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Chapter I - General provisions

* This translated version is originated from Ministry of Justice and for reference only.

THE NATIONAL ASSEMBLY

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No: 36/2005/QH11

SOCIALIST REPUBLIC OF VIET NAM

Independence - Freedom - Happiness

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Ha Noi, day 14 month 06 year 2005

COMMERCIAL LAW

Pursuant to Article 103 and Article 106 of the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented under Resolution No. 51/2001/QH10 of 25 December, 2001, of the X th National Assembly, the 10 th session;

This Law provides for commercial activities.

Chapter I

GENERAL PROVISIONS

Section 1. GOVERNING SCOPE AND SUBJECTS OF APPLICATION

Article 1.- Governing scope

1. Commercial activities conducted in the territory of the Socialist Republic of Vietnam.

2. Commercial activities conducted outside the territory of the Socialist Republic of Vietnam in cases where the involved parties agree to this Law for application, or where a foreign law or a treaty to which the Socialist Republic of Vietnam is a contracting party stipulates the application of this Law.

3. Activities not for profit purposes conducted by a party in its transactions with traders in the territory of the Socialist Republic of Vietnam in cases where the party conducting such not-for-profit activities chooses to apply this Law.

Article 2.- Subjects of application

1. Traders conducting commercial activities as provided for in Article 1 of this Law.

2. Other organizations and individuals conducting commerce-related activities.

3. Basing itself on the principles provided for by this Law, the Government shall specify the application of this Law to individuals who independently and regularly conduct commercial activities without having to make business registration.

Article 3.- Interpretation of terms

In this Law, the following terms shall be construed as follows:

1. Commercial activities mean activities for the purpose of generating profits, including: sale and purchase of goods, provision of services, investment, commercial promotion and other activities for the profit purpose.

2. Goods include:

a/ All types of movables, including those to be formed in the future;

b/ Things attached to land;

3. Custom in commercial activities means a code of conduct that has an explicit meaning, is established and repeated time and again for a long period of time between and implicitly recognized by involved parties in order identify their respective rights and obligations in commercial contracts.

4. Commercial practice means a custom that is widely recognized in commercial activities in an area, a region or a commercial domain, has an explicit meaning, and is recognized by involved parties in order to identify their respective rights and obligations in commercial activities.

5. Data message means information created, sent, received and stored in electronic media.

6. Vietnam-based representative office of a foreign trader means a dependent unit of the foreign trader, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.

7. Vietnam-based branch of a foreign trader means a dependent unit of the foreign trader, which is established and conducts commercial activities in Vietnam under the provisions of Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party.

8. Purchase and sale of goods mean commercial activities whereby the seller is obliged to deliver goods, transfer ownership of goods to the purchaser and receive payment; the purchaser is obliged to pay to the seller and receive goods and the ownership thereof as agreed.

9. Provision of services means commercial activities whereby a party (hereinafter referred to as the service provider) is obliged to provide a service to another party and receive payment; the service-using party (hereinafter referred to as the customer) is obliged to pay to the service provider and use the service as agreed.

10. Commercial promotion means activities of promoting and seeking opportunities for the purchase or sale of goods and provision of services, including sale promotion, commercial advertisement, display and exhibition of goods and services, and trade fairs and exhibitions.

11. Commercial intermediary activities mean activities carried out by a trader to effect commercial transactions for one or several identified traders, including representation for traders, commercial brokerage, goods sale or purchase entrustment, and commercial agency.

12. Contractual breach means the failure of a party to perform, to fully or properly perform its obligations according to the agreement between the involved parties or the provisions of this Law.

13. Substantial breach means a contractual breach by a party, which causes damage to the other party to an extent that the other party cannot achieve the purpose of the entry into the contract.

14. Origin of goods means a country or a territory where all the goods are turned out or where the last stage of substantial processing of goods is performed in cases where many countries or territories join in the process of producing such goods.

15. Forms of validity equivalent to documents include telegraph, telex, facsimile, data message and other forms provided for by law.

Article 4.- Application of the Commercial Law and relevant laws

1. Commercial activities must comply with the Commercial Law and relevant laws.

2. Particular commercial activities provided for in other laws shall comply with the provisions of such laws.

3. Commercial activities which are not provided for in the Commercial Law and other laws shall comply with the provisions of the Civil Code.

Article 5.- Application of treaties, foreign laws and international commercial practices

1. Where a treaty to which Vietnam is a contracting party stipulates the application of foreign laws or international commercial practices, or contain provisions different from those of this Law, the provisions of such treaty shall apply.

2. Parties to commercial transactions involving foreign elements may agree to apply foreign laws or international commercial practices if such foreign laws or international commercial practices are not contrary to the fundamental principles of the Vietnamese law.

Article 6.- Traders

1. Traders include lawfully established economic organizations and individuals that conduct commercial activities in an independent and regular manner and have business registrations.

2. Traders are entitled to conduct commercial activities in occupations and sectors, in geographical areas, in forms and by modes which are not banned by law.

3. The right of traders to conduct lawful commercial activities is protected by the State.

4. The State exercises for a definite time its monopoly over commercial activities in respect to a number of goods and services or in a number of geographical areas in order to ensure the national interests. The Government shall specify the lists of goods, services and geographical areas subject to the State monopoly.

Article 7.- Obligation of traders to register business

Traders are obliged to register their business according to the provisions of law. Where traders have not yet registered their business, they are still held responsible for all of their activities according to the provisions of this Law and other provisions of law.

Article 8.- Agencies in charge of state management over commercial activities

1. The Government performs the unified state management over commercial activities.

2. The Trade Ministry is answerable to the Government for performing the state management over activities of goods sale and purchase and specific commercial activities provided for in this Law.

3. Ministries and ministerial-level agencies shall, within the scope of their respective tasks and powers, have to perform the state management over commercial activities in their assigned domains.

4. People's Committees at all levels perform the state management over commercial activities in their respective localities according to the decentralization by the Government.

Article 9.- Commercial associations

1. Commercial associations are established to protect the legitimate rights and interests of traders, mobilize traders to take part in commercial development, and disseminate and propagate the provisions of law on commerce.

2. Commercial associations are organized and operate according to the provisions of law on associations.

Section 2. FUNDAMENTAL PRINCIPLES IN COMMERCIAL ACTIVITIES

Article 10.- Principle of traders' equality before law in commercial activities

Traders of all economic sectors are equal before law in commercial activities.

Article 11.- Principle of freedom and freewill to agreement in commercial activities

1. Parties have the rights of freedom to reach agreements not in contravention of the provisions of law, fine traditions and customs and social ethics in order to establish their rights and obligations in commercial activities. The State respects and protects such rights.

2. In commercial activities, the parties shall act on their own freewill, and neither party is allowed to impose its own will on, to force, intimidate or obstruct, the other party.

Article 12.- Principle of application of customs in commercial activities pre-established between parties

Except otherwise agreed, the parties shall be regarded as automatically applying customs in commercial activities pre-established between them which they have already known or ought to know, provided that such customs are not contrary to the provisions of law.

Article 13.- Principle of application of practices in commercial activities

Where it is neither provided for by law nor agreed by the parties, and there exist no customs pre-established between them, commercial practices shall be applied provided that such practices are not contrary to the principles provided for in this Law and the Civil Code.

Article 14.- Principle of protection of legitimate interests of consumers

1. Traders conducting commercial activities are obliged to provide consumers with sufficient and truthful information on goods and/or services they trade in or provide and take responsibility for the accuracy of such information.

2. Traders conducting commercial activities must be responsible for the quality and lawfulness of goods and/or services they trade in or provide.

Article 15.- Principle of recognition of legal validity of data messages in commercial activities

In commercial activities, data messages which satisfy all technical conditions and standards provided for by law shall be recognized legally valid as documents.

Section 3. FOREIGN TRADERS CONDUCTING COMMERCIAL ACTIVITIES IN VIETNAM

Article 16.- Foreign traders conducting commercial activities in Vietnam

1. Foreign traders mean traders established and making their business registrations according to the provisions of foreign laws or recognized by foreign laws.

2. Foreign traders are entitled to set up their representative offices or branches in Vietnam; to establish in Vietnam foreign-invested enterprises in the forms provided for by Vietnamese law.

3. Vietnam-based representative offices and branches of foreign traders have the rights and obligations specified by Vietnamese law. Foreign traders shall be held responsible before Vietnamese law for all activities of their Vietnam-based representative offices and branches.

4. Foreign-invested enterprises established in Vietnam by foreign traders according to the provisions of Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a contracting party shall be regarded as Vietnamese traders.

Article 17.- Rights of representative offices

1. To operate for the purposes, within the scope and duration stipulated in their establishment licenses.

2. To rent offices, rent and purchase equipment and facilities necessary for their operations.

3. To recruit Vietnamese and expatriate employees to work for them according to the provisions of Vietnamese law.

4. To open accounts in foreign currencies or foreign currency-based Vietnam dong at banks licensed to operate in Vietnam, and to be allowed to use those accounts solely for their operations.

5. To have seals bearing their names according to the provisions of Vietnamese law.

6. To have other rights as defined by law.

 

Article 18.-Obligations of representative offices

1. Not to directly conduct profit-generating activities in Vietnam.

2. To conduct commercial promotion activities within the scope permitted by this Law.

3. Not to enter into contracts, not to amend or supplement contracts already entered into by foreign traders, except where chief representatives obtain valid letters of authorization from foreign traders or other cases specified in Clauses 2, 3 and 4, Article 17 of this Law.

4. To pay taxes, fees and charges, and fulfil other financial obligations provided for by Vietnamese law.

5. To report on their operations according to Vietnamese law.

6. To have other obligations as defined by Vietnamese law.

Article 19.- Rights of branches

1. To rent offices, rent and purchase equipment and facilities necessary for their operations.

2. To recruit Vietnamese and expatriate employees to work for them according to Vietnamese law.

3. To enter into contracts in Vietnam in compliance with their operation contents specified in their establishment licenses and the provisions of this Law.

4. To open Vietnam dong accounts and foreign-currency accounts at banks licensed to operate in Vietnam.

5. To transfer profits overseas according to the provisions of Vietnamese law.

6. To have seals bearing their own names according to the provisions of Vietnamese law.

7. To conduct activities of goods purchase and sale and other commercial activities in compliance with their establishment licenses according to the provisions of Vietnamese law and treaties to which the Socialist Republic of Vietnam is a contracting party.

8. To have other rights provided for by law.

Article 20.- Obligations of branches

1. To observe the accounting regime provided for by Vietnamese law; in cases where it is necessary to apply another commonly used accounting system, the approval by the Finance Ministry of the Socialist Republic of Vietnam is required.

2. To report on their operations according to the provisions of Vietnamese law.

3. To have other obligations provided for by law.

Article 21.- Rights and obligations of foreign-invested enterprises

Rights and obligations of foreign invested enterprises shall be determined according to the provisions of Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party.

Article 22.- Competence to license foreign traders to conduct commercial activities in Vietnam

1. The Government shall uniformly manage the licensing of commercial activities of foreign traders in Vietnam.

2. The Planning and Investment Ministry shall be answerable to the Government for managing the issuance of licences to foreign traders investing in Vietnam according to the provisions of Vietnamese law.

3. The Trade Ministry shall be answerable to the Government for managing the issuance of licences to set up Vietnam-based representative offices of foreign traders; or licenses to set up branches, joint-venture enterprises or enterprises with 100% foreign capital in Vietnam in cases where such traders are specialized in conducting activities of goods purchase and sale or other activities directly related to goods purchase and sale in compliance with Vietnamese law and treaties to which the Socialist Republic of Vietnam is a contracting party.

4. Where a specialized law contains specific provisions on the competence of ministries or ministerial-level agencies, which are responsible before the Government for managing the issuance of licences to foreign traders for conducting commercial activities in Vietnam, the provisions of such specialized law shall apply.

Article 23.- Termination of operations in Vietnam of foreign traders

1.Foreign traders shall terminate their operations in Vietnam in the following cases:

a/ Upon expiration of the operation duration stipulated in their licenses;

b/ At the request of traders, which is approved by competent state management agencies;

c/ Under decisions of competent state management agencies as a sanction against their violations of law and their licenses;

d/ Where traders are declared bankrupt;

e/ Where foreign traders terminate their operations according to foreign laws, for representative offices, branches or foreign parties to business cooperation contracts with Vietnamese parties;

f/ Other cases provided for by law.

2. Before terminating their operations in Vietnam, foreign traders are obliged to pay debts and fulfill other obligations toward the State, concerned organizations and individuals in Vietnam.

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