report fundamental breach in vietnam law the us law and cisg

Article 3 13 of Law on Commerce 2005 presents that fundamental breach means a breach of contract by one party causing loss to the other party to the extent that such other party is not a

Subject: Law of contract

Report Supervisor: LLM Tran Thanh Tam

Group: 07

Nguyễn Đức Trâm Anh 2153401020009

Tran Thai Hoa 2153401020094 Ta Nguyén Duy Lam 2153401020121 Nguyễn Hoàng Trúc Linh 2153401020131 Tran Ngọc Khánh Linh 2153401020141

Nguyễn Anh Thư 2153401020245 Ngô Thảo Uyên 2153401020297

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chapter 3: case laws of fundamental breach under vietnam law, the us law and cisg

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chapter 5: legal consequences of fundamental breach under vietnam law, the us law

5.1 Legal consequences of fundamental breach under vietnam law 7 5.2 Legal consequences of fundamental breach under the us law 9 5.3 Legal consequences of fundamental breach under cisg 10

5.4 Similarities of legal consequences of fundamental breach between vietnam law, the US 0s vi: 4 ă.ă 12 5.5 Differences of legal consequences of fundamental breach between vietnam law, the US 0s vi: 4 ă.ă 13 chapter 6: conclusions of fundamental breach under vietnam law, the us law and cisg

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INTRODUCTION Determining a fundamental breach of contract always has a certain impact rights and obligations of the parties and the application of sanctions in trade such as temporarily suspending the performance of the contract, suspending the performance of the contract or canceling the contract

That's why this content which is discussed by lawmakers, researchers, and readers even parties in domestic and foreign commercial contractual relations is important, basic and always interested in finding a perfect direction

CHAPTER 1: DEFINITIONS OF FUNDAMENTAL BREACH UNDER

VIETNAM LAW, THE US LAWAND CISG 1.1 Adefinition of fundamental breach under Vietnam law

Currently, there is a parallel existence about the term “serious violation” and the term “fundamental violation” However, they are quite different under Vietnam law Fundamental breach of contract is a new concept adopted in the law Vietnamese commerce, specifically Law on Commerce

Article 3 (13) of Law on Commerce 2005 presents that fundamental breach means a breach of contract by one party causing loss to the other party to the extent that such other party is not able to achieve its objective of entering into the contract 1.2 Adefinition of fundamental breach under the US law

The US law doesn’t stipulate obviously and directly the definition of fundamental breach, but Restatement (Second) of Contracts 1981 refers to the term

“material breach’’ \t is similar to the term “fundamental breach” However, it is used more commonly than the term “fundamental breach” in US law

A “material breach” which is defined by Westlaw from the provisions of Article 241 of Restatement (Second) of Contracts is a breach that is serious enough to justify the other party in abandoning the contract A “material breach” is one that substantially defeats the purpose of the contract, or relates to an essential element of the contract, and deprives the injured party of a benefit that he or she reasonably expected

1.3 A definition of fundamental breach under CISG Article 25 of CISG 1980 regulates that a breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result

1.4 Similarities of definitions of fundamental breach between Vietnam law, the US law and CISG

These definitions of fundamental breach are based on a breach of a contract and the significant and serious impact of the consequences of the conduct breach by one

party against what the parties expected to achieve from the contract 1.5 Differences definitions of fundamental breach between Vietnam law, the US law, and CISG

The first criterion is the basis for determining the level of serious impact on the expected benefits from the contract It is different depending on the legal regulations of each country or international For example, Vietnam law determines the level of the damage in relation to the purpose of entering into the contract The US law bases on an essential element of the contract which is stipulated in Article 241 of Restatement (Second) of Contracts The CISG is based on substantial prejudice and results in a substantial deprivation of what the aggrieved party is entitled to expect from the contract unless the breaching party could not have foreseen it and a reasonable person would not have foreseen consequences if they were in a position and similar circumstances

The second criterion is that the breaching party and a reasonable person of the same kind in the same circumstances would not have foreseen such a result The CISG is more advanced than Vietnam law and the US law when it takes into account both the interests of the person suffering the damage and the person causing the damage because it considers objective factors that make it impossible for them to predict that damage will be cau8ed

1 Võ Sỹ Mạnh (2015) Vï phạm cơ bản hợp động theo Công ước Viên năm 1980 về hợp đồng mua bán hàng hóa quốc tế và định hướng hoàn thiện các quy định có liên quan của pháp luật Việt Nam Retrieved October 8, 2023, https://amilawfirm.com/wp-content/uploads/2023/08/1R.-Luận-án-Vi-phạm-hợp-đồng-theo-Công-ước-Viên- 1980 pdf

2 Bùi Thị Bích Sơn (2011) Tuyên bố hủúy hợp động và hậu quả pháp lý của việc húy hợp động mua bán hàng hóa quốc tế theo Công ước Viên 1980 và Luột Thương mại 2005 Graduate dissertation, Ho Chỉ Minh City University of Law, 17

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CHAPTER 2: ELEMENTS OF FUNDAMENTAL BREACH UNDER

VIETNAM LAW, THE US LAWAND CISG 2.1 Elements of fundamental breach under Vietnam law

There is no requirement that fundamental breach must contain the specific terms Through the definition of fundamental breach under Vietnam law, we conclude that fundamental breach must contain two following terms:

One party causes loss to the other party to the extent that such other party is not able to achieve its objective of entering into the contract

The other party fails to achieve its objective of entering into the contract 2.2 Elements of fundamental breach under the US law

Article 241 of Restatement (Second) of Contracts 1981 provides for circumstances significant in determining whether a failure is material In determining whether a failure to render or to offer performance is material, the following circumstances are significant:

(a) The extent to which the injured party will be deprived of the benefit which he reasonably expected;

(b) The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;

(c) The extent to which the party failing to perform or to offer to perform will suffer forfeiture;

(d) The likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;

(e) The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing

2.3 Elements of fundamental breach under CISG “Fundamental breach of contract” is a legal regime stipulated in Article 25 of CISG 1980 However, the CISG does not provide a specific explanation to determine what fundamental breach must contain From the provision of Article 25, it shows that fundamental breach must contain the following terms:

A breach of a contract The existence of a breach of a contract is the primary element of a fundamental breach under the CISG, thus without breach, Article 25 is not applicable

Abreach that causes the detriment that substantially deprives the other party of what he was entitled to expect under the contract

The detriment could have been foreseen by the defaulting party and by a reasonable person of the same kind under the same circumstances of the breaching party

2.4 Similarities of elements of fundamental breach between Vietnam law, the US law and CISG

Fundamental breach under Vietnam law, the US law and CISG must contain two following terms:

One party causes loss to the other party The detriment resulting from the breach must extensively hamper the legitimate contractual expectations of the aggrieved party

2.5 Differences of elements of fundamental breach between Vietnam law, the US law and CISG

There is no foreseeability in Vietnam law and US law whereas a breach that causes a detriment that substantially deprives the other party of what he was entitled to expect under the contract is not a fundamental breach if the detriment could not have been foreseen by the defaulting party, and by a reasonable person of the same kind under the same circumstances of the breaching party under the CISG’s interpretative rules

The US law refers to the likelihood that the party failing to perform or to offer to perform will cure his failure and the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing while Vietnam law and the CISG doesn’t point out that

3 Robert Koch, The Concept of Fundamental Breach of Contract under the United Nations Convention on

Contracts for the International Sale of Goods (CISG), Review of the convention on contracts for the international

http://cisgw3.law.pace.edu/cisg/biblio/koch html 4 Ana Paula S C Rizzo de Barros, Definition of Fundamental Breach under CISG's Art 25 and Analysis of Recent

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Under US law, in determining whether a failure to render or to offer performance is material, the innocent party's benefit which they want from the contract must be reasonably expected which was shown through Article 241 (a) of Restatement (Second) of Contracts 1981 Meanwhile, Vietnam law and CISG only seem to stipulate that what is harmed is what the innocent party aims or expects to achieve when entering into the contract, without mentioning the reasonableness of that aim or expectation

CHAPTER 3: CASE LAWS OF FUNDAMENTAL BREACH UNDER

VIETNAM LAW, THE US LAWAND CISG 3.1 Acase law of fundamental breach under Vietnam law

Judgment of Binh Duong province of people's court No: 12 /2018/KDTM-PT regarding contract disputes credit and contracts rent a waréhouse

3.1.1 Facts of a case law of fundamental breach under Vietnam law Bank P lent money to Company N under the medium-long-term credit contract dated November 18, 2015 and the attached Debt Acceptance Agreements as follows: Loan amount: 50,000,000,000 VND Loan term: 120 months (Detailed loan term according to debt agreement) Essence: According to each debt agreement Overdue interest rate: equal to 150% of the interest rate during the overdue debt transfer period Loan purpose: Supplement investment capital to build rental houses Company N provides collateral for loans under the Credit Contract As of June 2016, Company N has not fulfilled its obligations under the medium- long-term credit contract Bank P has repeatedly urged and reminded the debt, but Company N still does not fulfill its debt payment obligations to Bank P, leading to a violation of payment obligations according to Article 4 of the medium-long-term credit contract Violation of consent in the signed credit contract When disbursed from Bank P, Company N uses the loan to start investing in building a factory according to the installed project During this process, this work affected the rainy weather, so the project was slow to complete, and at the same time, the price of many construction materials increased, so construction costs were increased to complete to ensure contingency calculations

Because of the lack of capital to complete the project, Company N has difficulty producing finished factory products and creating rental sources Company N requested Bank P to continue disbursement to help Company N complete this rental factory project to put it into business, however, Bank P did not agree to this request Faced with the fact that the factory has been completed and is looking for customers to rent, the real estate market in the area is on a positive upward trend, so Company N hopes to soon find a source of income from factory rental above to repay the 5Amilawfirm Quyền sử dựng đất thể chấp có nhà xưởng đang được bên thứ ba thuê.https://amilawfim.comAwp- content/uploads/201 9/08/17 Quyén-su-dung-dat-thé-chap-cé-nha-xudng-dang-dugc-bén-thi-ba-thué pdf

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loan to Bank P Company N requests to continue implementing the contract, the original loan amount of 50,000,000,000 VND has not yet been paid at the present time, this amount will be paid after the end of the contract Loan term (120 months from November 23, 2015)

3.1.2 Decision of a case law of fundamental breach under Vietnam law Company N’s behavior was a fundamental breach of contract 3.1.3 Analysis of elements of fundamental breach under Vietnam case law

From the above judgment, we can see that there was a fundamental breach of contract through the following factors:

There was damage to Bank P when Company N had not yet fulfilled its payment obligations to the Bank, leading to a breach of payment obligations, affecting Bank P

Failure to fulfill payment obligations not only causes damage to the Bank but also affects the purpose of entering into a contract between Bank P and Company N Company N cannot supplement capital for the construction investment factory as planned and Bank P failed to achieve its profitable lending goals and revenue and profit goals, even affecting its finances

3.2 Acase law of fundamental breach under the US law Judgement of Court of Appeals No E2019-01712-COA-R3-CV 11-25-2020 regarding A & P excavating and materials, LLC v David Geiger

3.2.1 Facts of a case law of fundamental breach under the US law The plaintiff is A&P Excavating and Materials Company (hereinafter referred to as "A&P"), a wood manufacturing company that signed a contract with Mr Geiger on August 22, 2014 In it, Mr Geiger granted A&P logging rights on properties owned by him in Rogersville, Tennessee In addition, the contract also stipulates A&P'’s obligation to comply with the best standards and implement necessary forest conservation measures according to the standards of the Tennessee Department of Forest Protection and Management On December 2, 2016, A&P had the opportunity to claim that Mr Geiger committed a concurrent violation by

°® Casetext A & P Excavating & Materials, LLC v Geiger https://casetext com/case/a-p-excavating-materials-llc- v-geiger

allowing another individual to participate in logging in the same area as A&P This work greatly reduced the amount of timber that A&P was able to harvest, and A&P offered Mr Geiger compensation equivalent to $600,000

On March 5, 2016, Geiger filed a counterclaim in which he claimed that A&P violated the concurrent study Specifically, A&P was unable to complete the task of managing and preserving forests in his property area A&P itself has committed acts such as not cleaning the mining area after completion of mining but moving to another area as well as moving and adding new mining machines to the mining area without informing Mr Geiger

3.2.2 Decision of a case law of fundamental breach under the US law Court of First Instance: The Court of First Instance held that A&P’s conduct in failing to comply with the best standards and implement necessary forest conservation measures according to the standards of the Tennessee Department of Forest Protection and Management violated the law serious breach of contract Therefore, Mr Geiger has complete grounds to stop performing the contract and let another party participate in the exploitation

Court of Appeal: First of all, the Court of Appeal needs to review the wording of the terms in the contract The Court of Appeal held that the provision was clearly stated and would be the basis for review Next, the Court of Appeals considers the grounds to determine whether one party has materially breached the contract or not

The Court of Appeal thereby reaffirmed that A&P's failure to comply with the criteria was a material breach of contract Specifically, A&P's failure to comply with the standards was contrary to the defendant's instructions

3.2.3 Analysis of elements of fundamental breach under the US case law A & P deprived Mr Geiger of the benefit of insuring that the logging operation proceeded in an orderly fashion and did not cause damage to the property or Big Creek, for which Mr Geiger could have been liable Similarly, it would be difficult to compensate Mr Geiger for any such damage, and based on the history of communications between the parties, it appears unlikely that A&P would have cured its failure under the contract Mr Geiger was deprived of the benefit that he reasonably expected from this contract In conclusion, A & P’s behavior constituted

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