Cores 836

reaches the offeree before or at the same time as the offer” "An offer can be

revoked at any point before acceptance is given unless an expiration date isprovided, or the offeris presented as irrevocable Ifthe offeree rejects the offer,then the offer becomes null regardless of whether the expiration term has

concluded or ifthe offer was irrevocable!S The UCC's section 2-206 states that

“an order or other offer to buy goods for prompt or current shipment shall beconstrued as inviting acceptance either by a prompt promise to ship or by theprompt or current shipment of conforming or non-conforming goods." To put

it simply, if merchant receives a purchase order for goods, the UCC views it

as an invitation to accept an offer

In terms of rejection, an offer by the offeree brings the offer to an end

If the offeree attempts to accept the offer again, it will be considered a newoffer Similar to revocation, a rejection of an offer is only effective when it isreceived by the offeror or their agent

In terms of counter-offer, if the initial offer is not acceptable, however,the offeree may respond by making a “counter-offer” of her own, which may

in tum be accepted by the original offeror The offeree may simply reject theinitial offer without acquiring his offer as the offeror has the right to insist on

considering his offer before further addressing any similar issues 15

In terms of lapse of time, an offer will automatically terminate by theJaw when the time specified in the offer has passed, The time specified in anoffer normally begins to run when the offer is received by the offeree, not when

it is formed or sent When the offer is delayed, the period begins to run fromthe date the offeree would have received the offer, but only ifthe offeree knows

poche 15, Uned Nations Convention on Contracts fr the Intemational Sle of Goode (CIS)

ps vd comanessonbha is accepunce acorn wvrruls-eomplesteml [Ace It November]

+ Mimsagoi & Se lanh Ry v Cohanbne Eoling MAI Co, I9 Unked Sates 149

However, the principle of withdrawing or revokingan offerto enter into

a contract before it is accepted under United States law also has threeexceptions as follows

(1) The offeror has no right to withdraw or cancel the offer ifit has pledgednot to withdraw or cancel the offer and has received reciprocalconsideration) as a bid for keeping the above promise (OptionContracts),

(2) The law of some states stipulates that there are firm offers In addition,according to Article 2-205 (UCC), witten offers signed by traders whoirrevocably promise not to cancel within the committed time limit orwithin a reasonable time limit of no more than 03 (three) months, if notcommitted in detail in the offer

(B)If the offeror already knows in advance that the recipient will have toely on histher offer, the offer may not be withdrawn

3.12 Acceptance

> Requirements of acceptance

‘Where an offer has been made, a contract binding the parties will resultwhen, and only when, the offeree has accepted the offer As in the case of anoffer, certain basic requirements of an acceptance must be met

(2) Acceptance must be unequivocal and unconditional

The acceptance must not change the terms of the original offer in anyway This principle is called ‘the mirror image rule’ The ‘mirror image ruleestablished that an offeree's acceptance of the terms must mirror the offeror'sterms, or be in accordance If the offeree answers the offer by presenting new

‘Resatmme (Second) of con, § 48

terms and requirements, this is considered a counteroffer Contracts for saleand purchase of goods are an exception to the mirror image rule, which coverspersonal property (clothing, furniture, food, motor vehicles, and equipment)The main exceptions are created by the UCC, which is a set of statutes thatcovers sales law as well as other areas of commercial law It was drafted tomake interstate trade easier and has been adopted by 49 states with minorvariations Only Louisiana has not adopted all of its provisions One UCCexception involves nonmerchants The second exception concems traders.

‘When both parties are merchants, the additional or different terms become apart of the contract unless

~ The offer expressly limited acceptance of its terms

- _ The newterms would materially alter the offer, or

- The offeror gives notice of objection to the new terms within a

reasonable time after receiving the acceptance 15

‘When the offeree has made his acceptance expressly conditional on theofferor's agreement to the new terms or when the offeree’s response to the offer

is not “an expression of acceptance” (e.g , an express rejection), no contract iscreated under section 2-207(1) A contract will only result in such cases if theparties engage in conduct that “recognizes the existence ofa contract,” suchas

an exchange of performance Unlike her counterpart under traditional contractprinciples, however, the offeror who accepts performance in the face of anexpress rejection or expressly conditional acceptance is not thereby bound toall of the terms contained in the offeree’s response Instead, the Code providesthat the terms of a contract created by such performance are those on whichparties’ writings agree, supplemented by appropriate gap-filling provisions

from the Code.”

'*CC Bạt 32070),

"UCC Pe 3-3070)

(©) Acceptance must be communicated to the offeror

In a bilateral contract, communication of acceptance is necessarybecause acceptance is in the form of a promise (not performance) and thecontract is formed when the promise is made (rather than when the act isperformed) The offeree shall notify the offeree ofits acceptance However, nonotice of acceptance is required, if the offer is submitted with the request Inaddition, sometimes the law requires notice of acceptance, and thus notice is

necessary

(G) The acceptance must follow the rules regarding the method

Acceptance must be notified to the applicant by the requirements of theform as specifically requested If no mandatory form is required in advance,then acceptance may be in writing, verbally, or by conduct Acceptance inbilateral contracts must be timely The time at which an acceptance takees place

is important because that is when the contract comes into existence Silence isnot generally considered acceptable Only under very special requirements, forexample between parties who have had a long-term contractual relationship,the silence can be considered as acceptance of the offer This is evidenced bycase law Everlith v Phelan: 22 Conn Sunn 377 173 A2đ601 (1961) When theparties are dealing face-to-face on the telephone, no special problem exists.Special rules, however, govern acceptance when the parties are separated by a

distance and must communicate by letters, telegrams, or fax?

2.13 Capacity

> Minor’s right and obligation

* Pusu to section 22206118) of the UCC, an order or offer lo pchase other goods for expected

‘menuportation map be considered ơn afer contemplated by tateral or wleteral contract ane may be excepted by promis of carriage (blateral cont) ov ad cearage of good, The iver mit be need

ef exceptence within areasoncble period ef tne, or he yer may consider te offer to he expired before

gpteee

"The Unomn Ehctonk Bunectons Act and Anirle TSỢ) ofthe CISG

Minors are persons under the age of eighteen, the age of majority (when

a person is no longer a minor) for contractual purposes” In addition, some

states provide for the termination of a minority on marriages Minority statusmay also be terminated by a minor's emancipation, which occurs whena child'sparent or legal guardian relinquishes the legal right to exercise control over thechild Several jurisdictions permit minors to petition a court for emancipationthemselves (e.g tobacco or alcoholic beverages)

Interms ofa minor š right to disaffirm, a minor must express his or herintent, through words or conduct, not to be bound to the contract The minormust disaffirm the entire contract, not merely a portion of it A contract can

ordinarily be disaffirmed at any time during the minority or fora reasonable

time after reaching a majority (two months or a year or more after maturity) If

a person does not disaffirm a contract within a reasonable time after reachingthe age of majority, the court is likely to consider the contract ratified It isimportant to note that an adult who contracts with a minor cannot escape theirobligations just because the minor can Unless the minor chooses to disaffim.the contract, the adult is usually bound by it

In terms ofa minor obligations on disaffirmance, although all states’laws permit minors to disaffirm contracts, states differ on the extent of a

‘minor's obligations on disaffimance Courts in a majority of states hold thatthe minor need only retum the goods to the contract, provided the goodsare inthe minor’s possession or control In contrast, either by statute or by courtdecision, place an additional duty on the minor—the duty to restore the adultparty to the position

> Contracts of minors

-Ajhood em sillbetenty-one for other paposes, such as buying nd consuming schol

However some sates, amar signing «nd purchase contract chợt re he contrac wilh or she

reaches the kẹt of majority

Jn terms of votdabie contracts, A contract entered into by a minor,however, is voidable at the option of that minor, subject to certain exceptions

To exercise the option to avoid a contract, a minor need only manifest anintention not to be bound by it The minor “avoids” the contract by disaffirming

Ít Unlike avoid contract, which is unenforceable on its face,avotdable contract is presumed to be enforceable but for the presence of somefactor here, the contractual capacity of one of the parties which permits partylacking capacity to avoid his or her otherwise valid contractual obligations

In terms of ratification, ratification is accepting and giving legal force

to an obligation that previously was not enforceable Express ratification takesplace when the individual, on reaching the age of majority, states orally or in

‘writing that they intend to be bound by the contract Implied ratification takesplace when the minor, on r

abide by the contract

> Mental incapacity and intoxication

thing the age of majority, indicates an intent to

Interms ofmental incapacity, Contracts made by mentally incompetentpersons can be void, voidable, or valid

In terms of itovication, it occurs when alcohol or drugs impair normal

actions and thoughts TM A contract entered into by an intoxicated person can be

either voidable or valid (and thus enforceable)

Ifa contract is voidable because of a person's intoxication, that personhas the option of disaffirming it while intoxicated and for a reasonable timeafter becoming sober- the same option available to a minor To avoid thecontract in most states, the person claiming intoxication must be able to retum.all consideration received except in contracts involving necessaries

* Wig v Faber, 32 8.7505 Quich 1887)

‘When an intoxicated person enters into a contract, they have the option

to either ratify it expressly or impliedly after becoming sober, similar to howa

‘minor may do so upon reaching the age of majority Implied ratification occurs

if the person fails to disaffirm the contract within a reasonable time after

‘becoming sober Conduct or actions that are inconsistent with an intent todisaffirm, such as the continued use of property purchased under a voidablecontract, will also result in the ratification of the contract

2.14, Intention

Intention in contract lawis determined objectively and prospectively Aparty is taleen to intent what its contracting partner could reasonably believe itintended when the parties contracted Under section 21 of the SecondRestatement, neither real nor apparent intention that a promise be legally

‘binding is essential to the formation of a contract, but a manifestation ofintention that a promise shall not affect legal relations may prevent theformation ofa contract It is a familiar fact that parties’ intent to contract doesnot suffice under the common law to create a contract The first clause ofSection 21 says that the parties’ manifest intent to contract is also not a

necessary condition of enforcement ® The second clause of Section 21 says that

‘a manifest intent not to be bound can prevent the formation ofa contract Thusthe comments to Section 21 explain that even a mutually mistaken belief that

an agreement is not legally binding will not prevent the creation of contract

6

2.15 Consideration

Reciprocal obligation, also known as the obligation to compensate orconsideration, is a concept that plays an important role in contract law,characteristic of the customary law tradition to refer to an effective condition

“dien 23130) of te UCC

esttemene (Second of Contract, §71,cat 8 he 2 (982).

of the contract, which is the bid of the promised party in exchange for thepromise of the party making the promise, which may be beneficial to the party

‘making the promise or detrimental to the promised party

> Requirements of Consideration

In Collins's Dictionary of Law, consideration is “an exchange ofpromises by which each party makes a gain and suffers a detriment” Underthe common law, a primary basis for the enforcement of promises isconsideration Consideration is usually defined as the value (such as cash)given in retum for a promise or retum for a performance ‘Consideration’distinguishes legally binding agreement from other types ofagreement Manyagreements are not legally binding because they lack considerationConsideration includes three characteristics

(1)Bargained-for Exchange

The promise given by the promisor (offeror) must induce the promisee(offeree) to offera retum promise, a performance, ora forbearance, mustinducethe promisor to make the promise An agreement is reached through a mutuallyagreed exchange of promises, actions, or refraining from actions For over acentury, however, it also has been common to define consideration in terms of

“exchange” There is consideration for a promise if it performance would bepart of a “bargained-for exchange”, in which one party's performance is the

“price” of the other's, and vice versa” Since the vast majority of significant

commercial transactions do contemplate an exchange of something (goods, realestate, services, etc) for something else (typically, but not necessarily, money),the requirement of consideration in most business contracts automatically wallbbe satisfied

() Something of value

‘Resuatmnme (Second) of Contact S71

The “something of legally sufficient value” may consist of

~ a promise to do something that one has no prior legal duty to do,

- the performance of an action that one is otherwise not obligated toundertake, or

~ the refraining from an action that one has a legal right to undertake (called

a forbearance)

Consideration in bilateral contracts normally consists a promise inretum for a promise For example, suppose that in a contract for the sale ofgoods, the seller promises to ship specific goods to the buyer, and the buyer

‘promises to pay for those goods when they are received Each ofthese promisesconstitutes consideration for the contract In contrast, unilateral contractsinvolvea promise in retum fora performance The difference between behaviorconstitutes consideration and behavior can bea consideration ora condition for

a gift depending on how the parties treat the behavior

(G) Legality of Consideration

The courts require that the consideration involved in an agreement belegal If the consideration is illegal, the contract is invalid Asa result of thisrequirement, a party cannot agree to do something that he or she does not havethe legal right to do Nor can a party agree to give up something that he or shedoes not legally own In addition, a party promises to stop something illegal

> Types of consideration

Jn terms of money as consideration, one party will offer money in

exchange for another party's promises or performance The amount of

consideration is negotiable unless it is legally prescribed (e.g fuel, oil, naturalgas) It is often better to exchange goods or services instead of relying on thepromise of payment in cash US courts consider such exchange agreements to

° Brow, Gordan W, Sys Pa A Ibid gp 140.141