Contract transfer under Vietnamese civil law

Labor contract. The new employer replaces the old employer and continues to perform the labor contract signed between the old employer and the employee.

Article 194 “Enterprise merger” 34 Law on Enterprises 2014, two or more

many companies of the same type - for the merged company, or one or several companies of the same type can merge into another company, into another company. This merger is carried out by transferring all assets, rights, obligations and legal interests of the merged company (temporarily called the old company) to the merged company, receiving the merger (new company). In all those assets, rights, obligations and legal interests, there is the labor contract of the company. The new company, after the merger, will be responsible for continuing to perform the labor contract signed by the old company with the employee. That labor contract is not automatically terminated upon the termination of the contract with the old company, but it is automatically transferred to the new company. Thus, in this case, there has been a transfer

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34 Article 194 “Enterprise merger

1. Two or more companies (hereinafter referred to as the merged companies) may merge into a new company (hereinafter referred to as the merged company), and at the same time terminate the existence of the merged companies.

2. The procedure for company merger is prescribed as follows:

a) The merged companies prepare the merger contract. The merger contract must include the main contents of the names and head office addresses of the merged companies; the name and head office address of the merged company; the merger procedures and conditions; the labor use plan; the time limit, procedures and conditions for converting assets, converting capital contributions, shares and bonds of the merged company into capital contributions, shares and bonds of the merged company; the merger implementation period; the draft Charter of the merged company;

b) The members, company owners or shareholders of the merged companies shall approve the merger contract, the Charter of the merged company, elect or appoint the Chairman of the Board of Members, Chairman of the company, Board of Directors, Director or General Director of the merged company and proceed to register the business of the merged company in accordance with the provisions of this Law. The merger contract must be sent to creditors and notified to employees within 15 days from the date of approval.

3. In case of merger in which the merged company has a market share of 30% to 50% in the relevant market, the legal representative of the merged company must notify the competition management agency before proceeding with the merger, unless otherwise provided by the Competition Law.

Prohibit mergers in which the merged company has a market share of more than 50% in the relevant market, unless otherwise provided by the Competition Law.

4. The dossier and procedures for registering a merged company shall comply with the relevant provisions of this Law and must be accompanied by copies of the following documents:

a) Merger contract;

b) Resolution and meeting minutes approving the merger contract of the merged companies.

5. After business registration, the merged companies cease to exist; the merged company enjoys legal rights and benefits, and is responsible for unpaid debts, labor contracts and other property obligations of the merged companies.

6. The business registration authority shall update the legal status of the merged company on the National Database of Business Registration when issuing the Certificate of Business Registration to the merged company. In case the merged company has its head office address outside the province or centrally-run city where the merged company's head office is located, the business registration authority where the merged company is located must notify the business registration to the business registration authority where the merged company's head office is located to update the legal status of the merged company on the National Database of Business Registration.

labor contract between two companies. This provision aims to ensure the legitimate rights and interests of employees. And Article 195 " Enterprise merger" 35 also stipulates the same as the case of the merged enterprise above.

The above regulations aim to ensure that employees have stable employment. In this aspect, the implementation of labor contracts directly affects not only the employee himself, but also the employee's family and society. Therefore, the stable implementation of labor contracts also contributes to social stability and ensures the legitimate rights and interests of employees. Therefore, the law requires that labor contracts signed between the former employer and the employee must be maintained and implemented, even when the employee

35 Article 195 “Enterprise merger

1. One or more companies (hereinafter referred to as the merged companies) may merge into another company (hereinafter referred to as the acquiring company) by transferring all assets, rights, obligations and legitimate interests to the acquiring company, and at the same time terminating the existence of the merged company.

2. The procedures for company merger are prescribed as follows:

a) The companies involved prepare the merger contract and draft the Charter of the acquiring company. The merger contract must include the main contents of the name and head office address of the acquiring company; the name and head office address of the merged company; the merger procedures and conditions; the labor use plan; the method, procedures, time limit and conditions for converting assets, converting capital contributions, shares and bonds of the merged company into capital contributions, shares and bonds of the acquiring company; and the time limit for implementing the merger;

b) The members, company owners or shareholders of the related companies shall approve the merger contract, the Charter of the acquiring company and register the business of the acquiring company in accordance with the provisions of this Law. The merger contract must be sent to all creditors and notified to employees within 15 days from the date of approval;

c) After business registration, the merged company ceases to exist; the acquiring company enjoys legal rights and benefits, and is responsible for unpaid debts, labor contracts and other property obligations of the merged company.

3. In case of merger in which the acquiring company has a market share of 30% to 50% in the relevant market, the legal representative of the company shall notify the competition management agency before proceeding with the merger, unless otherwise provided by the Competition Law.

Prohibit mergers of companies in which the acquiring company has a market share of over 50% in the relevant market, unless otherwise provided by the Competition Law.

4. The dossier and procedures for registering the merged company shall comply with the relevant provisions of this Law and must be accompanied by copies of the following documents:

a) Merger contract;

b) Resolution and minutes of meeting approving the merger contract of the acquiring companies;

c) Resolutions and minutes of meetings approving the merger contract of the merged companies, except in cases where the acquiring company is a member or shareholder owning more than 65% of the charter capital or voting shares of the merged company.

5. The business registration authority shall update the legal status of the merged company on the National Database of Business Registration and make changes to the business registration contents for the acquiring company.

In case the merged company has its head office address outside the province or centrally-run city where the head office of the acquiring company is located, the Business Registration Authority where the acquiring company is located shall notify the business registration to the Business Registration Authority where the head office of the merged company is located to update the legal status of the merged company on the National Database on Business Registration.

The old employer has been replaced, and this new replacement must naturally take the place of the employer in the old labor contract.

The Law on Insurance Business 2000 was amended and supplemented in 2010, 2013, 2014. This Law stipulates a whole section - Section 3 "Transfer of insurance contracts", including: Article 74 "Transfer of insurance contracts" 36 ; Article 75 "Conditions for transferring insurance contracts" 37 ; Article 76 "Procedures for transferring insurance contracts" 38

Thus, for insurance contracts alone, lawmakers have clearly regulated contract transfer, with basic contents such as: Transfer cases; transfer conditions; transfer procedures; the subjects of this transfer are insurance companies.

This provision aims to ensure the legitimate rights and interests of the insurance buyer, the insured and the beneficiary. To ensure that in the event that an insurance company is at risk of insolvency, the insurance company is divided, separated, merged, consolidated or dissolved; the insurance contract previously signed between these insurance companies and the insurance buyer will continue to be implemented, without being terminated. The insured and the beneficiary will still have their rights and interests resolved, or have other rights and obligations under the contract. (The person resolving the rights is the insurance company receiving the transfer).

36 Article 74 “Transfer of insurance contracts: 1. The transfer of the entire insurance contract of one or several insurance lines between insurance enterprises is carried out in the following cases:

a) Insurance companies are at risk of insolvency;

b) Insurance enterprises divide, separate, merge, consolidate, or dissolve;

c) According to agreement between insurance companies.

2. In case an insurance company is at risk of insolvency or dissolution and cannot reach an agreement on transferring the insurance contract to another insurance company, the Ministry of Finance shall designate the insurance company to receive the transfer.

37 Article 75 “Conditions for transferring insurance contracts. The transfer of insurance contracts is carried out

under the following conditions:

1. The insurance enterprise receiving the transfer is currently operating the transferred insurance business;

2. The rights and obligations under the insurance contract transferred remain unchanged until the end of the insurance contract term;

3. The transfer of insurance contracts must be accompanied by the transfer of funds and operational reserves related to the entire insurance contract being transferred”.

38 Article 76 “Procedures for transferring insurance contracts. The transfer of insurance contracts is carried out

according to the following procedure:

1. An insurance company transferring an insurance contract must submit a request for insurance contract transfer to the Ministry of Finance stating the reason and plan for transfer, along with the transfer contract. The transfer of an insurance contract may only be carried out after receiving written approval from the Ministry of Finance;

2. Within 30 days from the date the Ministry of Finance approves the transfer of the insurance contract, the enterprise transferring the insurance contract must announce the transfer and notify the insurance buyer in writing.

One point to note is that according to Clause 2 of Article 74 above, in addition to the case of transferring contracts by agreement, the law also stipulates compulsory transfer of contracts, that is, " In case an insurance enterprise is at risk of insolvency or dissolution and cannot agree on the transfer of the insurance contract to another insurance enterprise, the Ministry of Finance shall designate an insurance enterprise to receive the transfer ". That is, the State has the right to force the transfer of insurance contracts, if the enterprise that needs to transfer cannot find or agree on the transfer of the contract with another enterprise. This provision clearly demonstrates the will of the legislator, wanting to absolutely protect the interests of the insured, the insured, and the beneficiary; also wanting to ensure that the signed insurance contract continues to be performed without being terminated.

Article 133 “Right to continue renting a house” 39 Housing Law 2014,. According to this article, the law stipulates mandatory transfer of house lease contracts. Specifically, in case the lessor dies while the lease term under the contract is still valid, the heir or the State must continue to perform the lease contract until the contract expires. Even if the tenant dies during the lease term under the contract, the person living with the tenant will continue to rent the house, according to the content of the lease contract signed by the lessor and the lessee. This provision aims to ensure stable housing conditions for the lessee, ensuring that the lessee can use the house stably during the lease term.

Decree 99/ND-CP dated October 20, 2015, detailing and guiding the implementation of the Housing Law, Article 72 "Documents proving housing conditions for participating in transactions in cases where a Certificate is not required" 40 .

39 Article 133 “Right to continue renting a house: In case the house owner dies while the house rental term is still valid, the lessee may continue renting until the end of the contract term. The heir shall be responsible for continuing to perform the previously signed house rental contract, unless otherwise agreed by the parties. In case the owner does not have a legal heir according to the provisions of law, the house shall belong to the State and the current tenant may continue to rent it according to the regulations on management and use of state-owned houses.

In case the homeowner transfers ownership of the rented house to another person while the rental term is still valid, the lessee may continue to rent the house until the end of the contract; the new homeowner is responsible for continuing to perform the previously signed rental contract, unless the parties have another agreement.

When the lessee dies while the lease term is still in effect, the person living with the lessee may continue to rent the house until the end of the lease term, except in the case of renting official housing or if the parties have another agreement or the law provides otherwise.

40 Article 72 “Documents proving housing conditions for participating in transactions in cases where it is not mandatory to

have Certificate

Documents proving the conditions and housing participating in the transaction in the case specified in Clause 2, Article 118 of the Housing Law are stipulated as follows:

Law on Real Estate Business 2014, Article 59 “Legal transfer”

Contract for sale and lease-purchase of future housing" 41

1. In case of mortgaging future housing, there must be documents as prescribed in Clause 1, Article 148 of the Housing Law; in case of buying and selling future commercial housing, there must be documents as prescribed by the law on real estate business and as prescribed in Point b, Clause 2, Article 19 of this Decree.

2. In case the organization donates a house of gratitude or charity, there must be documents proving the construction of the house by the donor.

3. In case of leasing old state-owned houses, there must be documents as prescribed in Article 60 of this Decree; in case of buying and selling old state-owned houses, there must be documents as prescribed in Article 69 of this Decree.

4. In case of buying, selling, or renting social housing (including cases where households and individuals subject to resettlement buy or rent social housing), there must be documents proving eligibility according to the provisions of Article 63 of the Housing Law.

5. In case of buying and selling houses invested in construction under a project to serve resettlement, there must be a Certificate or decision on land allocation, a decision approving the project by a competent authority and approved project documents, a Construction Permit if required, and documents on acceptance of completion of construction and putting the house into use according to the provisions of law on construction.

6. In case a household or individual purchases a commercial house for resettlement purposes, there must be a house purchase contract or a house purchase order contract signed between the investor of the commercial housing project and the unit assigned by the State to arrange housing for resettlement, along with the approved project documents; if purchasing an existing house, there must be additional documents certifying the completion of construction and putting the house into use in accordance with the provisions of the law on construction; if purchasing a house to be built in the future, there must be a record of acceptance of the completion of the construction of the house foundation in accordance with the provisions of the law on construction.

7. In case of buying and selling houses as prescribed in Clause 4, Article 62 of the Housing Law, there must be a house sale and purchase contract or a house lease-purchase contract signed with the investor of the social housing construction project, accompanied by a house handover record and documents proving full payment of the house purchase or lease-purchase fee to the investor.

8. In case of house inheritance, the following documents are required:

a) If the inherited house is a gift, there must be a legally established gift document or contract, along with documents proving the house ownership of the donor (if any);

b) If the inheritance of a house is subject to purchase or hire-purchase, there must be a legal house purchase or hire-purchase contract accompanied by documents proving the house ownership or proving the investment in house construction by the seller or hire-purchaser;

c) If inheriting a house that is newly constructed, there must be a Construction Permit (in cases where a Construction Permit is required) and documents proving the legal right to use the land according to the provisions of the law on land of the inheriting party;

d) If inheriting a house according to a decision of the People's Court, there must be a judgment or decision that has come into legal effect of the People's Court.

9. In case of leasing, lending, allowing temporary stay, or authorizing the management of housing (except for the case of leasing old state-owned housing), the lessor, lender, temporary stay, or authorizing the management of housing must have a contract for the sale or hire-purchase of housing signed with the investor of the housing construction project if the housing is purchased or hired-purchased from the investor, or have a Construction Permit or other documents proving the ownership of the housing according to the provisions of civil law and land law if the housing construction investment is made"

41 Article 59. “Transfer of contracts for sale and purchase or hire-purchase of future housing

1. The buyer or the lessee has the right to transfer the contract for sale or lease-purchase of future housing when the application for the Certificate of land use rights, house ownership rights and other assets attached to the land for the buyer or lessee has not been submitted to the competent state agency. The transfer of the contract for sale or lease-purchase of future housing must be made in writing, with the investor's confirmation on the transfer document.

2. The contract transferee shall continue to exercise the rights and obligations of the home buyer or lessee with the investor. The investor shall be responsible for facilitating the parties in the contract transfer and shall not collect any fees related to the contract transfer.

Decision 202/QD-TTg dated May 2, 1995 of the Prime Minister " promulgating documents regulating the contracting of forest protection, forest regeneration and afforestation ", Article 6 "Obligations and rights of contracted households" 42 .

Through the above legal provisions, it can be seen that although they are legal relationships of similar nature, some laws define this relationship as “transfer” (Labor Code, Enterprise Law, Insurance Business Law, Housing Law), but some laws define this relationship as “assignment” (Real Estate Business Law). So are these two terms “transfer” and “assignment” different? Through research, it can be seen that the “transfer” relationship often has compensation for benefits (such as transferring land use rights, houses, etc.), while “assignment” may have compensation for benefits, or may not (such as transferring obligations and transferring claims). Although different in name, in essence, these legal relationships are the same, all are transfers of contracts from one subject to another.

On the other hand, not only is there no agreement on the name of the legal relationship as above, but the provisions of the specialized law that regulate the transfer of this contract also regulate each aspect of each regulatory relationship separately, and there are no general provisions for all cases. These provisions aim to protect some special legal relationships that lawmakers want to protect their legitimate rights.

The above regulations are also the premise and first basis for the author to look at contract transfer, from the perspective of contract transfer as assessed and regulated by law.

From there, there is a basis for the author to raise the issue to a more comprehensive level, reflected in the 2015 Civil Code.

3. The final transferee of the house sale and purchase or lease-purchase contract shall be granted a Certificate of land use rights, house ownership rights and other assets attached to the land by a competent state agency in accordance with the provisions of the law on land.

4. The transfer of contracts prescribed in this Article does not apply to contracts for the purchase and sale or hire-purchase of social housing.

5. The Government shall detail this Article”.

42 Article 6 “Obligations and rights of the contracting household: When the contract period under the signed contract has not ended, due to objective circumstances the contracting household cannot continue to receive the contract, the contracting household can transfer the contract rights to another household or pay for the contract part during the period of implementation so that the forest owner can establish a contract with another household”.

Chapter 1 Conclusion

As mentioned above, the 2015 Civil Code has provisions on “transfer of claim rights” and “transfer of obligations”, “performance of work through a third party”. Accordingly, in terms of the subject of the transfer, these relationships are transferred in each individual relationship of rights and obligations, but have not been transferred with a set of rights and obligations, along with all other elements of the contract, such as the right to unilateral protest. While “a contract is not simply a set of rights and obligations but also a relationship between two contracting parties and associated with it are the personal qualities necessary for the performance of the contract and the rights to unilateral protest” 43 . Therefore, these provisions are not sufficient to apply to the contract transfer relationship.

In addition, in terms of the method of transfer, the three legal relationships mentioned above are only implemented according to agreement, not according to legal regulations. Meanwhile, specialized laws stipulate a number of contract transfer relationships in specific cases. Therefore, the existing regulations of the 2015 Civil Code do not cover contract transfer.

On the other hand, through analysis, the main issues of these legal relationships have been clarified, such as concepts, subjects, legal nature, scope of transfer, legal consequences...

So is contract transfer similar to these legal relationships? Are the concepts different? The legal nature and regulatory content have been stipulated in the content of the above provisions? Explaining these issues will show the absence of legal provisions and the need to stipulate contract transfer in the 2015 Civil Code.

In addition, it is also on the above legal provisions; which are the basis, premise, and favorable factors for the provision of "contract transfer" in the 2015 Civil Code. Because as mentioned, in detail, contract transfer is the transfer of a set of rights and obligations arising under the contract. While the transfer of claim rights and the transfer of individual obligations have been regulated, civil law has provided for legal relationships close to contract transfer.

43 Ngo Quoc Chien (2013), op. cit. (2).

On the other hand, some specialized legal documents have stipulated the transfer of contracts in specific cases, showing that the law has recognized some contract transfer relationships. That means, in some contracts, the law expects these contracts to continue to be performed even if one party in the contract changes or no longer exists. The new parties involved in this change will naturally replace the old party to continue performing with the remaining party. The continued performance of the contract is the optimal solution, ensuring the rights and legitimate interests of the parties in the contract.

The analysis of the issues in this chapter 1 aims to show that the 2015 Civil Code has provisions on legal relations similar to contract transfer, but cannot cover and apply to contract transfer. Because these relations have different concepts, legal nature and regulatory content than contract transfer (analyzed in chapter 2). Therefore, these existing provisions of the Civil Code are not enough to regulate the relationship of contract transfer.

From this absence, the author studies the laws of countries around the world on contract transfer. They apply the provisions on transfer of claim rights, transfer of obligations to regulate the contract transfer relationship, or prescribe a separate contract transfer regime to apply to this relationship. From there, gain experience for Vietnam to perceive the issue being studied. In addition, based on the positive law in Vietnam on related issues, combined with the reality of courts trying contract transfer disputes, the author presents and explains his views on the contents of contract transfer.

Contract transfer under Vietnamese civil law - 5

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