Socialist Republic of Vietnam

Part 1 General Provisions

Part 2 Property & Ownership Rights

Part 3 Civil Obligations & Civil Contracts

Part 4 Inheritance

Part 5 Transfer of Land Use Rights

Part 6 Intellectual Property Rights & Technology Transfer

Part 7 Civil Relations Involving Foreign Elements



PREAMBLE


Vietnamese civil law is the legal mechanism promoting civil intercourse and creating a favourable environment for the socio-economic development of the country.

The Civil Code is derived from and develops the Vietnamese civil law from the past to the present, makes detailed provisions for [the implementation of] the 1992 Constitution, holds an important position in the legal system of the nation and creates a legal basis for the purpose of continued realization of all production potential, promotion of democracy and ensurance of social equity and civil rights of persons.

The Civil Code will contribute to: ensuring a stable, healthy communal life; preserving and fostering the traditions of solidarity, mutual support, fine customs and practices and the people's national cultural identity developed during the long history of building and protecting the Vietnamese homeland; the formation of a socialist oriented market driven multi-sector commodity economy under State administration; and to fulfilling the objectives of a prosperous people, a strong nation and a fair and civilized society.

PART 1

GENERAL PROVISIONS


Chapter I

BASIC PRINCIPLES

Article 1 Objects and Scope of the Civil Code

The Civil Code: protects the legal rights and interests of individuals and organizations, and the interests of the State and the public; ensures legal stability and equality in civil relations; contributes to the satisfaction of the physical and spiritual needs of the people; and promotes socio-economic development.

The Civil Code: stipulates the legal status of individuals, legal entities and other subjects and their rights and obligations in property and personal relations arising from civil intercourse; and provides legal standards for the conduct of subjects entering into civil relations.

Article 2 Principle of Respect for Interests of the State, Interests of the Public and Legal Rights and Interests of Other Persons

The establishment and exercise of civil rights and the performance of civil obligations must not infringe the interests of the State, the interests of the public or the legal rights and interests of other persons.

Article 3 Principle of Compliance with the Law

Civil rights and obligations must be established and performed in compliance with the bases, formalities and procedures stipulated in this Code and other legal regulations; where the law does not so stipulate, the parties may undertake or agree on the establishment of civil rights and obligations in a manner which is consistent with the basic principles set out in this Code.

Article 4 Principle of Respect for Good Morals and Traditions

The establishment and exercise of civil rights and the performance of civil obligations shall preserve ethnic identity and shall respect and promote the good customs, practices and traditions, solidarity, mutual support, [the tradition of] each individual for the community and the community for each individual, and the high moral values of the various ethnic groups living in the Vietnamese homeland.

Ethnic minorities shall enjoy favourable conditions in their civil intercourse in order to improve steadily their physical and spiritual life.

Assistance to elderly persons, young children and disabled persons in the exercise of civil rights and the performance of civil obligations shall be encouraged.

Article 5 Principle of Respect for and Protection of Personal Rights

Personal rights in civil relations as stipulated by law shall be respected and shall be protected by law.

Article 6 Principle of Respect for and Protection of Ownership Rights and Other Rights With Respect to Property

Ownership and other rights of subjects with respect to property, irrespective of the form of ownership, shall be respected and shall be protected by law.

The lawful exploitation of property for profit shall be encouraged.

Each individual shall respect and protect property under the ownership of the people.

Article 7 Principle of Free and Voluntary Undertaking and Agreement

The law guarantees the freedom to undertake and agree on the establishment of civil rights and obligations in accordance with law.

In civil intercourse, parties shall be entirely voluntary and no party may force upon, prohibit, coerce, intimidate or hinder any other party.

All lawful undertakings and agreements shall bind the parties.

Article 8 Principle of Equality

All parties are equal in civil relations and differences in ethnicity, gender, social status, economic position, belief, religion, education and occupation may not be used as reasons for unequal treatment.

Article 9 Principle of Goodwill and Honesty

In civil relations, the parties must act with goodwill and honesty and, in addition to being concerned with and caring about their own legal rights and interests, they must also respect and be concerned with the interests of the State, the interests of the public and the legal rights and interests of other persons and must assist each other in the exercise of civil rights and the performance of civil obligations. No party may deceive another party, and a party claiming that another party is dishonest must produce supporting evidence.

Article 10 Principle of Bearing Civil Liability

The parties must perform strictly their civil obligations and shall be liable for the failure to perform, or the incorrect performance of, any such obligations. If a party does not perform [civil obligations] voluntarily, it may be forced to do so in accordance with law.

Article 11 Principle of Conciliation

Conciliation between the parties in accordance with law is encouraged in civil relations.

No one may use, or threaten to use, force in the resolution of civil disputes.

Article 12 Protection of Civil Rights

1. All civil rights of individuals, legal entities and other subjects shall be respected and shall be protected by law.

2. When the civil rights of a subject are violated, the subject may petition a court or another authorized State body to:

(a) recognize the civil rights of the subject;

(b) order the cessation of the violating act;

(c) order a public apology or retraction;

(d) order the performance of civil obligations;

(e) order compensation for any damage; or

(f) impose a penalty in respect of the violation.

Article 13 Bases for Establishing Civil Rights and Obligations

Civil rights and obligations may be established on the basis of any of the following:

1. Legal civil transactions;

2. Decisions of a court or another authorized State body;

3. Events stipulated by law;

4. Creation of intellectual property which is the subject of intellectual property ownership rights;

5. Lawful possession of property;

6. Causing damage through acts contrary to law;

7. Unauthorized performance of acts;

8. Unlawful possession or use of, or profiting from, property; and

9. Other bases stipulated by law.

Article 14 Principle of Application of Customary Practice and Analogous Law

Matters which are not addressed by law nor agreed by the parties may be regulated by customary practice or analogous provisions of law provided that such regulation is consistent with the basic principles set out in this Code.

Article 15 Effectiveness of the Civil Code

1. The Civil Code governs civil relations established from the date on which this Code takes effect.

The Civil Code also governs civil relations established before the date on which this Code takes effect where the National Assembly passes a law or resolution which so provides.

2. The Civil Code shall be applied throughout the Socialist Republic of Vietnam.

3. The Civil Code governs civil relations entered into by overseas Vietnamese in Vietnam, except for certain civil relations which are regulated separately.

4. The Civil Code also governs civil relations involving foreign elements, except as otherwise provided by international treaties which the Socialist Republic of Vietnam has signed or acceded to.


Chapter II

INDIVIDUALS

Section 1

CIVIL LEGAL CAPACITY AND
CAPACITY FOR CIVIL ACTS OF INDIVIDUALS

Article 16 Civil Legal Capacity of Individuals

1. The civil legal capacity of an individual means the capability of the individual to have civil rights and civil obligations.

2. All individuals have equal civil legal capacity.

3. The civil legal capacity of an individual commences at birth and terminates at death.

Article 17 Content of Civil Legal Capacity of Individuals

An individual has the following civil rights and obligations:

(i) Personal rights associated, or not associated, with property;

(ii) Ownership rights, inheritance rights and other rights with respect to property;

(iii) Rights to enter into civil relations and to assume obligations arising out of such relations.

Article 18 No Restrictions on Civil Legal Capacity of Individuals

The civil legal capacity of an individual may not be restricted, except by law .

Article 19 Capacity for Civil Acts of Individuals

The capacity for civil acts of an individual shall be the capability of the individual to establish and exercise civil rights and perform civil obligations through his or her acts.

Article 20 Adults and Minors

Adults are individuals who are eighteen (18) or more years of age. Minors are individuals who are under eighteen (18) years of age.

Article 21 Capacity for Civil Acts of Adults

Other than in the circumstances stipulated in articles 24 and 25 of this Code, an adult shall have full capacity for civil acts.

Article 22 Capacity for Civil Acts of Minors Who Are between Six and Eighteen Years of Age

An individual who is between six and eighteen (18) years of age must have the consent of his or her legal representative to establish and perform civil transactions, except for civil transactions which are performed for the purpose of meeting the needs of daily life appropriate to the age group.

A person who is between fifteen (15) and eighteen (18) years of age and has sufficient property to secure the performance of obligations may establish and perform civil transactions without the consent of his or her legal representative, except as otherwise provided by law.

Article 23 Persons Lacking Capacity for Civil Acts

A child under six years of age does not have the capacity for civil acts. All civil transactions of a child under six years of age must be established and performed by his or her legal representative.

Article 24 Loss of Capacity for Civil Acts

1. Based on the opinion of an authorized examination organization, a court shall, upon the petition of an individual with related rights or interests, issue a decision to declare a loss of capacity for civil acts in respect of an individual who is incapable of being aware of, or controlling, his or her own acts due to any mental or other illness.

Where the basis upon which an individual has been declared as losing the capacity for civil acts no longer exists, the court shall, upon the petition of such person or an individual with related rights or interests, issue a decision to revoke the decision declaring the loss of capacity for civil acts.

2. All civil transactions of an individual who has lost the capacity for civil acts shall be established and performed by his or her legal representative.

Article 25 Restricted Capacity for Civil Acts

1. Upon the petition of an individual with related rights or interests, or of a relevant body or organization, a court may issue a decision to declare an individual whose addiction to drugs or other stimulants has ruined the property of his or her family as having restricted capacity for civil acts.

2. The legal representative of an individual with restricted capacity for civil acts and the scope of such representation shall be determined by a court. The consent of the legal representative must be obtained in respect of all civil transactions relating to the property of an individual with restricted capacity for civil acts, except for small transactions to meet the needs of daily life.

3. Where the basis upon which an individual has been declared as having restricted capacity for civil acts no longer exists, the court, upon the petition of such person, an individual with related rights or interests, or a relevant body or organization, shall issue a decision to revoke the decision declaring restricted capacity for civil acts.

Section 2

PERSONAL RIGHTS

Article 26 Personal Rights

Personal rights stipulated in this Code are civil rights personal to each individual. They may not be transferred to other persons, except where the law otherwise provides.

A person may not use his or her personal rights to infringe the interests of the State, the interests of the public or the legal rights and interests of other persons.

All persons must respect the personal rights of other persons.

Article 27 Protection of Personal Rights

When the personal rights of an individual are infringed, such individual is entitled to:

1. Demand, or petition a court to order, the infringing party to terminate the infringing act and to issue a public apology or retraction;

2. Make a retraction in the mass media;

3. Demand, or petition a court to order, the infringing party to compensate for any physical or spiritual damage.

Article 28 Rights With Respect to Surnames and Given Names

1. Each individual may have a surname and given name. The surname and given name of an individual shall be stated in his or her birth certificate.

2. An individual shall establish and exercise civil rights and perform civil obligations in his or her surname and given name as recognized by the authorized State body.

3. The use of aliases and secret names must not cause damage to the legal rights or interests of other persons.

Article 29 Right to Change Surnames and Given Names

1. An individual may request the authorized State body to recognize a change of surname or given name in any of the following cases:

(a) Where that individual has a surname or given name which causes confusion or has an [adverse] influence on his or her family's ties, or his or her honour, legal rights or interests;

(b) Where the adoptive father or mother of the individual wishes to change the name of their adopted child; or if the individual ceases to be an adopted child and the individual or his or her biological father or mother wishes to reclaim the surname or given name which was given by his or her biological father or mother;

(c) Where the father or mother of the individual has been identified and they wish, or the individual wishes, to change the name of the individual;

(d) Where the surname of the individual is to be changed from that of the father to that of the mother, or vice versa;

(e) Where the individual was lost in his or her childhood and his or her surname and given name are to be changed upon discovering the origin of his or her bloodline; or

(f) Other cases as stipulated by law.

2. The changing of the surname or given name of an individual who is nine or more years of age shall be subject to the consent of such individual.

3. The changing of a surname or given name shall not change or terminate the civil rights and obligations which were established in the former surname or given name.

Article 30 Right to Identification of Ethnicity

An individual shall have his or her ethnicity identified at birth in accordance with the ethnicity of his or her mother and father. Where the father and mother belong to two different ethnic groups, the ethnicity of the individual shall be that of his or her father or mother in accordance with the relevant customary practice, or as mutually agreed between the father and mother.

An adult may request the authorized State body to re-determine his or her ethnicity in any of the following cases:

(a) In accordance with the ethnicity of the father or the mother where they belong to two different ethnic groups;

(b) In accordance with the ethnicity of the biological father or mother in the case where the individual is adopted by an individual belonging to another ethnicity.

Article 31 Rights of an Individual With Respect to His or Her Photograph

1. An individual has rights with respect to his or her photograph.

2. The photograph of an individual must not be used without the consent of the individual or, where the person has died or lost the capacity for civil acts, the consent of his or her relatives, except where the law otherwise provides.

Article 32 Right to Safety of Life, Health and Physical Body

1. Individuals are entitled to the safety of their life, health and physical body.

2. An individual may not harm the life, health or physical body of another person.

3. When an individual is sick or has had an accident resulting in his or her life being threatened, an individual who discovers such situation must take such individual to a medical facility. State, collective and private medical facilities may not refuse to provide treatment and must use all available means and capabilities for any treatment.

4. The consent of an individual is required for the application of new medical cures to that individual and the anaesthetization, surgery, amputation and transplant of his or her bodily organs. If the individual is a minor, has lost the capacity for civil acts or is unconscious, the consent of the father, mother, guardian or relatives of the individual must be obtained. Where there is a threat to the life of a patient and the consent of the father, mother, guardian or relative of such person cannot be obtained in time, a decision of the head of the medical facility is required.

5. Post-mortem operations may be performed only if the deceased person has clearly expressed consent before death. In the absence of such consent, the consent of the father, mother, guardian or relative is required. Post-mortem operations may also be performed pursuant to the decision of an authorized State body.

Article 33 Right to Protection of Honour, Dignity and Reputation

1. The honour, dignity and reputation of an individual shall be respected and shall be protected by law.

2. No one may damage the honour, dignity or reputation of another person.

Article 34 Right to Privacy

1. The right to privacy of an individual shall be respected and shall be protected by law.

2. The collection and publication of information and materials relating to the private life of an individual must have the consent of that individual or, where that individual has died or lost the capacity for civil acts, the consent of his or her relatives, except in the case where the collection and publication of information and materials is required pursuant to a decision of an authorized State body. The collection and publication must then be performed in accordance with law.

3. No one may, of his own volition, open, seize or destroy letters or telegrams, intercept telephone lines, or commit other acts for the purpose of preventing or hindering the communication of another person.

Inspection of the letters, telegrams or telephone of an individual may only be conducted in cases stipulated by law subject to an order issued by an authorized State body.

Article 35 Right to Marry

Marriage shall be based upon the principle of one wife and one husband.

Males and females who satisfy fully the conditions for marriage as stipulated by the law on marriage and family may marry freely provided that no party may coerce or deceive the other party [in relation to the marriage]. No one may interfere with a voluntary or progressive marriage, or coerce another into marriage.

The freedom to marry of individuals belonging to different ethnic or religious groups, and of an individual who belongs to a religion and another who does not, shall be respected and shall be protected by law.

Article 36 Right to Equality between Husband and Wife

Husbands and wives are equal and have equal rights and obligations with respect to all aspects of the family and in civil intercourse and shall build together a comfortable, solid, harmonious and happy family.

Article 37 Rights of Family Members to Enjoy Each Other's Care

Members of a family are entitled to enjoy mutual care and assistance in accordance with the good moral traditions of the Vietnamese family.

Children and grandchildren who are minors are entitled to enjoy the care of, and upbringing by, their parents and grandparents. Children and grandchildren must respect, care for and support their parents and grandparents.

Article 38 Right to Divorce

A wife or husband or both may, for legitimate reasons, petition a court to terminate the marital relationship.

Article 39 Right to Acknowledge or Not Acknowledge a Father, Mother or Child

An individual who is not acknowledged as the father, mother or child of another individual may request the authorized State body to identify him or her as the father, mother or child of that individual in accordance with the law on marriage and family and the law on civil status.

An individual who is acknowledged as the father, mother or child of another individual may request the authorized State body to identify him or her as not being the father, mother or child of that individual in accordance with the law on marriage and family and the law on civil status.

Article 40 Right to Adopt a Child and Be Adopted

The rights of an individual to adopt a child or to be adopted shall be recognized and shall be protected by law.

The process of adopting a child or being adopted shall take place in accordance with the conditions, formalities and procedures stipulated in the law on marriage and family and the law on civil status.

Article 41 Rights With Respect to Citizenship

An individual has the right to citizenship.

The recognition of, or any changes to, Vietnamese citizenship shall be implemented in accordance with the conditions, formalities and procedures stipulated by the law on citizenship.

Article 42 Right to Safety of Place of Residence

An individual has the right not to have his or her place of residence intruded upon.

The entry into the place of residence of an individual requires the consent of that individual.

No one may enter the place of residence of an individual contrary to the wishes of that individual. The execution of a search of the place of residence of an individual may only be performed in cases stipulated by law subject to an order issued by the authorized State body. The search must be conducted strictly in accordance with the formalities and procedures stipulated by law.

Article 43 Right to Freedom of Belief and Religion

1. An individual is entitled to freedom of belief and religion, and to follow or not to follow a religion.

2. No one may infringe the right to freedom of belief and religion or take advantage of beliefs or religion in order to infringe the interests of the State, the interests of the public or the legal rights or interests of other persons.

Article 44 Right to Freedom of Movement and Residence

1. An individual is entitled to freedom of movement and residence as stipulated by law. The movement and choice of a place of residence shall be determined by the individual as appropriate to his or her needs, capabilities and situation.

2. The freedom of movement and residence of an individual may only be restricted pursuant to a decision of the authorized State body and in accordance with the formalities and procedures stipulated by law.

Article 45 Right to Work

Individuals are entitled to the right to work.

Each individual has the right to work and the freedom to choose a job or occupation without being discriminated against on the basis of gender, ethnicity, social status, belief or religion.

Article 46 Right to Freedom To Do Business

The right to freedom to do business of an individual shall be respected and shall be protected by law.

An individual is entitled to choose a form, place and type of business, to establish a business, to enter into contracts freely and to hire labour, and has other rights stipulated by law.

Article 47 Right to Freedom of Creation

1. An individual is entitled freely to create, engage in scientific and technical research, discover, invent, make technical innovations and improvements and rationalize production; and is entitled to compose and comment on literature and arts and to participate in other cultural activities in order to realize fully his or her creative talents in accordance with his or her capabilities and aptitude.

2. The right to freedom of creation shall be respected and shall be protected by law. No one may hinder or restrict the right to freedom of creation of an individual.

3. The State recognizes and protects ownership rights with respect to intellectual property.

Section 4
CIVIL STATUS

Article 54 Registration of Civil Status

1. Registration of civil status means certification by the authorized State body of an event of birth, death, marriage, divorce, guardianship, adoption, change in surname, given name or citizenship; identification of ethnicity; amendment of civil status or other event in accordance with the law on civil status.

2. Registration of civil status is the right and obligation of each individual.

3. Registration of civil status shall be effected in accordance with the formalities and procedures stipulated by the law on civil status.

Chapter III

LEGAL ENTITIES

Section 1

GENERAL PROVISIONS ON LEGAL ENTITIES

Article 94 Legal Entities

An organization shall be recognized as a legal entity if it satisfies all of the following conditions:

1. Being established, permitted to be established, registered or recognized by the authorized State authority;

2. Having an identifiable structure;

3. Having property independent from other individuals and organizations and discharging liability by recourse to such property; and

4. Independently participating in legal relations in its own name.

Article 95 Establishment of Legal Entities

A legal entity may be established on the initiative of an individual, economic organization, political organization, socio-political organization, social organization, socio-professional organization, social fund or charitable fund or in accordance with a decision of the authorized State body.

The establishment of a legal entity must comply with the procedures stipulated by law.

Article 96 Civil Legal Capacity of Legal Entities

1. The civil legal capacity of a legal entity is the capability of that entity to have civil rights and obligations which are consistent with its operational objectives.

A legal entity must operate in accordance with its objectives. In order to change its operational objectives, it must apply for permission and register with the authorized State body.

Where a legal entity is established pursuant to a decision of the authorized State body, any change in its operational objectives must comply with the decision of such authority.

2. The civil legal capacity of a legal entity arises from the time at which it is established, or permitted to be established, by the authorized State body. If the legal entity is required to register its operation, the civil legal capacity of the legal entity arises from the time of registration.

3. In civil relations, the legal or authorized representative of a legal entity shall act in the name of the entity.

4. The civil legal capacity of a legal entity terminates from the time when the entity terminates.

Article 97 Names of Legal Entities

1. A legal entity must have its own name in the Vietnamese language, which shall clearly reflect the organizational form of the legal entity and distinguish it from other legal entities in the same field of activity.

2. A legal entity must use its own name in civil transactions.

3. The name of a legal entity shall be recognized and shall be protected by law.

Article 98 Head Offices of Legal Entities

The head office of a legal entity is the place where the management body of the entity is located.

A legal entity may choose another location to serve as a liaison address.

Article 99 Charters of Legal Entities

1. Where the law provides that a legal entity must have a charter, the charter of the entity must be adopted by its founding members or a general meeting of its members. If the legal entity is established in accordance with a decision of the authorized State body, the charter of the entity shall be approved by the State body that established the entity.

2. The charter of a legal entity shall include the following principal contents:

(a) Name of entity;

(b) Purpose and scope of operation;

(c) Head office;

(d) Legal capital , if any;

(e) Organizational structure, procedures for appointments and dismissals, and duties and powers of the management body and other bodies;

(f) Rights and obligations of members;

(g) Procedures for amending and supplementing the charter; and

(h) Conditions for winding up the entity.

3. Amendments and supplements to the charter of the legal entity must be approved and registered.

Article 100 Representative Offices and Branches of Legal Entities

1. A legal entity may establish representative offices and branches at places other than the place of the head office of the legal entity.

2. A representative office is a dependent unit of a legal entity and must, according to its authorization, represent and protect the interests of the legal entity.

3. A branch is a dependent unit of a legal entity and must perform all or part of the functions of the legal entity, including its authorized representative functions.

4. Representative offices and branches are not legal entities. The head of the representative office or branch shall perform his or her duties as authorized by the legal entity.

5. A legal entity has the civil rights and obligations which arise from transactions established and performed by its representative offices and branches.

Article 101 Management Bodies of Legal Entities

1. A legal entity must have a management body.

2. The organization, duties and powers of the management body of a legal entity shall be stipulated in the charter of the legal entity or in the decision establishing the legal entity.

Article 102 Representatives of Legal Entities

1. The representative of a legal entity may be a legal representative or an authorized representative.

2. The legal representative of a legal entity shall be stated in the decision establishing the legal entity or in its charter.

3. The legal representative of a legal entity may authorize another person to perform the representative duties on his or her behalf.

Article 103 Civil Liability of Legal Entities

1. A legal entity has civil liability with respect to the civil rights and obligations established and performed in the name of the legal entity by its representatives.

2. A legal entity shall discharge its civil liability by recourse to its property but shall not have civil liability with respect to the civil obligations established and performed by a member other than in the name of the legal entity.

3. A member of the legal entity shall not have civil liability with respect to the civil obligations of the legal entity.

Article 104 Consolidation of Legal Entities

1. Legal entities of the same type may be consolidated to form a new legal entity pursuant to a decision of the authorized State body or as agreed by such legal entities.

The consolidation of legal entities must comply with the procedures for establishing and registering legal entities stipulated by law.

2. After consolidation, the former legal entities shall be wound up and their civil rights and obligations transferred to the new legal entity.

Article 105 Merger of Legal Entities

1. A legal entity may be merged (hereinafter referred to as the merged legal entity) into another legal entity of the same type (hereinafter referred to as the merging legal entity) pursuant to a decision of the authorized State body or as agreed by such legal entities.

2. After merger, the merged legal entity shall be wound up and the civil rights and obligations of such legal entity shall be transferred to the merging legal entity.

Article 106 Division and Demerger of Legal Entities

1. A legal entity may be divided or demerged into a number of legal entities pursuant to a decision of the authorized State body or a decision of the competent body of the legal entity as stipulated in its charter.

2. After division, the divided legal entity shall be wound up and its civil rights and obligations transferred to the new legal entities in accordance with the decision dividing the legal entity and in a manner consistent with the operational objectives of the legal entity.

3. After demerger, the legal entities shall perform their rights and obligations in a manner consistent with their operational objectives.

Article 107 Dissolution of Legal Entities

1. A legal entity may be dissolved in any of the following cases:

(a) Pursuant to a decision of the authorized State body;

(b) Pursuant to a decision of the competent body of the legal entity as stipulated in its charter; or

(c) Upon expiry of its term of operation as stipulated in the charter or in the decision of the authorized State body establishing the legal entity.

2. Before dissolution, a legal entity must perform its obligations with respect to its property and must have approval from the authorized State body.

Article 108 Winding up of Legal Entities

1. A legal entity is wound up in any of the following cases:

(a) Consolidation, merger or division of a legal entity in accordance with articles 104, 105 and 106 of this Code;

(b) Dissolution in accordance with article 107 of this Code; or

(c) Declaration of bankruptcy in accordance with the law on bankruptcy.

2. A legal entity is wound up from the time at which its name is removed from the legal entity registry.

Article 109 Re-establishment of Legal Entities

1. A legal entity which has been dissolved or declared bankrupt may be re-established pursuant to a decision of the authorized State body.

2. After re-establishment, the legal entity shall continue to exercise its rights and perform its obligations.


Section 2

TYPES OF LEGAL ENTITIES

Article 110 Types of Legal Entities

1. Legal entities comprise the following types:

(a) State bodies and units of the armed forces;

(b) Political organizations and socio-political organizations;

(c) Economic organizations;

(d) Social organizations and socio-professional organizations;

(e) Social funds and charitable funds; and

(f) Other organizations which satisfy all conditions stipulated in article 94 of this Code.

2. The organizational and operational rules of all types of legal entities shall be stipulated by law depending on the operational objectives of each type of legal entity.

Article 111 State Bodies and Units of the Armed Forces

1. A State body or a unit of the armed forces to which the State has allocated property in order to enable it to perform the functions of State administration, social and cultural activities or other non-profitable functions, is a legal entity when participating in civil relations.

2. A State body or a unit of the armed forces has civil liability with respect to the performance of its functions and duties by recourse to the funds allocated to it from the State budget.

3. Where a State body or a unit of the armed forces engages in an activity generating revenue in accordance with law, it has civil liability with respect to such activity by recourse to the property obtained from such activity.

Article 112 Political Organizations and Socio-Political Organizations

1. A political organization or socio-political organization which manages, uses or disposes of property under its ownership for the purpose of achieving political or social objectives in accordance with its charter is a legal entity when participating in civil relations.

2. The property of a political organization or socio-political organization may not be distributed to its members.

3. A political organization or socio-political organization has civil liability by recourse to its property, except such property as the law stipulates may not be used for discharging civil liability.

Article 113 Economic Organizations

1. State owned enterprises, co-operatives, limited liability companies, shareholding companies, enterprises with foreign owned capital and other economic organizations satisfying all conditions stipulated in article 94 of this Code are legal entities.

2. An economic organization must have a charter approved by the authorized State body.

3. An economic organization has civil liability by recourse to its property.

Article 114 Social Organizations and Socio-Professional Organizations

1. A social organization or socio-professional organization permitted to be established, having its charter approved by the authorized State body and whose members are individuals or organizations voluntarily contributing property or membership fees for the purpose of supporting the common needs of the members and objectives of the organization , is a legal entity when participating in civil relations.

2. A social organization or socio-professional organization has civil liability by recourse to its property.

3. A member does not have civil liability with respect to the performance of the civil obligations of the organization by recourse to his or her own property.

4. Where the social organization or socio-professional organization is wound up , its property shall not be distributed to its members but shall be settled in accordance with law.

Article 115 Social Funds and Charitable Funds

1. A social fund or charitable fund permitted to be established, having its charter approved by the authorized State body and operating for the purpose of encouraging the development of culture, science and charity and other non-profitable social and humanitarian purposes, is a legal entity when participating in civil relations.

2. The property of a social fund or charitable fund shall be managed, used and disposed of in accordance with law and in a manner consistent with the operational objectives of the fund as stipulated in its charter.

3. A social fund or charitable fund is only permitted to engage in the activities stipulated in its charter approved by the authorized State body to the extent of its property, and has civil liability by recourse to such property.

4. An organization which establishes a social fund or charitable fund does not have civil liability with respect to its activities by recourse to its property, and may not distribute its property during the course of its operations.

Where a social fund or charitable fund is wound up, its property may not be distributed to the founding members but must be settled in accordance with law.


Chapter IV

FAMILY HOUSEHOLDS AND CO-OPERATIVE GROUPS

Section 1

FAMILY HOUSEHOLDS

Article 116 Family Households

1. Family households, the members of which have household property used in common economic activities involving land use, agriculture, forestry and fishery or several other economic and production activities stipulated by law, are subjects in civil relations.

2. A family household to which land has been allocated for residential purposes is also a subject in civil relations with respect to such land.

Article 117 Representatives of Family Households

1. The head of the household is the representative of the family household in civil transactions in respect of the common interests of the household. The father, mother or another member who has attained adulthood may be the head of the household.

The head of a household may authorize another member who has attained adulthood to act as the representative of the household in civil transactions.

2. Civil transactions established and performed in the common interests of the household by the representative of a family household shall bind the entire family household.

Article 118 Household Property of Family Households

The household property of a family household comprises property which the members of the household create together or which is given to the whole family household, and other property which the members agree to be the household property of the household.
The legal land use rights of a family household are also household property.

Article 119 Civil Liability of Family Households

1. A family household has civil liability with respect to the exercise of civil rights and performance of civil obligations established and performed in the name of the family household by its representative.

2. A family household has civil liability by recourse to its household property. If the household property is insufficient to discharge the common obligations of the household, the members are jointly liable by recourse to their own separate properties.


Section 2

CO-OPERATIVE GROUPS

Article 120 Co-operative Groups

1. A co-operative group formed on the basis of a co-operation contract certified by the people's committee of the village, ward or town and entered into by three or more individuals who jointly contribute property and efforts in order to perform certain tasks, to enjoy benefits mutually and to bear liabilities jointly, is a subject in civil relations.

A co-operative group which satisfies all conditions to become a legal entity in accordance with the provisions of the law may register its activities as a legal entity with the authorized State body.

2. A co-operation contract shall have the following principal contents:

(a) The purpose and term of the co-operation contract;

(b) The surname, given name and place of residence of the head and the members of the group;

(c) The amounts of property contributed, if any, and the methods for distributing the benefits and income amongst the group members;

(d) The rights, obligations and liabilities of the head and the members of the group;

(e) The conditions for admitting and withdrawing members of the group;

(f) The conditions for winding up the group; and

(g) Other terms.

Article 121 Members of Co-operative Groups

An individual who is eighteen (18) or more years of age and who has full capacity for civil acts may be a member of a co-operative group.

A co-operative group is entitled to enter into labour contracts with non-members for the purpose of performance of certain tasks.

Article 122 Representatives of Co-operative Groups

1. The representative of a co-operative group in civil transactions is the head of the group as appointed by its members.

The head of a co-operative group may authorize a member to perform certain tasks necessary for the group.

2. Civil transactions established and performed by the representative of a co-operative group for the purpose of the operation of the group and in accordance with the decision of a majority of the group members shall bind the entire group.

Article 123 Property of Co-operative Groups

1. Property which has been contributed or jointly created by group members and property which has been given to the whole group is the group property of the co-operative group.

2. The members of a group shall manage and use the group property as agreed.

3. The disposal of any group property which is a means of production requires the consent of all members. With respect to [the disposal of] other types of group property, the consent of a majority of the members is required.

Article 124 Obligations of Group Members

A group member is obliged to:

1. Co-operate in accordance with the principles of equality, mutual benefit, mutual assistance and ensuring the common interests of the group; and

2. Compensate the group for any damage he or she is at fault for causing.

Article 125 Rights of Group Members

A group member is entitled to:

1. Receive benefits and income from the activities of the group as agreed; and

2. Participate in the decision-making process with respect to issues relating to the activities of the group, and check the activities of the group.

Article 126 Civil Liability of Co-operative Groups

1. A co-operative group has civil liability with respect to the performance of civil obligations established and performed in its name by its representative.

2. A co-operative group has civil liability by recourse to its group property. If the group property is insufficient for the performance of the joint obligations of the group, the members are jointly liable by recourse to their own property in proportion to their respective contributions of such property.

Article 127 Admission of Group Members

A co-operative group may only admit a member with the consent of the majority of the members, unless otherwise agreed.

Article 128 Withdrawal from Co-operative Groups

1. A member is entitled to withdraw from a co-operative group on the terms and conditions agreed.

2. A member withdrawing from a co-operative group may demand the return of property which he or she has contributed to the group and to receive his or her share of the group property and must perform his or her obligations to the group as agreed. If the return of his or her property in kind affects [adversely] the continuation of the operations of the group, the value of such property shall be paid instead.

Article 129 Winding Up of Co-operative Groups

1. A co-operative group shall be wound up in any of the following cases:

(a) Upon the expiry of the term stated in the co-operation contract;

(b) The objective of the co-operation has been achieved; or

(c) The members agree to wind up the group.

In cases of winding up, the co-operative group must so notify the people's committee of the village, ward or town which certified the co-operation contract.

2. A co-operative group may be wound up pursuant to a decision of the authorized State body in the circumstances stipulated by law.

3. Upon winding up, a co-operative group must settle its debts. If the group property is insufficient to pay the debts, the members' own separate property shall be used for settlement in accordance with article 126 of this Code.

Where the debts have been settled and group property still remains, such property shall be divided among the members in proportion to their respective contributions, unless otherwise agreed.


Chapter V

CIVIL TRANSACTIONS

Article 130 Civil Transactions

A civil transaction is a unilateral legal act or a contract entered into between individuals, legal entities or other subjects, which gives rise to, changes or terminates civil rights and civil obligations.

Article 131 Conditions for Effective Civil Transactions

A civil transaction is effective when it satisfies all of the following conditions:

1. Persons participating in the transaction have the capacity for civil acts;

2. The objective and subject of the transaction are not contrary to the law or social morals;

3. Persons participating in the transaction act entirely voluntarily; and

4. The transaction conforms with the formalities prescribed by law.

Article 132 Objectives of Civil Transactions

The objectives of a civil transaction are the lawful interests which the parties wish to achieve at the time when they enter into such transaction.

Article 133 Forms of Civil Transactions

Civil transactions may be created verbally, in writing or through specific acts.

Where the law stipulates that civil transactions must be in writing, notarized by a State notary public, certified, registered or approved, such stipulations must be complied with.

Article 134 Conditional Civil Transactions

Where the parties have an agreement on the conditions which give rise to or terminate a civil transaction, such transaction shall arise or be terminated upon the occurrence of such conditions.

Article 135 Interpretation of Civil Transactions

1. The interpretation of a civil transaction shall be based on the real intention of the parties at the time when the transaction is entered into and on the objectives of such transaction.

2. Where a civil transaction may be understood in different ways, it shall be interpreted in a manner consistent with the objectives of the transaction and the customary practice of the place where the transaction is entered into. If a party in an economically superior position introduces into a civil transaction matters which adversely affect a party in an economically inferior position, then such transaction shall be interpreted in a manner which favours the party in the inferior economic position.

Article 136 Invalid Civil Transactions

Civil transactions failing to satisfy any condition stipulated in article 131 of this Code shall be invalid.

Article 137 Invalidity of Civil Transactions Due to Violation of Legal Prohibitions or Due to Contravention of Social Morals

1. Civil transactions which violate legal prohibitions or contravene social morals shall be invalid and the transacted property and the benefits and income derived therefrom shall be confiscated and paid into the State budget .

2. Where all parties are at fault for causing damage, each party shall be liable for its portion of the damage. If only one party is at fault, such party must compensate the others for the damage.

Article 138 Invalidity of Civil Transactions Due to Falsification

Where parties enter into a civil transaction falsely for the purpose of concealing another transaction, such false transaction shall be invalid, however the transaction which is concealed shall still be valid, except where such transaction is also invalid under the provisions of this Code. A transaction which is not entered into for the purpose of creating rights and obligations of the parties shall also be considered invalid.

Article 139 Invalidity of Civil Transactions Due to Non-Compliance with Prescribed Formalities

Where the law stipulates that a civil transaction shall be invalid if not created in writing, notarized by a State notary public, certified, registered or approved, a court or another authorized State body shall, upon the petition of one party or all parties, order the parties to comply with the prescribed formalities within a certain period of time. If such formalities are not complied with within such period of time, the transaction shall be [deemed] invalid. The party at fault for making the transaction invalid must compensate for any damage.

Article 140 Invalidity of Civil Transactions Entered into and Performed by Minors or Persons Who Have Lost Their Capacity for Civil Acts or Have Restricted Capacity for Civil Acts

1. Where a civil transaction is entered into and performed by a minor, or a person who has lost his or her capacity for civil acts or has a restricted capacity for civil acts, then, if the law stipulates that such transaction must be entered into and performed by the representative of such person, a court shall, upon the petition of the representative of such person, declare such transaction invalid.

2. Where a party to a civil transaction knows that the other party to the transaction is a minor, or a person who has lost his or her capacity for civil acts or has a restricted capacity for civil acts, but proceeds with such transaction, then, upon the request of the representative of the latter party, the former party must compensate the latter party for any damage.

Article 141 Invalidity of Civil Transactions Due to Misunderstandings

1. Where a party has entered into a transaction on the basis of a misunderstanding of a major part of the transaction, it may request the other party to modify such transaction. If the other party does not accept such request, the former party may petition a court to declare the transaction invalid.

2. Where a civil transaction is invalid due to a misunderstanding, the party at fault for causing such misunderstanding must compensate for any damage.

Article 142 Invalidity of Civil Transactions Due to Deception or Threat

1. Where a party enters into a civil transaction as a result of a deception or threat, it may petition a court to declare such transaction invalid.

Deception in a civil transaction means an intentional act of a party for the purpose of misleading the other party as to any parties to, or the subject matter or content of, the transaction, which has caused the other party to enter into the transaction.

A threat in a civil transaction means an intentional act of a party which intimidates the other party to enter into the transaction in order to avoid damage to its life, health, honour, reputation, dignity or property, or that of its relatives.

2. A party which deceives or threatens another party must compensate that other party for any damage.

The transacted property and the benefits and income of the party deceiving or threatening shall be confiscated and paid into the State budget.

Article 143 Invalidity of Civil Transactions Entered into by Persons Incapable of Being Aware of Their Acts

A person who has the capacity for civil acts but has entered into a civil transaction at a time when he or she was incapable of being aware of, or controlling, his or her acts may petition a court to declare such civil transaction invalid.

A person who knows, or should have known, that he or she is entering into a civil transaction with an individual who is incapable of being aware of, or controlling, his or her acts but, nevertheless, enters into such transaction, must compensate for any damage.

Article 144 Partially Invalid Civil Transactions

A civil transaction is partially invalid when a part of it is invalid and the remaining parts are valid .

Article 145 Time-Limit for Petitioning a Court to Declare a Civil Transaction Invalid

1. The time-limit within which a petition may be made to a court to declare a civil transaction invalid under articles l40, 141, 142 or 143 of this Code is one year from the date on which the civil transaction is entered into.

2. There is no restriction on the time-limit within which a petition may be made to a court to declare a civil transaction invalid under articles 137, 138 or 139 of this Code.

Article 146 Legal Effects of Invalidity of Civil Transactions

1. An invalid civil transaction shall not, from the time it is entered into, bind the parties.

2. Where a civil transaction is invalid, the parties shall restore [everything] to its original state and shall return to each other what they have received. If restitution cannot be made in kind, it may be paid in money. The party at fault must compensate for any damage.

Depending on the particular circumstances and taking into account the nature of the invalid transaction, the transacted property and any benefits and income derived therefrom may be confiscated in accordance with law.
Article 147 Protection of Interests of Bona Fide Third Parties With Respect to Invalid Civil Transactions

Where a civil transaction is invalid but the transacted property has already been transferred to a bona fide third party through another transaction, then the latter transaction is valid. If the transacted property is confiscated and paid into the State budget or is returned to the lawful owner of the property, the third party may request the person with whom he or she transacted to compensate for any damage.


Chapter VI

REPRESENTATION

Article 148 Representation

1. Representation refers to an individual (hereinafter referred to as a representative) acting in the name of another person (hereinafter referred to as a principal) in order to enter into and perform a civil transaction within the [authorized] scope of representation.

2. Individuals, legal entities and other subjects may enter into and perform civil transactions through a representative. An individual may not allow another person to represent him or her if the law stipulates that the individual must personally enter into and perform the transaction.

3. The representation relationship shall be established in accordance with law or in accordance with an authorization.

4. A principal has the civil rights and obligations arising from the civil transactions entered into and performed by his or her representative within the authorized scope of representation.

Article 149 Legal Representation

Legal representation means representation which is required by law or by a decision of the authorized State body.

Article 150 Legal Representatives

A legal representative may be:

1. The father or mother with respect to a minor;

2. The guardian with respect to a ward;

3. The person appointed by a court with respect to a person having a restricted capacity for civil acts;

4. The head of a legal entity under the charter of the legal entity or under a decision of the authorized State body;

5. The head of a family household with respect to the family household;

6. The head of a co-operative group with respect to the co-operative group; and

7. Other persons in accordance with law.

Article 151 Authorized Representation

1. Authorized representation means representation which is authorized [by and] between the representative and the principal.

2. An authorization must be made in writing.

Article 152 Authorized Representatives

1. An individual, or the legal representative of a legal entity, a family household or a co-operative group, may authorize another person, in accordance with the provisions of this Code, to enter into and perform a civil transaction in his or her name.

2. A minor, or a person who has lost his or her capacity for civil acts or who has a restricted capacity for civil acts, may not act as an authorized representative.

Article 153 Scope of Representation

1. A legal representative may enter into and perform all civil transactions in the interests of the principal, unless the law otherwise provides or the authorized State body otherwise decides.

2. The scope of representation of an authorized representative shall be specified in a power of attorney.

3. A representative may only perform civil transactions within his or her scope of representation.

4. A representative must inform the parties to a civil transaction of his or her scope of representation.

5. A representative may not perform civil transactions with himself or herself or with a third party whom the representative also represents.

PART 2

PROPERTY AND OWNERSHIP RIGHTS


Chapter I

GENERAL PROVISIONS

Article 172 Property

Property comprises tangible objects, money or papers which can be valued in terms of money and property rights .

Article 173 Ownership Rights

Ownership rights comprise the rights of an owner to possess, use and dispose of property in accordance with law.

An owner is an individual, legal entity or other subject having all these three rights with respect to property.

Article 174 Registration of Property Ownership Rights

Property ownership rights must be registered as required by law.

Article 175 Protection of Ownership Rights

1. The ownership rights of an individual, legal entity or other subject shall be recognized and shall be protected by law.

2. No one may illegally deprive another person of his or her property or restrict the ownership rights of another person with respect to his or her property.

An owner is entitled to protect his or her ownership rights himself or herself and to stop any person who infringes his or her ownership rights and to search for, and to reclaim, the property which has been possessed, used or disposed of unlawfully by another person.

3. In cases of extreme necessity for reasons of national defence and security or the national interest, the State may compulsorily acquire, or requisition with compensation , the property of an individual, legal entity or other subject in accordance with law.

Article 176 Bases for Creating Ownership Rights

Ownership rights are created with respect to property in any of the following cases:

1. Through labour or legal production and business activities;

2. Transfer of ownership rights pursuant to an agreement or pursuant to a decision of the authorized State body;

3. Receipt of benefits and income;

4. Formation of new objects through merging, mixing or processing;

5. Inheritance of property;

6. Acquisition, in accordance with law, of objects which have been abandoned, lost, mislaid or buried, of stray poultry or livestock, or of underwater creatures ;

7. Unlawful, but bona fide, possession of property in a continuous and overt manner as a result of the expiry of the limitation period stipulated in paragraph 1 of article 255 of this Code; and

8. Other circumstances stipulated by law.

Article 177 Bases for Terminating Ownership Rights

Ownership rights terminate in any of the following cases:

1. The owner transfers his or her ownership rights to another person;

2. The owner renounces his or her ownership rights;

3. The property is destroyed;

4. The property is disposed of in order to perform the obligations of the owner;

5. The property is requisitioned;

6. The property is confiscated;

7. Where other persons have established ownership rights under the conditions stipulated by law with respect to objects which have been lost or mislaid, to stray poultry or livestock, or to underwater creatures; where other persons have established ownership rights with respect to property in accordance with paragraph 1 of article 255 of this Code; or

8. Other bases stipulated by law.

Article 178 Exercise of Ownership Rights

An owner may perform all acts with respect to his or her property of his own volition provided that he or she shall not cause damage to, nor affect, the interests of the State or the public or the legal rights or interests of other persons.

Article 179 Forms of Ownership

On the basis of the regime of entire people's ownership, collective ownership and private ownership, the State recognizes and protects all forms of ownership, being the entire people's ownership, ownership by political organizations or socio-political organizations, collective ownership, private ownership, ownership by social organizations or socio-professional organizations, mixed ownership and multiple ownership.

Article 180 Rights of Persons Not Owning Property

A person who does not own [particular] property may, nevertheless, possess, use or dispose of the property pursuant to an agreement with the owner of such property or in accordance with law.


Chapter II

TYPES OF PROPERTY

Article 181 Immoveable Property and Moveable Property

1. Immoveable property is property which cannot be moved or removed, comprising:

(a) Land;

(b) Residential houses and structures attached to land, including property attached to such residential houses and structures;

(c) Other property attached to land; and

(d) Other property stipulated by law.

2. Moveable property is property which is not immoveable property.

Article 182 Benefits and Income

1. Benefits are the natural products of property.

2. Income is the gain derived from the exploitation of property.

Article 183 Primary Objects and Auxiliary Objects

1. A primary object is an independent object which can be exploited to carry out its function.

2. An auxiliary object is an object which directly supports the exploitation of the utility of a primary object and which is a part of the primary object but may be separated from it.

Upon the performance of an obligation to transfer a primary object, any auxiliary objects must also be transferred, unless otherwise agreed.

Article 184 Divisible Objects and Indivisible Objects

1. A divisible object is an object which, after being divided, retains its nature and utility functions.

2. An indivisible object is an object which, after being divided, cannot retain its original nature and utility functions.

When it is necessary to divide an indivisible object, it must be valued in terms of money for the purpose of division.

Article 185 Consumable Objects and Non-Consumable Objects

1. A consumable object is an object which, after having been used once, loses, or is not capable of retaining, its original appearance, nature and utility functions.

A consumable object may not be the object of a lease contract or a bailment contract.

2. A non-consumable object is an object which, after having been used many times, substantially retains its original appearance, nature and utility functions.

Article 186 Generic Objects and Distinctive Objects

1. Generic objects are objects which have the same appearance, nature and utility function and which can be defined by units of measure.

Generic objects which have the same quality are interchangeable.

2. A distinctive object is an object which is distinguishable from other objects by its own characteristic markings, appearance, colour, material, nature or position.

An obligation to transfer a distinctive object can only be discharged by transferring that particular distinctive object.

Article 187 Integrated Objects

1. An integrated object is an object comprised of parts or components which fit together and are connected with each other to make up a complete form whereby if one of the parts or components is missing, or there is a part or component which is not of the right specification or type, it cannot be used or its utility value is decreased.
2. An obligation to transfer an integrated object can only be discharged by transferring all parts and components thereof.

Article 188 Property Rights

Property rights are rights which can be valued in terms of money and may be transferred in civil intercourse, including intellectual property rights stipulated in Part Six of this Code.


Chapter III

CONTENT OF OWNERSHIP RIGHTS

Section 1

RIGHT TO POSSESS

Article 189 Right to Possess

The right to possess is the right of an owner to keep and manage his or her own property .

A person who is not the owner may, nevertheless, have the right to possess property where he or she is transferred the right to possess by the owner or where the law so provides.

Article 190 Lawful Possession

Lawful possession is the possession of property in any of the following cases:

1. The owner by himself or herself possesses the property;

2. A person is authorized by the owner to manage the property;

3. A person is transferred the right to possess through a civil transaction in accordance with the wishes of the owner;

4. A person finds and keeps, in accordance with the conditions of the law, property which has been abandoned, lost, mislaid, buried or sunken; and

5. Other cases stipulated by law.

Article 191 Right to Possess of Owners

Where an owner possesses his or her own property, such owner may do all things to keep and manage the property in accordance with his wishes provided that it is not contrary to the law or social morals to do so.

Possession by an owner shall not be restricted or interfered with at any time , except in circumstances where the owner transfers possession to another person or where the law otherwise provides.

Article 192 Right to Possess of Persons Managing Property Under Authorization of Owner

1. When an owner authorizes another person to manage his or her property, the authorized person shall exercise the right to possess such property within the scope, and in the manner and time period, specified by the owner.

2. A person authorized to manage property cannot become the owner of that property as a result of the expiry of the limitation period stipulated in paragraph 1 of article 255 of this Code.

Article 193 Right to Possess of Persons to Whom Property is Delivered Through a Civil Transaction

1. Where an owner delivers property to another person through a civil transaction which does not include the transfer of the ownership rights, the person to whom the property is delivered must undertake the possession of such property in a manner consistent with the purpose and substance of the transaction.

2. The person to whom the property is delivered may use such property and is entitled to transfer the right to possess and use the property to another person if the owner so agrees.

3. The person to whom the property is delivered cannot become the owner of that property as a result of the expiry of the limitation period stipulated in paragraph 1 of article 255 of this Code.

Article 194 Right to Possess Lost, Mislaid, Buried or Sunken Property and Property the Owner of Which Cannot Be Identified

1. A person who finds lost, mislaid, buried or sunken property must immediately inform, or return the property to, its owner. If the owner is unknown, that person must inform, or submit such property to, the people's committee of the nearest village, ward or town or the nearest local police station or other authorized State body in accordance with law.

A person who finds property the owner of which cannot be identified, or lost, mislaid, buried or sunken property, is entitled to possess such property from the time of discovery until the time when the property is returned to the owner or the time when the property is submitted to the authorized State body.

2. With respect to property which has been dispersed by other persons in order to conceal unlawful acts or to evade the performance of a civil obligation, the person who makes the discovery must inform immediately, or submit the property to, the authorized State body.

Article 195 Unlawful Possession In Good Faith

Unlawful possession of property is possession of property not in accordance with article 190 of this Code.

A person who possesses property unlawfully, but in good faith, is a possessor who does not know, and should not know, that the possession of such property is unlawful.

Article 196 Continuous Possession

Continuous possession of property is possession of property which occurs over a period of time without dispute relating to such property, including when the property is delivered to another person for possession.

Article 197 Overt Possession

Overt possession is possession which occurs in an explicit manner, without concealment. Property which is possessed shall be used in accordance with its functions and utility and shall be taken care of and preserved by the possessor as if it were his or her own property.

Section 2

RIGHT TO USE

Article 198 Right to Use

The right to use is the right of an owner to exploit , and to enjoy the benefits and income derived from, the property.

A person who is not the owner shall have the right to use the property where the right to use has been transferred by the owner [to such person] or where the law so provides.

Article 199 Right to Use of Owners

Where the owner personally exercises the right to use property under his or her ownership, the owner may exploit, and enjoy the benefits and income derived from, the property in accordance with the wishes of the owner provided that this will not cause damage to, nor affect, the interests of the State or the public or the legal rights or interests of other persons.

Article 200 Right to Use of Persons Who Are Not Owners

1. The right to use property may be transferred to another person by contract or in accordance with law.

Such person shall have the right to use the property strictly in accordance with its functions and proper methods .

2. A person who possesses property unlawfully, but in good faith, as stipulated in article 195 of this Code, shall also have the right to exploit, and enjoy the benefits and income derived from, the property in accordance with law.

Section 3

RIGHT OF DISPOSAL

Article 201 Right of Disposal

The right of disposal is the right of an owner to transfer ownership rights with respect to his or her property to another person or to renounce such ownership rights.

An owner has rights to sell, exchange, give, lend, bequeath, renounce or otherwise dispose of his or her property.

Article 202 Conditions for Disposal

Disposal of property must be performed by an individual who has the capacity for civil acts in accordance with law.

Where the law stipulates formalities and procedures for disposal of property, such formalities and procedures must be complied with.

Article 203 Authorization for Disposal

1. An owner may authorize another person to dispose of the property of the owner.

2. The person so authorized must perform the disposal in a manner consistent with the wishes and the interests of the owner.

Article 204 Restrictions on Right of Disposal

1. The right of disposal is restricted with respect to property which has been seized, pledged or mortgaged, and in other cases stipulated by law.

2. Where a property for sale is an antique or an historic or cultural relic, the State shall have the right of first refusal to purchase.

Where an organization or an individual has the right of first refusal to purchase certain property in accordance with law, the owner must observe such right of first refusal .


Chapter IV

FORMS OF OWNERSHIP

Section 1

ENTIRE PEOPLE'S OWNERSHIP

Article 205 Property Under Entire People's Ownership

The land, mountains and forests, rivers and lakes, water sources, underground natural resources, maritime resources, continental shelf and airspace, and the capital and assets invested by the State in enterprises and facilities of branches and areas of the economy, culture, society, sciences, technology, foreign affairs and national defence and security, together with other property stipulated by law to belong to the State, shall be under the entire people's ownership.

Article 206 The State is the Representative of the Owner With Respect to Property Under Entire People's Ownership

1. The State of the Socialist Republic of Vietnam exercises the rights of the owner with respect to property under the entire people’s ownership.

2. The Government shall uniformly manage and ensure the appropriate , efficient and economic use of property under the entire people’s ownership.

Article 207 Management, Use and Disposal of Property Under Entire People's Ownership

The management, use and disposal of property under the entire people’s ownership shall be performed within the scope, and in accordance with the procedures, stipulated by law.

Article 208 Exercise of Entire People's Ownership Rights With Respect to Property Under Management by State Owned Enterprises

Where property under the entire people’s ownership is invested in a State owned enterprise, the State shall exercise the rights of the owner with respect to such property in accordance with the law on State owned enterprises.

Article 209 Management Authority of State Owned Enterprises With Respect to Property Allocated by the State

A State owned enterprise shall have the authority to manage and use the capital, land, natural resources and other property allocated to it by the State in accordance with the law on State owned enterprises.

Article 210 Exercise of Entire People's Ownership Rights With Respect to Property Allocated to State Bodies and Units of the Armed Forces

1. Where property under the entire people’s ownership is allocated to a State body or unit of the armed forces, the State shall control and inspect the management and use of such property.

2. A State body or unit of the armed forces has the right to manage the property allocated to it by the State and to use such property for lawful purposes in accordance with law.

Article 211 Exercise of Entire People's Ownership Rights With Respect to Property Allocated to Political Organizations and Socio-Political Organizations

1. Where property under the entire people’s ownership is allocated to a political organization or socio-political organization, the State shall control and inspect the management and use of such property.

2. A political organization or socio-political organization has the right to manage the property allocated to it by the State and to use such property for lawful purposes, within the lawful scope, in accordance with lawful methods and procedures, and in a manner consistent with its functions and duties as stipulated in its charter.

Article 212 Rights of Non-State Owned Enterprises, Family Households, Co-operative Groups and Individuals to Use and Exploit Property Under Entire People's Ownership

In accordance with law and as permitted by the authorized State body, a non-State owned enterprise, family household, co-operative group or individual may use land and exploit aquatic resources and other natural resources under the entire people’s ownership provided that it [or he or she] does so efficiently and for lawful purposes and performs fully all obligations to the State in accordance with law.

Article 213 Property Under Entire People's Ownership Which Has Not Been Allocated to Organizations or Individuals for Management

The Government shall protect, investigate and survey, and shall formulate plans to exploit, property under the entire people’s ownership which has not been allocated to an organization or individual for management.

Section 2

OWNERSHIP BY POLITICAL ORGANIZATIONS
AND SOCIO-POLITICAL ORGANIZATIONS

Article 214 Ownership by Political Organizations and Socio-Political Organizations

Ownership by a political organization or socio-political organization is the ownership by such organization as a whole for the purpose of achieving the common objectives as stipulated in its charter.

Article 215 Property Under Ownership of Political Organizations and Socio-Political Organizations

1. Property under the ownership of a political organization or socio-political organization comprises property which is contributed by members, property which is given to the whole [organization] and property which is obtained from other sources in accordance with law.

Property under the entire people's ownership which has been transferred by the State to a political organization or socio-political organization is property under the ownership of such organization.

2. Property under the entire people's ownership which the State allocates for management and use to a political organization or socio-political organization is not under the ownership of such organization.

Article 216 Possession, Use and Disposal of Property Under Ownership of Political Organizations and Socio-Political Organizations

1. A political organization or socio-political organization has the right to possess, use and dispose of property under its ownership for the purpose of performing its functions.

2. The management and exploitation of, and the disposal of, property under the ownership of a political organization or socio-political organization must comply with the law and be in accordance with its operational objectives as stipulated in its charter.

Section 3

COLLECTIVE OWNERSHIP

Article 217 Collective Ownership

Collective ownership is the ownership by a co-operative group or other stable collective economic form in which individuals or family households contribute capital and labour jointly for production and business co-operation purposes in order to achieve the common objectives stipulated in its charter, and in accordance with the principles of voluntariness, equality, democracy and joint management and enjoyment of benefits.

Article 218 Property Under Collective Ownership

Property under the ownership of a collective comprises property which is contributed by its members, lawful income derived from production and business activities, and support from the State and other sources in accordance with law.

Article 219 Possession, Use and Disposal of Property Under Collective Ownership

1. The possession, use and disposal of property under collective ownership must comply with the law and the charter of the collective and must ensure the stable development of the collective ownership.
2. Property under collective ownership delivered to the members may be exploited by them through their labour in production and business activities in order to expand production and economic development for the interests and needs of the members.

3. Members of a collective shall have the right of first refusal to purchase, lease or “thue khoan” the property under collective ownership.

Section 4

PRIVATE OWNERSHIP

Article 220 Private Ownership

Private ownership is the ownership by an individual of his or her lawful property.

Private ownership comprises individual ownership, ownership by small owners and ownership by private capitalists .

Article 221 Property Under Private Ownership

1. Property under private ownership comprises lawful revenue, savings, residential houses, commodities of daily life, means of production, capital, benefits, income and other lawful property of an individual.

Lawful property under private ownership is not limited in terms of quantity and value.

2. An individual is not entitled to own property which the law provides may not be owned privately.

Article 222 Possession, Use and Disposal of Property Under Private Ownership

1. An individual has the right to possess, use and dispose of property under his or her ownership for the purpose of satisfying the needs of daily life, consumption or production and business activities and other purposes in accordance with law.

2. The possession, use and disposal of property under private ownership may not cause damage to, nor affect, the interests of the State or the public or the legal rights or interests of other persons.

Section 5

OWNERSHIP BY SOCIAL ORGANIZATIONS AND
SOCIO-PROFESSIONAL ORGANIZATIONS

Article 223 Ownership by Social Organizations and Socio-Professional Organizations

Ownership by a social organization or socio-professional organization is the ownership by such organization as a whole for the purpose of achieving the common objectives of the members as stipulated in its charter.

Article 224 Property Under Ownership of Social Organizations and Socio- Professional Organizations

Property under the ownership of a social organization or socio-professional organization comprises property which is contributed by members, property which is given to the whole [organization] and property which is obtained from other sources in accordance with law.

Article 225 Possession, Use and Disposal of Property Under Ownership of Social Organizations and Socio-Professional Organizations

A social organization or socio-professional organization shall possess, use and dispose of property under its ownership in accordance with law and in a manner consistent with its operational objectives as stipulated in its charter.

Section 6

MIXED OWNERSHIP

Article 226 Mixed Ownership

Mixed ownership is ownership of property contributed by owners belonging to different economic sectors for the purpose of conducting production and business activities to generate profits.

Article 227 Property Under Mixed Ownership

Property under mixed ownership comprises capital contributed by owners and lawful profits earned from production and business activities or obtained from other lawful sources.

Article 228 Possession, Use and Disposal of Property Under Mixed Ownership

The possession, use and disposal of property under mixed ownership must comply with the provisions of this Code in relation to multiple ownership and the legal regulations in relation to capital contributions, organization and operation of production and business activities, management, administration, liability for property, and distribution of profits.

Section 7

MULTIPLE OWNERSHIP

Article 229 Multiple Ownership

Multiple ownership is ownership of property by more than one owner.

Multiple ownership comprises ownership in common and joint ownership.

Property under multiple ownership is [known as] multiple ownership property.

Article 230 Creation of Multiple Ownership Rights

Multiple ownership rights shall be created as agreed by the owners or in accordance with law or customary practice.

Article 231 Ownership in Common

1. Ownership in common is multiple ownership whereby each owner's share of the ownership rights with respect to the multiple ownership property is specified.

2. Each of the owners in common has rights and obligations with respect to the multiple ownership property corresponding to his or her share of the ownership rights, unless otherwise agreed.

Article 232 Joint Ownership

1. Joint ownership is multiple ownership whereby each owner's share of the ownership rights with respect to the multiple ownership property is not specified.

Joint ownership includes divisible joint ownership and indivisible joint ownership.

2. Joint owners have equal rights and obligations with respect to the multiple ownership property.

Article 233 Multiple Ownership by Husbands and Wives

1. Multiple ownership by a wife and husband is joint ownership.

2. A wife and husband jointly create and develop multiple ownership property through their efforts and shall have equal rights to possess, use and dispose of such property.

3. A wife and husband shall discuss, agree on or authorize each other in relation to the possession, use and disposal of the multiple ownership property.

4. The multiple ownership property of a husband and wife may be divided as agreed or in accordance with a decision of a court.

Article 234 Multiple Ownership by Communities

1. Multiple ownership by a community is the ownership by an extended family, hamlet, village, tribal village, religious community or other community of property which is created or obtained in accordance with customary practice, which is jointly contributed to, and raised by, the members of the community, or which was given to the whole [community], and property which is obtained from other sources in accordance with law for the purpose of satisfying the common lawful interests of the entire community.

2. Members of a community [shall] jointly manage, use and dispose of multiple ownership property in the interests of the community as agreed or in accordance with customary practice and in a manner consistent with the law and social morals.

3. The multiple ownership property of a community is indivisible joint property.

Article 235 Possession of Multiple Ownership Property

The owners of multiple ownership property shall manage jointly such property in accordance with the principle of unanimity, unless otherwise agreed or stipulated by law.

Article 236 Use of Multiple Ownership Property

1. An owner in common may exploit, and enjoy the benefits and income derived from, the multiple ownership property in proportion to his or her share of the ownership rights, unless otherwise agreed or the law otherwise provides.

2. Joint owners have equal rights to exploit, and enjoy the benefits and income derived from, the multiple ownership property, unless otherwise agreed.

Article 237 Disposal of Multiple Ownership Property

1. Each owner in common has the right to dispose of his or her own share of the ownership rights as agreed or stipulated by law.

2. Disposal of joint property shall be performed as agreed by the owners of the property or as stipulated by law.

3. Where an owner of multiple ownership property sells his or her share of the ownership rights, the other owners of the property shall have the right of first refusal to purchase such share. Such owner may sell [such share] to other persons if no other owner purchases within three months, in the case of immoveable property, or within one month, in the case of moveable property, from the date on which the other owners receive notice of the sale and the conditions of the sale.

4. Where one of the owners of multiple ownership property renounces his or her share of the ownership rights, or where such person dies leaving no heir, his or her share of the ownership rights shall belong to the State.

Article 238 Division of Multiple Ownership Property

1. Where multiple ownership [property] is divisible, each owner may request the property to be divided. If the owners have agreed not to divide the property within a certain period of time, each owner may only request the property to be divided upon the expiry of that period. Where the property cannot be distributed in kind, it shall be valued in terms of money for the purpose of distribution.

2. Where a person requests one of the owners of multiple ownership property to discharge a payment obligation, the requesting person may request such property to be divided in order to receive monetary payment and is entitled to participate in the division of the property, unless the law otherwise provides.

Article 239 Multiple Ownership in Apartment Buildings

1. The areas, equipment and furnishings which are for common use in an apartment building are under multiple ownership of all owners of the apartments in the apartment building, and are indivisible.

2. The owners of the apartments in an apartment building have equal rights and obligations with respect to the management and use of common areas and equipment.

3. Where an apartment building is destroyed, the owners of the apartments in the apartment building may use the land surface area of such apartment building in accordance with law.

Article 240 Termination of Multiple Ownership

Multiple ownership terminates in any of the following cases:

1. The multiple ownership property has been divided;

2. One of the owners of the multiple ownership [property] is entitled to enjoy the property in its entirety;

3. The multiple ownership property no longer exists; and

4. Other cases as stipulated by law.


Chapter V

CREATION AND TERMINATION
OF OWNERSHIP RIGHTS


Section 1

CREATION OF OWNERSHIP RIGHTS

Article 241 Creation of Ownership Rights With Respect to Revenue Earned from Labour and Lawful Business and Production Activities

Workers and persons who conduct lawful business and production activities have ownership rights with respect to the revenue earned from the labour and the lawful business and production activities from the time when such revenue is earned.

Article 242 Creation of Ownership Rights As Agreed

A person to whom property has been transferred through a contract for sale and purchase or by gift, exchange or loan may own such property from the time of transfer of the property, unless otherwise agreed or the law otherwise provides.

Article 243 Creation of Ownership Rights With Respect to Benefits and Income

An owner or the person using property has ownership rights with respect to the benefits and income [derived from such property] from the time when such benefits and income are derived, as agreed or in accordance with law.

Article 244 Creation of Ownership Rights in Case of Merger

1. Where property of more than one owner is merged to form an indivisible object and it is not possible to determine whether the property which is merged is a primary object or an auxiliary object, the newly formed object shall be the multiple ownership property of such owners. If the property which is merged consists of a primary object and [an] auxiliary object[s], the newly formed object shall belong to the owner of the primary object from the time when the new object is formed. The owner of the new property must pay the value of the auxiliary object to its owner, unless otherwise agreed.

2. Where a person merges the property of another person with his or her own property, even though he or she knows, or should know, that such property is not his or her own and he or she does not have the consent of the owner of the property which is merged, the owner of the property which is merged may:

(a) request the person who merged the property to deliver the new property to him or her and pay such person the value of the property of such person; or

(b) if the owner of the property which is merged does not wish to take the new property, request the person who merged the property to pay the value of his or her property and to compensate for any damage.

Article 245 Creation of Ownership Rights in Case of Mixing

1. Where the property of more than one owner is mixed to form a new indivisible object, the new object shall be the multiple ownership property of such owners from the moment of mixing.

2. Where a person has mixed the property of another person with his or her own property, even though he or she knows, or should know, that such property is not his or her own and he or she does not have the consent of the owner of the property which has been mixed, the owner of the property which has been mixed may:

(a) request the person who mixed the property to deliver the new property to him or her and pay such person the value of the property of such person;

(b) if the owner of the property which has been mixed does not wish to take the new property, request the person who mixed the property to pay the value of his or her property and to compensate for any damage.

Article 246 Creation of Ownership Rights in Case of Processing

1. An owner of raw materials which are processed to form a new object is also the owner of the newly formed object.

2. A person who, in good faith, processes raw materials under the ownership of another person shall become the owner of the new property, but must pay the value of the raw materials to the owner and compensate him or her for any damage.

3. Where a person processes [raw materials] not in good faith, the owner of the raw materials may request that the new object be delivered to him or her. Where the raw materials are owned by more than one person, such persons shall become the owners of the newly formed object in proportion to the value of the raw materials owned by each person. Such owners may request the person carrying out the processing to compensate for any damage.

Article 247 Creation of Ownership Rights With Respect to Abandoned Objects and Objects the Owner of Which Cannot Be Identified

1. An abandoned object is an object in respect of which the owner has renounced his or her ownership rights.

A person who finds an abandoned object which is moveable property shall have the right to own such property in accordance with law. If the found object is immoveable property, it shall belong to the State.

2. A person who finds an object the owner of which cannot be identified must inform, or deliver the object to, the people's committee of the nearest village, ward or town or the nearest local police station in order that a public announcement may be made notifying the owner to reclaim the object.

A report on the delivery of the object must be prepared specifying the surnames, given names and addresses of the finder and the receiver and the condition, quantity and volume of the property delivered.

The people's committee or local police station which received the object must notify the finder of the results of their inquiries in order to determine who the owner is.

Where the object, the owner of which cannot be identified, is moveable property, if, after one year from the date of the public announcement, the owner [of the object] still cannot be identified, then such property shall be under the ownership of the finder in accordance with law. Where the object is immoveable property, if, after six years from the date of the public announcement, the owner still cannot be identified, then such property shall belong to the State. The finder shall be entitled to enjoy a monetary reward in accordance with law.

Article 248 Creation of Ownership Rights With Respect to Buried or Sunken Objects Which Are Found

Ownership rights with respect to a buried or sunken object which is found, but which has no owner or the owner of which cannot be identified, shall be determined, after deducting search and maintenance expenses, as follows:

1. A found object which is an antique or an historic or cultural relic shall belong to the State and the finder shall be entitled to enjoy a monetary reward in accordance with law.

2. A person who finds an object which is not an antique, or an historic or cultural relic, but which has a large value is entitled to fifty (50) per cent of the value of the object, with the remainder belonging to the State. If the object has a small value, it shall be under the ownership of its finder, unless the law otherwise provides.

Article 249 Creation of Ownership Rights With Respect to Objects Which Other Persons Have Lost or Mislaid

1. A person who finds an object which another person has lost or mislaid, and who is aware of the address of the person who lost or mislaid the object, must inform, or return the object to, such person. If he or she is not aware of the address of the person who lost or mislaid the object, he or she must inform, or deliver the object to, the people's committee of the nearest village, ward or town or the nearest local police station in order that a public announcement may be made notifying the owner to reclaim the object.

A report on the delivery of the object must be prepared, specifying the surnames, given names and addresses of the finder and the receiver and the condition, quantity and volume of the property delivered.

The people's committee or local police station which received the object must notify the finder of the results of their inquiries in order to determine who the owner is.

2. If, after one year from the date of the public announcement, the owner of the object still cannot be identified, the object shall be under the ownership of the finder. If the object has a large value, the finder shall be entitled to fifty (50) per cent of the value of the object after deducting the expenses for taking care of the object, with the remainder belonging to the State.

3. A lost or mislaid object which is an antique or an historic or cultural relic shall belong to the State if, after one year from the date of the public announcement, the owner still cannot be identified or no one reclaims the object. The finder shall be entitled to enjoy a monetary reward in accordance with law.

Article 250 Creation of Ownership With Respect to Stray Domestic Livestock

A person who captures a stray domestic livestock must take care of it and notify the people's committee of the village, ward or town in which such person resides in order that a public announcement may be made notifying the owner to reclaim [the stray domestic livestock]. An owner who reclaims the stray domestic livestock must remunerate the person who captured it for feeding and taking care [of the stray domestic livestock] and any other expenses [incurred].

If, after six months from the date of the public announcement, no one reclaims the stray domestic livestock, it shall be under the ownership of the person who captured it. If the stray domestic livestock is one which is allowed to roam according to customary practice, this time-limit shall be one year.

During the period of feeding and taking care of the stray domestic livestock, the person who captured it shall be entitled to half of any offspring born. Such person must compensate for any damage if he or she intentionally causes the death of the stray domestic livestock.

Article 251 Creation of Ownership Rights With Respect to Stray Domestic Poultry

Where the domestic poultry of a person is lost and captured by another person, the person who captured the [stray domestic] poultry must make a public announcement notifying the owner to reclaim the [stray domestic] poultry. An owner who reclaims the stray poultry must remunerate the person who captured it for feeding and taking care [of the stray domestic poultry] and any other expenses [incurred].

If, after one month from the date of the public announcement, no one reclaims the stray domestic poultry, it shall be under the ownership of the person who captured it.

During the period of feeding and taking care of the stray [domestic poultry], the person who captured it shall enjoy the benefits from the stray [domestic poultry]. Such person must compensate for any damage if he or she intentionally causes the death of the stray [domestic poultry].

Article 252 Creation of Ownership Rights With Respect to Underwater Creatures

Where the underwater creature of a person moves naturally into the field, pond or lake of another person, the creature shall be under the ownership of the person having such field, pond or lake. Where the underwater creature has special marks which make it possible to determine that it is not under the ownership of the person having such field, pond or lake, such person must make a public announcement notifying the owner to reclaim the creature. If, after one month from the date of the public announcement, no one reclaims the creature, it shall be under the ownership of the person having such field, pond or lake.

Article 253 Creation of Ownership Rights Due to Inheritance

An heir shall have ownership rights with respect to inherited property in accordance with Part Four of this Code.

Article 254 Creation of Ownership Rights in Accordance with the Judgement or Decision of a Court or in Accordance with the Decision of another Authorized State Body

Ownership rights may also be created on the basis of a judgement or decision of a court or the decision of another authorized State body.

Article 255 Creation of Ownership Rights Resulting from Limitation Periods

1. A person who, unlawfully but in good faith, possesses, or derives benefits from, property, continuously and in an overt manner, for ten years with respect to moveable property, and for thirty years with respect to immoveable property, shall become the owner of such property from the moment of commencement of possession, except as stipulated in paragraph 2 of this article.

2. A person who unlawfully possesses property under the entire people's ownership may not become the owner of such property, irrespective of good faith, continuous and overt possession, or length of time of possession.

Section 2

TERMINATION OF OWNERSHIP RIGHTS

Article 256 Transfers of Ownership Rights

Where an owner transfers his or her ownership rights to another person through a contract for sale and purchase, by exchange, gift or loan, or through inheritance, the ownership rights with respect to the property of the owner shall terminate from the time when the ownership rights of the transferee arise.

Article 257 Renunciation of Ownership Rights

An owner may terminate ownership rights with respect to his or her property by publicly declaring, or performing certain acts evidencing, his or her renunciation of the right to possess, use and dispose of such property.

With respect to property the renunciation of which may harm social order or security or cause environmental pollution, the renunciation of ownership rights must comply with the law.

Article 258 Property In Respect of Which Other Persons Have Lawfully Created Ownership Rights

When a person has, in accordance with articles 249 to 252 of this Code, lawfully created ownership rights with respect to a lost or mislaid object or a stray domestic livestock, poultry or underwater creature, the ownership rights of the former owner shall terminate.

When the ownership rights of a possessor have been created in accordance with paragraph 1 of article 255 of this Code, the ownership rights of the former owner shall terminate.

Article 259 Realization of Property in Order to Perform Obligations of Owner

1. Ownership rights with respect to property shall terminate when such property is realized in order to perform the obligations of the owner in accordance with a decision of a court or another authorized State body, unless the law otherwise provides.

2. Property which the law stipulates cannot be seized may not be realized in order to perform the obligations of the owner.

3. The ownership rights with respect to property realized in order to perform the obligations of the owner shall terminate at the time when the ownership rights of the recipient of such property arise.

4. The realization of land use rights shall be carried out in accordance with Part Five of this Code and the law on land.

Article 260 Destroyed Property

When property is destroyed, the ownership rights with respect to such property shall terminate.

Article 261 Property Which is Compulsorily Acquired

Where property is compulsorily acquired in accordance with a decision of the authorized State body for reasons of national defence and security or the national interest, the ownership rights of the owner shall terminate from the time when the decision of the authorized State body becomes legally effective.

Article 262 Confiscated Property

Where property of an owner is confiscated and paid to the State budget due to the owner committing a crime or an administrative violation, the ownership rights of the owner with respect to such property shall terminate from the moment when the judgement or decision of a court, or the decision of the authorized State body, becomes legally effective.


Chapter VI

PROTECTION OF OWNERSHIP

Article 263 Measures for Protecting Ownership

A lawful owner or possessor may petition a court, or request another authorized State body, to force any person infringing his or her ownership rights or right to possess to return the property and to cease the infringement of his or her ownership rights or right to possess, and may demand compensation for any damage.

The lawful owner or possessor shall have the right to protect the property under his or her ownership or the property currently in his or her lawful possession by measures in accordance with law.

Article 264 Right to Reclaim Property

Except as stipulated in paragraph 1 of article 255 of this Code, a lawful owner or possessor [of property] may request a person unlawfully possessing, using or receiving benefits from his or her property to return such property.

Article 265 Right to Demand Prevention or Cessation of Acts Which Illegally Hinder the Exercise of Lawful Ownership Rights and Rights of Possession

When exercising his or her ownership rights or right to possess, a lawful owner or possessor [of property] may demand a person unlawfully hindering the exercise of his or her ownership rights or right to possess to cease such acts. If such person does not cease voluntarily, the lawful owner or possessor may request a court or another authorized State body to force such person to do so.

Article 266 Right to Demand Compensation for Damage

The lawful owner or possessor may demand a person infringing his or her ownership rights or right to possess to compensate for any damage.



Chapter VII

OTHER PROVISIONS REGARDING OWNERSHIP RIGHTS

Article 267 Obligations of Owners in Emergency Situations

1. An emergency situation is the situation of a person who, in order to avoid danger which is directly and actually threatening the interests of the State or of a collective, or his or her legal interests or those of any other persons, has no alternative than to commit actions causing damage to a lesser extent than the damage he or she attempts to prevent .

2. In an emergency situation, the owner of property may not hinder other persons from using the property of that owner nor hinder other persons from causing damage to such property in order to prevent or reduce the greater danger or damage that might occur.

3. Causing damage in an emergency situation is not an act of infringement of ownership rights. The owner shall be compensated for any damage in accordance with the stipulations of paragraph 3 of article 618 of this Code.

Article 268 Obligations of Owners to Protect Environment

When using, taking care of or renouncing his or her property, an owner must comply with the law on environmental protection. If he or she causes environmental pollution, the owner must cease the acts which cause the pollution and take measures to remedy any consequences and compensate for any damage.

Article 269 Obligations of Owners to Respect and Protect Social Order and Security

When exercising the right to possess, use or dispose of his or her property, an owner must respect and protect social order and security and may not abuse his or her ownership rights in order to cause public disorder or loss of security or to cause damage to the interests of the State or the public or the legal rights or interests of other persons.

Article 270 Obligation to Respect Boundaries between Immoveable Properties

1. The boundaries between adjoining immoveable properties shall be determined in accordance with the agreement of the owners or in accordance with a decision of the authorized State body.

The boundaries may also be determined in accordance with customary practice or according to boundaries which have existed for thirty (30) or more years without dispute.

2. A person having land use rights may use the airspace and the subsurface according to the vertical dimensions of the boundaries around the land in accordance with the construction plan stipulated by the authorized State body and may not interfere with the use by other persons of the adjoining land.

A land user may only plant trees and perform other activities within the area covered by his or her land use rights and according to the defined boundaries. Such person may not allow the roots and branches of trees to extend beyond the boundaries, except as otherwise agreed.

3. Where the boundary is a canal, irrigation ditch, trench, gutter or path at the edge of a rice field, the land user must respect and preserve the common boundary. He or she may not encroach upon, or change, the boundary markers.

Article 271 Ownership Rights With Respect to Boundary Markers Separating Immoveable Properties

1. An owner of adjoining immoveable property may only erect boundary stakes and fences and build separating walls on the area covered by his or her land use rights. Adjoining land users may agree to the erection of boundary stakes and fences, the building of separating walls and the planting of trees on the boundary for use as boundary markers between the immoveable properties, and the boundary markers shall be under the multiple ownership of such persons.

Where a boundary marker is erected on the boundary by only one party with the consent of the owner of the adjoining immoveable property, such boundary marker shall be multiple ownership property and the construction expenses shall be borne by the party who erected the marker, unless otherwise agreed. If the owner of the adjoining immoveable property does not give consent and has legitimate reasons, then the owner who erected the boundary stake or fence or built the separating wall must remove it.
With respect to trees which are common boundary markers, the parties shall have equal obligations to protect the trees, and the fruits from the trees shall be distributed equally, unless otherwise agreed.

2. With respect to boundary markers which are common house walls, the owner of the adjoining immoveable property may not cut out a window or air ventilating hole or drill the wall in order to install building structures, except with the consent of the owner of the adjoining property.

Where houses are separately built, but with adjoining walls, an owner may only drill and install building structures up to the space between the adjoining walls.

Article 272 Obligations to Respect Building Rules

1. When constructing a project, the owner of the project must comply with the law on construction and ensure safety. He or she may not build beyond the height and distance stipulated by the law on construction or infringe the legal rights or interests of the owners of adjoining and neighbouring immoveable properties.

2. Where there is a danger of an incident occurring with respect to a construction project which would affect adjoining or neighbouring immoveable properties, the owner of the project must immediately suspend the construction and carry out any repairs or removal as required by the owners of the adjoining or neighbouring immoveable properties or by the authorized State body. If damage is caused, compensation must be made.

3. When building a sanitation project, a warehouse for storing toxic chemical substances or other projects, the use of which may cause environmental pollution, the owner must build such project at an appropriate site which is a reasonable distance away from the boundaries and must ensure sanitation and security and not adversely affect adjoining or neighbouring owners.

Article 273 Obligations to Ensure Security of Adjoining Construction Projects

When digging a well or a pond, or constructing underground structures, the owner of the project must do so at the distance away from the boundaries stipulated by the law on construction.

Where it is likely that a project will threaten the safety of adjoining or neighbouring immoveable properties, the owner of the project must take remedial measures immediately. If damage is caused to the owners of adjoining or neighbouring properties, compensation must be made.

Article 274 Obligations of Owners relating to Draining of Rainwater

A house owner must install water drainpipes in order that the rainwater from his or her roof does not run onto any adjoining immoveable properties.

Article 275 Obligations of Owners relating to Draining of Waste Water

A house owner must install underground drains or water drainage channels to discharge waste water to the prescribed location in order that the waste water does not run and spill onto any adjoining immoveable properties or onto public streets or public places , causing environmental pollution.

Article 276 Restrictions on Right to Install Doors and Windows

1. A house owner may only install entry and exit doors and windows swinging over adjacent houses or towards opposite houses and common walkways in accordance with the law on construction.

2. The awnings above entry and exit doors or windows swinging over common walkways must be at least two point five (2.5) metres above the ground.

Article 277 Right to Demand Repair or Removal of Adjoining Immoveable Properties

Where it is likely that a tree or construction works [or building] will collapse onto an adjoining immoveable property or a public place, the owner must cut down the tree, or repair or demolish the construction works [or building], [as the case may be].

The owner of an adjoining immoveable property may request the owner of the tree or the construction works [or building] to cut down the tree, or demolish the construction works [or building]. If such person does not cut down the tree, or demolish the construction works [or building], the owner of an adjoining immoveable property may request the authorized State body to procure that the tree be cut down or the construction works [or building] be demolished. The expenses for cutting the tree or demolishing the construction works [or building] shall be borne by the owner of the tree or the construction works [or building], [as the case may be].

Article 278 Easements Over Adjoining Immoveable Properties

A house owner or a land user may use in a reasonable manner adjoining immoveable property under the ownership of other persons in order to meet his or her needs regarding access, supply and drainage of water, electric transmission cables, communication cables and other necessary needs, with compensation unless otherwise agreed.

Article 279 Creation of Easements Over Adjoining Immoveable Properties

1. An easement over adjoining immoveable property may be created as agreed or in accordance with law.

2. Where the easement over an adjoining immoveable property has already been created for a house owner or land user, a person to whom the house or land use right is transferred shall also enjoy such easement.

Article 280 Right of Passage Through Adjoining Immoveable Properties

1. An owner of immoveable property which is surrounded by the immoveable property of other owners so that there is no exit may request the owner of adjoining immoveable property to provide him or her with a reasonable and convenient passage to a public path. The person who has been so requested must grant such request. The person who is provided with the passage must compensate the owner of the adjoining immoveable property, unless otherwise agreed.

2. The location and the length, width and height of the passage shall be agreed by the parties in order to ensure convenient passage and minimize inconvenience to the parties. If there are any disputes regarding the passage, the parties may request the authorized State body to resolve the dispute.

3. Where immoveable property is divided into more than one part for different owners or users, necessary passages must be provided, without compensation, to persons in the interior as stipulated in paragraph 2 of this article.

Article 281 Right to Install Electric Transmission Cables and Communication Cables Through Adjoining Immoveable Properties

An owner of immoveable property may install electric transmission cables and communication cables in a reasonable manner through the immoveable property of other owners, but must ensure the safety and convenience of such owners. If damage is caused, compensation must be made.

Article 282 Rights relating to Supply and Drainage of Water Through Adjoining Immoveable Properties

Where, due to the natural location of immoveable property, the supply and drainage of water must pass through another immoveable property, the owner of the immoveable property through which the water flows must provide an appropriate channel for the supply and drainage of water and may not hinder or prevent the flow of water. The person using the water supply and drainage channel must minimize any damage to the owner of the immoveable property through which the water flows when installing the water channel. If damage is caused, compensation must be made. Where water flows naturally from a higher position to a lower position and causes damage to the owner of the property through which the water flows, the person using the water supply and drainage channel shall not be liable to compensate for any damage.

Article 283 Rights relating to Irrigation and Water Drainage in Cultivation

A person who has the right to use land for cultivation may request neighbouring land users to provide a reasonable and convenient water channel for irrigation and drainage. A person who has been so requested must grant such request. If the person using such water channel causes damage to neighbouring land users, compensation must be made.

Article 284 Termination of Easements Over Adjoining Immoveable Properties

An easement over adjoining immoveable property terminates in any of the following cases:

1. An adjoining immoveable property and the immoveable property of a person having an easement over it are merged; or

2. A house owner or land user no longer requires an easement over adjoining property.

PART 3

CIVIL OBLIGATIONS AND
CIVIL CONTRACTS

Chapter I

GENERAL PROVISIONS

Section 1

CIVIL OBLIGATIONS

Article 285 Civil Obligations

Civil obligations are acts which one or more subjects (hereinafter referred to as obligors ) must perform, or must not perform, in the interests of one or more other subjects (hereinafter referred to as obligees ) in accordance with law.

Article 286 Bases for Giving Rise to Civil Obligations

Civil obligations arise from:

1. Civil contracts;

2. Unilateral civil acts;

3. Unlawful possession or use of, or receipt of benefits from, property;

4. Causing damage through unlawful acts;

5. Unauthorized performance of acts; and

6. Other bases as stipulated by law.

Article 287 Subject Matters of Civil Obligations

1. The subject matter of a civil obligation may be property or acts which must be performed or must not be performed.

2. The object of a civil obligation must be defined precisely.

3. Subject matters of civil obligations may only be property which can be transacted and tasks which can be performed and are not forbidden by law nor contrary to social morals.



Section 5

SECURITY FOR PERFORMANCE
OF CIVIL OBLIGATIONS


I. GENERAL PROVISIONS

Article 324 Types of Security for Performance of Civil Obligations

1. Types of security for the performance of civil obligations comprise the following:

(a) Pledge of property;

(b) Mortgage of property;

(c) Performance bond;

(d) Security deposit;

(e) Escrow deposit;

(f) Guarantee; and

(g) Penalties for violations.

2. Where the parties have agreed on, or the law requires, security [to be provided], the obligor must provide such security.

Article 325 Scope of Security for Performance of Civil Obligations

A civil obligation may be fully or partly secured as agreed or stipulated by law. If there is no agreement as to, or the law does not stipulate, the scope of the security, the obligation, including the obligation to pay interest and to compensate for any damage, shall be deemed to be fully secured.

Article 326 Objects Used as Security for Performance of Civil Obligations

Objects to be used as security for the performance of a civil obligation must be under the ownership rights of the securing party and be capable of being transacted.

Article 327 Money and Valuable Papers Used as Security for Performance of Civil Obligations

1. Money used as security for the performance of a civil obligation must be Vietnamese Dong, except where the law otherwise provides.

2. Bonds, shares, promissory notes and other valuable papers which are capable of being transacted may be used as security for the performance of a civil obligation.

Article 328 Property Rights Used as Security for Performance of Civil Obligations

Property rights under the ownership of a securing party may be used as security for the performance of a civil obligation provided that such rights may be valued in terms of money, are not in dispute and are capable of being transacted.

Land use rights may be mortgaged as security for the performance of civil obligations in accordance with the provisions of this Code and the law on land.

II. PLEDGES OF PROPERTY

Article 329 Pledges of Property

1. A pledge of property is the delivery by the obligor of moveable property under his or her ownership to the obligee as security for the performance of a civil obligation. If the ownership rights with respect to the pledged property have been registered, the parties may agree that the property is to be held by the pledgor or by a third party.

Property rights which are capable of being transacted may also be pledged.

2. Where the ownership rights with respect to property have been registered in accordance with law, such property may be pledged as security for the performance of several civil obligations provided that its value is greater than the total value of the secured obligations, unless otherwise agreed or stipulated by law.

Article 330 Formalities for Pledges of Property

1. A pledge of property must be made in writing, either in a separate document or stated within a principal contract, specifying the type, quantity, quality and value of the property, the duration of pledge and the manner for realizing the pledged property.

2. A pledge document must be notarized by the State notary public or certified by the authorized people's committee, if so agreed or stipulated by law. Where the law stipulates that ownership rights with respect to property must be registered, a pledge of such property must also be registered.

Article 331 Duration of Pledges of Property

The duration of a pledge of property shall be determined according to the duration for the performance of the civil obligation it secures.

Article 332 Obligations of Pledgors

A pledgor is obliged to:

1. Deliver the pledged property to the pledgee as agreed. If there are documents evidencing the ownership rights with respect to the pledged property, the originals thereof shall be delivered to the pledgee, unless otherwise agreed;

2. Notify the pledgee of any third party rights with respect to the pledged property, if any;

3. Register the pledge, if the ownership rights with respect to the pledged property must be registered in accordance with law;

4. Pay the pledgee the expenses necessary for taking care of and preserving the pledged property, unless otherwise agreed; and

5. Where the pledged property is held by the pledgor, he or she must take care of it and not sell, exchange, give, lease, or lend the property and may only use the pledged property with the consent of the pledgee. If the pledged property is in danger of losing its value or depreciating in value as a result of its use, the pledgor may not continue such use if so demanded by the pledgee.

Article 333 Rights of Pledgors

A pledgor is entitled to:

1. If the pledged property is in danger of losing its value or depreciating in value as a result of its use, demand the pledgee to suspend such use of the pledged property;

2. Demand the pledgee, or any third party, holding the pledged property to return the pledged property after the obligation has been fulfilled. If the pledgee holds only the documents evidencing the ownership rights with respect to the pledged property, demand the return of such documents; and

3. Demand the pledgee, or any third party, holding the pledged property to compensate for any damage caused to the pledged property.

Article 334 Obligations of Pledgees

A pledgee is obliged to:

1. Take care of and preserve the property as if it were his or her own;

2. Not sell, exchange, give, lease or lend the pledged property and not use it as security for the performance of another obligation;

3. Not exploit, or enjoy the benefits or income derived from, the pledged property without the consent of the pledgor;

4. Return the pledged property upon the termination of the secured obligation or where the pledge is replaced by another security; and

5. Compensate the pledgor for any damage in the event that the pledged property is lost or damaged [or deteriorates].

Article 335 Rights of Pledgees

A pledgee is entitled to:

1. Demand a person unlawfully possessing or using the pledged property to return the property;

2. If the ownership rights with respect to the pledged property must be registered in accordance with law, demand the pledgor to register the pledge;

3. If the pledgor fails to perform, or improperly performs, the [secured] obligation, demand the realization of the pledged property in accordance with the methods agreed or as stipulated by law in order to satisfy the obligation;

4. Exploit, and enjoy the benefits and income derived from, the pledged property, if so agreed; and

5. Upon returning the pledged property to the pledgor, be reimbursed for reasonable expenses incurred in taking care of the pledged property.

Article 336 Obligations of Third Parties Holding Pledged Property

A third party holding a pledged property must fulfil the obligations stipulated in article 334 of this Code.

Article 337 Rights of Third Parties Holding Pledged Property

A third party holding pledged property is entitled to:

1. Receive remuneration and be reimbursed for expenses incurred in taking care of the property, as agreed; and

2. Exploit, and enjoy the benefits and income derived from, the pledged property, if so agreed.

Article 338 Pledges of Property Rights

Where property rights are pledged, the pledgor shall deliver to the pledgee documents evidencing the property rights and must inform the obligor of the pledge of such property rights.

Article 339 Substitution and Repair of Pledged Property

1. A pledgor may only substitute pledged property with the consent of the pledgee, unless otherwise agreed.

2. Where pledged property is damaged [or deteriorates], the pledgor must repair it within a reasonable period of time or substitute it with other property of equivalent value, unless otherwise agreed.

Article 340 Cancellation of Pledges of Property

A pledge of property may be cancelled with the consent of the pledgee.

Article 341 Realization of Pledged Property

If a pledgor fails to perform, or performs not as agreed, an obligation when it falls due, the pledged property may be realized in accordance with the methods agreed, or auctioned, in order to satisfy the obligation. The pledgee shall have a priority to payment from the proceeds of sale of the pledged property, after deducting the expenses for taking care of and auctioning the property.

Article 342 Pledges of Property Used as Security for Performance of Several Obligations

1. Where property is pledged as security for the performance of several obligations, each pledge must be made in writing and the pledge must be registered in accordance with article 330 of this Code.

2. Where property must be realized in order to satisfy an obligation which has fallen due, the other [secured] obligations which have not become due shall be deemed due. The order of payment priority shall be determined according to the order in which the pledges were registered.

Article 343 Termination of Pledges of Property

A pledge of property terminates in any of the following cases:

1. The civil obligation secured by the pledge has terminated;

2. The pledge has been cancelled or substituted with another security; or

3. The pledged property has been realized in accordance with article 341 or paragraph 2 of article 342 of this Code.

Article 344 Return of Pledged Property

Where a pledge of property is terminated in accordance with paragraphs 1 and 2 of article 343 of this Code, the pledged property and documents evidencing the ownership rights [with respect to the property] shall be returned to the pledgor. Any benefits and income derived from the pledged property must also be returned to the pledgor, unless otherwise agreed.

Article 345 Pledges of Property at Pawn Shops

A pledge of property at a pawn shop shall be performed in accordance with articles 329 to 344 of this Code and other legal instruments relating to the operation of pawn shops.

III. MORTGAGES OF PROPERTY

Article 346 Mortgages of Property

1. A mortgage of property is the use by the obligor of an immoveable property under the ownership of the obligor as security for the performance of an obligation to the obligee.

Benefits, income and other rights derived from the mortgaged immoveable property shall form part of the mortgaged property, if so agreed or stipulated by law.

Where entire immoveable property having auxiliary objects is mortgaged, such auxiliary objects shall also form part of the mortgaged property.

Where a portion of immoveable property having auxiliary objects is mortgaged, such auxiliary objects shall only form part of the mortgaged property if so agreed.

2. Mortgaged immoveable property shall be held by the mortgagor, except where the parties agree that the mortgagee or a third party shall hold the mortgaged property.

3. Where the ownership rights with respect to immoveable property have been registered, such property may be mortgaged as security for the performance of several civil obligations if its value is greater than the total value of the secured obligations, unless otherwise agreed or stipulated by law.

4. Mortgage of land use rights is stipulated in articles 727 to 737 of this Code.

Article 347 Formalities for Mortgages of Property

1. A property mortgage must be made in writing, either in a separate document or stated within a principal contract, and must be notarized by the State notary public or certified by the authorized people's committee, if so agreed or stipulated by law.

2. A mortgage must be registered if the ownership rights of the immoveable property have been registered.

Article 348 Duration of Mortgages

The duration of a property mortgage shall be determined according to the duration of performance of the civil obligation it secures.

Article 349 Mortgages of Leased Property

Leased property may also be mortgaged. Any benefits and income derived from the lease shall form part of the mortgaged property, if so agreed or stipulated by law.

Article 350 Mortgages of Insured Property

Where mortgaged property is insured, the insurance coverage shall also form part of the mortgaged property.

Article 351 Obligations of Mortgagors of Property

A mortgagor is obliged to:

1. Register the property mortgage in accordance with the provisions in paragraph 2 of article 347 of this Code and inform the mortgagee of any third party rights with respect to the mortgaged property;

2. Inform each of any subsequent mortgagees of previous mortgages of the property;

3. Deliver the documents relating to the mortgaged property to the mortgagee; and

4. Where the mortgagor holds the mortgaged property:

(a) Take care of and preserve the mortgaged property;

(b) If the mortgaged property is in danger of losing its value or depreciating in value due to its exploitation, take necessary remedial measures, including ceasing the exploitation of the mortgaged property; and

(c) Not sell, exchange or give the mortgaged property, except as stipulated in article 358 of this Code.

Article 352 Rights of Mortgagors of Property

A mortgagor of property is entitled to:

1. If the mortgaged property is held by the mortgagor, exploit, and enjoy the benefits and income derived from, the property, except where the benefits and income also form part of the mortgaged property;

2. Lease, lend, or use the mortgaged property as security for the performance of other obligations, if so agreed or stipulated by law;

3. Recover the mortgaged property held by the mortgagee or a third party, when the obligation is terminated or is secured by other means.

Article 353 Obligations of Mortgagees of Property

A mortgagee of property is obliged to:

1. Where the mortgagee holds the documents relating to the mortgaged property, but does not hold the mortgaged property, return to the mortgagor such documents upon termination of the mortgage;

2. Where the mortgagee holds the mortgaged property and the documents relating to the mortgaged property:

(a) Take care of and preserve the mortgaged property as if it were its own, and compensate for any damage if it causes the mortgaged property to lose its value or depreciate in value;

(b) Comply with the restrictions on immoveable property stipulated in articles 270 to 284 of this Code;

(c) If the property is in danger of losing its value or depreciating in value due to its exploitation, to cease such exploitation as demanded by the mortgagor; and

(d) Return the mortgaged property and the documents relating to the mortgaged property when the mortgagor fulfils the obligation or when the obligation is secured by other means.

Article 354 Rights of Mortgagees of Property

A mortgagee of property is entitled to:

1. Exploit, and enjoy the benefits and income derived from, the property as agreed;

2. Demand any unlawful possessor or user of the property to return the property;

3. Demand the realization of the mortgaged property in accordance with article 359 or paragraph 2 of article 360 of this Code, and enjoy priority right to payment.

Article 355 Obligations of Third Parties Holding Mortgaged Property

A third party holding mortgaged property is obliged to:

1. Take care of and preserve the mortgaged property as if it were its own, and compensate for any damage if it causes the mortgaged property to lose its value or depreciate in value;

2. If the property is in danger of losing its value or depreciating in value due to its exploitation, to cease such exploitation; and

3. Return the mortgaged property to the mortgagee or mortgagor as agreed.

Article 356 Rights of Third Parties Holding Mortgaged Property

A third party holding mortgaged property is entitled to:

1. Exploit, and enjoy the benefits derived from, the property, if so agreed; and

2. Receive remuneration and be reimbursed for expenses incurred in taking care of and preserving the mortgaged property, unless otherwise agreed.

Article 357 Substitution and Repair of Mortgaged Property

1. A mortgagor may only substitute mortgaged property with the consent of the mortgagee, unless otherwise agreed.

2. Where mortgaged property is damaged [or deteriorates], the mortgagor must repair the mortgaged property within a reasonable time, or substitute the mortgaged property with another property of equivalent value, unless otherwise agreed.

Article 358 Conversion of Mortgages into Guarantees

Where mortgaged property is sold, exchanged or given, the purchaser, exchanger or recipient shall become the guarantor provided that the mortgagee and the purchaser, exchanger, or recipient so consent.

Article 359 Realization of Mortgaged Property

If a mortgagor fails to perform, or performs improperly, an obligation when it falls due, the mortgagee may demand an auction of the mortgaged property in order to satisfy the obligation, unless otherwise agreed.

The mortgagee shall have a priority to payment from the proceeds of sale of the mortgaged property, after deducting the expenses for taking care of and auctioning the property.

Article 360 Mortgages of Property Used as Security for Performance of Several Obligations

1. Where the ownership rights with respect to immoveable property have been registered, and the property is mortgaged to secure the performance of several obligations, each mortgage must be made in writing and registered in accordance with paragraph 2 of article 347 of this Code.

2. Where a mortgaged property must be realized in order to satisfy an obligation which has fallen due, the other [secured] obligations which have not become due shall be deemed due. The order of payment priority shall be determined according to the order in which the mortgages were registered.

Article 361 Cancellation of Mortgages of Property

A mortgage of property may be cancelled with the consent of the mortgagee, unless the law otherwise provides.

Article 362 Termination of Property Mortgages

A mortgage of property terminates in any of the following cases:

1. The obligation which is secured by the mortgage has been performed;

2. The mortgage of the property is cancelled or substituted with another security; or

3. The mortgaged property has been realized in accordance with article 359 or paragraph 2 of article 360 of this Code.

When a mortgage terminates, the authorized State body which registered the mortgage shall certify the release of the mortgage.

IV. PERFORMANCE BONDS

Article 363 Performance Bonds

1. A performance bond is a sum of money, precious metals, gemstones or other valuable objects (hereinafter referred to as performance bond property) delivered by one party to another party for a period of time as security for the entering into, or performance of, a civil contract.

A performance bond must be recorded in writing.

2. Upon a contract being entered into or performed, any performance bond property shall be returned to the party which delivered the bond, or deducted from the amount of an obligation to pay money. If the party which delivered the bond refuses to enter into or perform the contract, the performance bond property shall belong to the recipient of the bond. If the recipient of the bond refuses to enter into or perform the contract, it must return the performance bond property and pay an amount equivalent to the value of the performance bond property to the party which delivered the bond, unless otherwise agreed.

V. SECURITY DEPOSITS

Article 364 Security Deposits

1. A security deposit is a sum of money, precious metals, gemstones or other valuable objects (hereinafter referred to as security deposit property) delivered by a lessee of moveable property to the lessor for a period of time as security for the return of the leased property.

2. Where the leased property is returned, the lessee is entitled to recover the security deposit property after [any outstanding] rent is deducted therefrom. If the lessee does not return the leased property, the lessor is entitled to reclaim the leased property. If the leased property can no longer be returned, the security deposit property shall belong to the lessor.

VI. ESCROW DEPOSITS

Article 365 Escrow Deposits

1. An escrow deposit is a sum of money, precious metals, gemstones or other papers which can be valued in terms of money deposited by an obligor into an escrow account at a bank as security for the performance of an obligation.

2. Where an obligor fails to perform, or performs improperly, an obligation, the obligee is entitled to be paid, and compensated for any damage that the obligor causes, by the bank where the account is held, after bank service charges are deducted.

3. The procedures for making deposits and making payments shall be stipulated by the law on banking activities.

VII. GUARANTEES

Article 366 Guarantees

1. A guarantee is an undertaking made by a third party (hereinafter referred to as the guarantor) to an obligee (hereinafter referred to as the beneficiary) to perform an obligation on behalf of an obligor (hereinafter referred to as the principal) if the obligation falls due and the principal fails to perform, or improperly performs, the obligation. The parties may agree that the guarantor shall only be obliged to perform the obligation if the principal is incapable of performing it.

2. A guarantee may only be made with property under the ownership of the guarantor or by the performance of an act.

A guarantee by trust made by a socio-political organization shall be provided in accordance with article 376 of this Code.

Article 367 Formalities for Guarantees

A guarantee must be made in writing and notarized by a State notary public or certified by the authorized people's committee, if so agreed or stipulated by law.

Article 368 Scope of Guarantees

A guarantor may guarantee an obligation in whole or in part on behalf of a principal.

A guaranteed obligation includes interest on the principal, penalties and compensation for any damage, unless otherwise agreed.

Article 369 Remuneration

The guarantor shall be entitled to receive remuneration, if so agreed with the principal or stipulated by law.

Article 370 Joint Guarantors

When more than one person guarantee an obligation, those persons must perform jointly the guarantee, except where it is agreed, or the law provides, that the guarantee comprises separate portions. The obligee may demand any of the joint guarantors to perform the obligation in its entirety.

Where one of the joint guarantors has performed the entire obligation on behalf of the principal, the guarantor may demand the other guarantors to perform their [respective] portions of the obligation with respect to that guarantor.

Article 371 Relationship between Guarantors and Beneficiaries

1. A beneficiary may not demand a guarantor to perform an obligation on behalf of the principal until the obligation falls due.

2. Where a beneficiary can offset an obligation with a principal, a guarantor does not have to perform the guaranteed obligation.

Article 372 Right to Demand of Guarantors

Where a guarantor has performed a [guaranteed] obligation, the guarantor may demand the principal to indemnify the guarantor to the extent of the guarantee, unless otherwise agreed.

Article 373 Discharge from Guaranteed Obligations

1. Where a beneficiary discharges a guarantor from an obligation, the principal remains liable to perform the obligation with respect to the beneficiary, except where it is agreed, or the law provides, that the guaranteed obligation must be performed jointly.

2. Where one person from amongst the joint guarantors is discharged from the performance of his or her portion of the guaranteed obligation, the other joint guarantors must still perform their share of the guaranteed obligation.

Article 374 Cancellation of Guarantees

A guarantee may be cancelled with the consent of the beneficiary, unless the law otherwise provides.

Article 375 Termination of Guarantees

A guarantee terminates in any of the following cases:

1. The obligation secured by the guarantee terminates;

2. The guarantee is cancelled or is substituted by another security;

3. The guarantor has satisfied the guaranteed obligation; or

4. The guarantor dies or the legal entity acting as the guarantor is wound up.

Article 376 Guarantees By Trust Provided by Socio-Political Organizations

1. A socio-political organization may provide a guarantee by trust in order that poor individuals and households can borrow small sums from banks or credit institutions for purposes of production, business or provision of services in accordance with the regulations of the Government.

2. A loan guaranteed by trust must be made in writing, specifying the loan amount, purpose of loan, term of loan, interest rate, rights, obligations and responsibilities of the borrower, the lending bank or credit institution and the guarantor organization.

VIII. PENALTIES FOR BREACH

Article 377 Penalties for Breach

1. A penalty for breach is a means of security for the performance of an obligation which shall be applied as agreed or stipulated by law, pursuant to which a party breaching an obligation shall pay a certain sum of money to the party whose rights are breached.

2. An agreement on the penalties for a breach must be made in writing and may be a separate document or stated within the principal contract.

Article 378 Amounts of Penalties for Breach

A penalty amount may be a fixed sum of money or may be calculated as a percentage of the value of that part of an obligation which is breached, but the maximum [rate] shall not exceed five per cent [of such part of the obligation].

Article 379 Relationship between Penalty for Breach and Compensation for Damage

1. Parties may agree that a party breaching an obligation must pay only a penalty for breach without having to compensate for any damage, or must pay both a penalty for breach and compensation for any damage. If there is no prior agreement as to the amount of compensation for any damage, then compensation must be made for all damage.

2. Where parties have agreed that, [in the event of a breach], either penalties for breach or compensation for damage will be payable, then the party not in breach shall have the right to choose.

3. Where parties have an agreement on, or the law stipulates, penalties for breach, but the parties do not have an agreement on, or the law does not stipulate, compensation for any damage, the party in breach is only required to pay the penalty for breach.

Section 6

TERMINATION OF CIVIL OBLIGATIONS

Article 380 Bases for Termination of Civil Obligations

A civil obligation terminates in any of the following cases:

1. The obligation is fulfilled;

2. The parties so agree;

3. The obligee waives the obligation ;

4. The obligation is substituted by another civil obligation;

5. The obligation is offset;
6. The obligee and the obligor merge;

7. The limitation period for initiating a legal action has expired;

8. The obligor, who is an individual, dies or the obligor, which is a legal entity, is wound up and the obligation must be performed by that particular individual or legal entity;

9. The obligee, who is an individual, dies and the right to demand is not bequeathed or the obligee, which is a legal entity, is wound up and the right to demand cannot be transferred to another legal entity; or

10. A distinctive object which is the subject matter of the obligation no longer exists and is substituted by another civil obligation.

An obligation may also terminate in other cases, if the law so provides.

Article 381 Fulfilment of Civil Obligations

The civil obligation shall be deemed to be have been fulfilled when the obligor has performed the obligation in its entirety.

Article 382 Fulfilment of Civil Obligations Where Obligees Are Late in Accepting Subject Matter of Obligations

1. When an obligee is late in accepting the subject matter of an obligation which is an object, the obligor must take care of and preserve the object, or deposit it [for safekeeping] at a place of storage, and must notify the obligee immediately. The party which is late in accepting must bear all related risks and expenses .

The obligation to deliver an object shall be fulfilled at the moment the object is deposited for safekeeping in the quantity, quality and other conditions as agreed by the parties.

2. Where the subject matter of an obligation is money or valuable papers and the obligee is late in accepting such subject matter, the obligor may deposit such subject matter [for safekeeping] at a place of storage and must notify the obligee immediately. The obligation is deemed to have been fulfilled from the moment when the subject matter is deposited for safekeeping.

Article 383 Termination of Civil Obligations by Agreement

Parties may agree to terminate a civil obligation at any time but must not cause damage to the interests of the State or the public or the legal rights or interests of other persons.

Article 384 Termination of Civil Obligations Due to Waiver

1. A civil obligation shall terminate when the obligee waives the obligation of the obligor, unless the law otherwise provides.

2. When a secured obligation is waived, the security arrangement shall also terminate.

Article 385 Termination of Civil Obligations by Substitution

1. Where parties agree to substitute an original civil obligation with another civil obligation, then the original civil obligation shall terminate.

2. A civil obligation shall also terminate if the obligee has accepted another property, or the performance of another act, as a substitute for the property or act previously agreed.

3. Where a civil obligation is an obligation to support others or to compensate for any damage due to harm to life, health, honour, dignity or reputation, or another personal obligation which cannot be transferred to other persons, such obligation may not be substituted with another obligation.

Article 386 Termination of Civil Obligations Where Obligations Are Offset

1. Where two parties have reciprocal obligations with respect to generic properties, when both obligations fall due, the parties shall not be required to perform their obligations to each other, and the obligations shall be deemed to have terminated, unless the law otherwise provides.

2. Where the values of properties or acts are not equivalent, the parties shall settle with each other the difference in value.

3. Objects having monetary value may be used to offset an obligation to pay money.

Article 387 Cases Where Civil Obligations May Not Be Offset

A civil obligation may not be offset in any of the following cases:

1. The civil obligation is in dispute;

2. The obligation is to compensate for harm to life, health, dignity, honour or reputation;

3. The obligation is to support others; and

4. Other obligations stipulated by law.

Article 388 Termination of Civil Obligations Upon Merger of Obligor and Obligee

A civil obligation of an obligor shall terminate automatically when the obligor becomes the obligee with respect to that particular obligation.

Article 389 Termination of Civil Obligations Due to Expiry of Limitation Periods for Initiating Legal Actions

Upon the expiry of a limitation period for initiating a legal action, the [relevant] obligation terminates. If the limitation period has expired but the obligation is, nevertheless, performed, the obligor shall not have the right to reclaim whatever he or she performed.

Article 390 Termination of Civil Obligations When Individual Obligors Die or When Legal Entity Obligors Are Wound Up

Where parties have agreed, or the law stipulates, that an obligation must be performed by a particular obligor, when such individual dies or such legal entity is wound up, the obligation terminates.

Article 391 Termination of Civil Obligations Where Individual Obligees Die or Legal Entity Obligees Are Wound Up

Where parties have agreed, or the law stipulates, that an obligation must be performed for a particular obligee, when such individual dies or such legal entity is wound up, the obligation terminates.

Article 392 Termination of Civil Obligations When Distinctive Objects No Longer Exist

An obligation to deliver a distinctive object terminates when such distinctive object no longer exists.

Parties may agree on the substitution of such object with another object or on compensation for any damage.

Article 393 Termination of Civil Obligations in Cases of Bankruptcy

In cases of bankruptcy, civil obligations shall terminate in accordance with the law on bankruptcy.

Section 7

CIVIL CONTRACTS

I. ENTERING INTO CIVIL CONTRACTS

Article 394 Definition of a Civil Contract

A civil contract is an agreement between parties in relation to the establishment, modification or termination of civil rights and obligations.

Article 395 Principles of Entering into Civil Contracts

A civil contract must be entered into in accordance with the following principles:

1. Freedom of contract provided that it is consistent with law and social morals; and

2. Voluntariness, equality, goodwill, co-operation, honesty and good faith.

Article 396 Offers to Enter into Civil Contracts

Where a party, which offers to another party to enter into a contract, has specified the principal contents of the contract and the time for reply, it may not, during the time-limit for reply, offer a third party to enter into the contract and shall be liable for his or her offer.

Article 397 Time-Limits for Accepting Offers to Enter into Civil Contracts

1. Where an offeror has specified a time-limit for reply, an acceptance shall only be effective if it is made within that time-limit. If the offeror receives an acceptance after the time-limit has expired, such acceptance shall be deemed to be a new offer from the party which is late in accepting.

2. Where the parties communicate directly, including conversations by telephone and other means of communication, the offeree must reply immediately as to whether or not he or she will accept, except where there is an agreement as to the time-limit for reply.

3. Where a reply is sent by mail, the time of reply shall be [deemed to be] the date on which the reply is posted as evidenced by the postal seal.

Article 398 Modification or Withdrawal of Offers to Enter into Civil Contracts

An offeror may modify or withdraw an offer in either of the following cases:

1. The offeree has not received the offer; or

2. The offeror had specified the circumstances in which the offer could be modified or withdrawn.

Article 399 Termination of Offers to Enter into Civil Contracts

1. An offer to enter into a civil contract terminates in any of the following cases:

(a) The offeree rejects the offer or is late in accepting [the offer]; or

(b) The time-limit for accepting has expired.

2. Where the offeror modifies the offer , that offer shall be deemed to be a new one.

3. Where the offeree agrees to enter into a contract, but attaches conditions to, or modifies the offer, it shall be deemed to have made a new offer.

Article 400 Formalities for Civil Contracts

1. Civil contracts may be entered into orally, in writing or by specific acts, where the law does not provide that such type of contract must be entered into in a specified form.

Where the parties have agreed to enter into a contract in a specified form, the contract shall be deemed to have been entered into when such form is complied with.

2. Where the law provides that a contract must be made in writing, notarized by the State notary public, registered or approved, such law must be complied with.

Article 401 Principal Contents of Civil Contracts

1. The principal contents of a civil contract are terms in the absence of which the contract cannot be entered into.

The principal contents of contracts are stipulated by law. Where the law does not so stipulate, such contents shall be as agreed by the parties.

2. Depending on the type of contract, the parties may agree on the following contents:

(a) The subject matter of the contract which is property to be delivered, or an act to be performed or not performed;

(b) Quantity and quality;

(c) Price and method of payment;

(d) Time-limit, place and method of performing the contract;

(e) Rights and obligations of the parties; and

(f) Liability for breach of contract.

In addition to the principal contents mentioned in this paragraph, a contract may contain other contents as agreed by the parties.

Article 402 Places for Entering into Civil Contracts

The place where a civil contract is entered into shall be the residence of the individual or the head office of the legal entity having made the offer in relation to entering into the contract, unless otherwise agreed.

Article 403 Time At Which Civil Contracts are Entered into

1. A contract is entered into at the time when the offeror receives the acceptance or at the time when the parties reach an agreement on the principal contents of the contract.

2. A contract shall also be deemed to be entered into when the time-limit for reply has expired and the offeree remains silent provided that the parties have agreed that silence shall constitute an acceptance.

3. The time at which an oral contract is entered into is the time at which the parties have personally reached agreement on the principal contents of the contract.

4. The time at which a written contract is entered into shall be the time at which the last party signs the contract.

5. With respect to contracts which must be notarized by the State notary public, registered or approved, the time at which a contract is entered into shall be the time at which the contract is notarized, registered or approved.

Article 404 Effectiveness of Civil Contracts

1. A contract legally entered into shall be binding on the parties.

2. A contract may only be modified or cancelled, if so agreed or stipulated by law.

3. A contract shall take effect from the time at which it is entered into, unless otherwise agreed or stipulated by law.

Article 405 Principal Types of Contracts

Civil contracts comprise the following principal types:

1. A bilateral contract is a contract whereby each party has an obligation to the other;

2. A unilateral contract is a contract whereby only one party has an obligation;

3. A principal contract is a contract the effectiveness of which does not depend on another contract;

4. An ancillary contract is a contract the effectiveness of which depends on a principal contract; and

5. A contract for the benefit of a third party is a contract whereby contracting parties must perform obligations for the benefit of a third party.

Article 406 Standard Form Contracts

1. A standard form contract is a contract containing terms and conditions which are prepared by a party based on a standard form requiring the other party to reply within a reasonable period of time. If the offeree accepts, it shall be deemed to have accepted the entire contract provided by the offeror.

2. Where a standard form contract contains terms and conditions which are unclear, such terms and conditions shall be interpreted in a manner favouring the offeree .

Article 407 Appendices to Contracts

Appendices providing details on certain terms and conditions of a contract may be attached to the contract. The appendices shall have the same effectiveness as the contract. The contents of the appendices shall not contradict the contents of the contract.

Article 408 Interpretation of Civil Contracts

1. Where a contract contains terms which are unclear, the interpretation of such terms shall be based not only on the wording of the contract but also on the mutual intentions of the parties.

2. Where a term of a contract may be interpreted in different ways, it shall be interpreted in the way which, when effective, will best benefit the parties.

3. Where the wording of a contract may be interpreted in different ways, such wording shall be interpreted in the way most appropriate to the nature of the contract.

4. Where a contract contains a term or wording which is difficult to understand, such term or wording shall be interpreted in accordance with the customary practice of the place where the contract was entered into.

5. Where a contract lacks a number of terms which are not principal, such terms may be added [to the contract] in accordance with the customary practice for that particular type of contract at the place where the contract was entered into.

6. The terms of a contract must be interpreted in relation to each other so that the meanings of the terms conform with the entire content of the contract.

II. PERFORMANCE OF CIVIL CONTRACTS

Article 409 Principles for Performance of Civil Contracts

The performance of a civil contract must comply with the following principles:

1. Performance in good faith, in the spirit of co-operation, for the best benefit of the parties and in mutual trust;

2. In strict compliance with the agreed subject matter, quality, quantity, type, time-limit, method and other matters;

3. No infringement of the interests of the State or the public or the legal rights or interests of other persons.

Article 410 Performance of Unilateral Contracts

With respect to a unilateral contract, the obligor must perform the obligation strictly as agreed. The obligor may only perform the obligation prior to or after the time-limit with the consent of the obligee.

Article 411 Performance of Bilateral Contracts

1. With respect to a bilateral contract, where the parties have agreed on a time-limit for the performance of an obligation, each party must perform its obligation when the obligation falls due. A party may not postpone performance by reason of the other party not having performed the obligations owed to the former, except in the circumstances stipulated in article 413 of this Code.

2. Where the parties have no agreement as to which party shall perform its obligation first, the parties must perform their obligations concurrently.

Article 412 Right to Postpone Performance of Bilateral Contracts

The party which is required to perform its obligation first may postpone the performance of such obligation, if the property of the other party has substantially decreased in value such that its obligation cannot be performed as undertaken, until the other party is able to perform its obligation or has a guarantor.

Article 413 Obligations Which Cannot Be Performed Due to Fault of a Party

When a party is unable to perform its obligations due to the fault of the other party, the former party may demand the latter party, nevertheless, to perform its obligation with respect to the former party or may cancel the contract and demand compensation for any damage.

Article 414 Performance of Contracts for Benefit of Third Parties

Where a contract is performed for the benefit of a third party, the third party may personally demand the obligor to perform the obligations with respect to such third party. If there is a dispute between the parties [to the contract] as to the performance of the contract, the third party may not demand performance until the dispute is resolved.

An obligee may also demand the obligor to perform a contract for the benefit of a third party.

Article 415 Right to Waive of Third Parties

Where a third party waives its [right to] benefits prior to the performance of an obligation by an obligor, the obligor shall not be required to perform the obligation but must notify the obligee, the contract shall be deemed to be cancelled, and each party shall return anything it has received from the other party. If a third party waives its [right to] benefits after the obligor has performed the obligation, the obligation shall be deemed to have been fulfilled and the obligee must perform its undertakings with respect to the obligor.

Article 416 No Amendment or Cancellation of Contracts for Benefit of Third Parties

Where a third party has agreed to receive a benefit, the parties to the contract may not amend or cancel the contract, even where the contract is yet to be performed, except with the consent of the third party.

III. AMENDMENT AND TERMINATION OF CIVIL CONTRACTS

Article 417 Amendment of Civil Contracts

1. Parties may agree to amend a contract and deal with any consequences resulting from such amendment, unless the law otherwise provides.

2. Where a contract has been made in writing, notarized by a State notary public, certified, registered or approved, any amendment of the contract must also comply with such formalities.

Article 418 Termination of Civil Contracts

A civil contract terminates in any of the following cases:

1. The contract has been completed;

2. The parties so agree;

3. Where a contract can only be performed by the particular individual who, or legal entity or subject which, has entered into the contract, and [that particular individual, legal entity or subject] dies, is wound up or [otherwise] ceases to exist;

4. The contract is cancelled or [the performance of the contract is] suspended;

5. The contract cannot be performed because the subject matter of the contract no longer exists. In such case, the parties may agree to substitute the subject matter of the contract with another subject matter or to compensate for any damage; and

6. Others circumstances stipulated by law.

Article 419 Cancellation of Contracts

1. A party may cancel a contract and is not liable to compensate for damage where the parties agree, or the law provides, that a breach of contract by the other party may give rise to cancellation.

2. A party cancelling a contract must notify the other party immediately of the cancellation. If the former party fails to notify the latter party, thereby causing damage to the other party, the former party must compensate [for any damage].

3. Where a contract is cancelled, it shall be [deemed to have been] ineffective as from the time at which it was entered into and each party must return anything it has received from the other party. If restitution cannot be made in kind, it may be paid in money.

4. A party at fault in relation to the cancellation of a contract must compensate for any damage.

Article 420 Unilateral Suspension of Performance of Contracts

1. A party may suspend unilaterally the performance of a contract without liability to compensate for damage where the breach of contract of the other party gives rise to such suspension as agreed by the parties or as stipulated by law. The party in breach of the contract must compensate for any damage.

2. A party which suspends unilaterally the performance of a contract must notify the other party immediately of such suspension. If the former party fails to inform the other party, thereby causing damage, the former party must compensate [for any damage].

3. Where the performance of a contract is suspended unilaterally, it terminates at the time when the other party is notified of the suspension. [In such case,] the parties do not have to continue to perform their obligations. A party which has already performed its obligation may demand the other party to make payment.


Chapter II

COMMON CIVIL CONTRACTS

Section 1

CONTRACTS FOR SALE AND PURCHASE OF PROPERTY

I. GENERAL PROVISIONS ON CONTRACTS FOR SALE AND PURCHASE OF PROPERTY

Article 421 Contracts for Sale and Purchase of Property

A contract for sale and purchase is an agreement between parties whereby a seller must deliver property, transfer the ownership rights with respect to that property to the purchaser, and receive monetary payment, and a purchaser must accept the property and pay the seller.

Article 422 Subject Matters of Contracts for Sale and Purchase

1. The subject matter of a contract for sale and purchase may be an object or property right. Such object or property right must exist and be capable of being transacted.

2. Where the subject matter of a contract for sale and purchase is an object, such object must be identified by its utility value, category, quantity and quality.

3. Where the subject of a contract for sale and purchase is a property right, documents or other evidence must be produced to prove that such rights are under the ownership of the seller.

Article 423 Quality of Objects for Sale and Purchase

1. The quality of an object for sale and purchase shall be agreed by the parties.

2. Where the quality of an object has been registered or is stipulated by the authorized State body, the quality of the object shall conform to the registered standard or the stipulations of the authorized State body.

3. Where parties have not agreed as to, or the law does not stipulate, the quality [of an object] for sale and purchase, then the quality of such object shall conform with the purpose of use and the average quality of an object of the same type.

Article 424 Price and Method of Payment

1. Price shall be agreed by the parties, or determined by a third party at the request of the parties.

With respect to property for which the State has stipulated a price range, the parties shall agree on a price within such price range.

Where parties have agreed that payment shall be made according to the market price, the price shall be determined at the moment and place of payment.

2. Parties may agree on the application of a mechanism to reflect movements in price.

3. The method of payment shall be agreed by the parties or as stipulated by law.

Article 425 Time-Limits for Performance of Contracts for Sale and Purchase

1. The time-limit for performance of a contract for sale and purchase shall be agreed by the parties.

The seller must deliver the property to the purchaser in accordance with the agreed time-limit . The seller may only deliver the property prior to the time-limit with the consent of the purchaser.

2. Where the parties have not agreed on a time-limit for delivery of the property, the purchaser may demand, at any time, the seller to deliver the property and the seller also may demand, at any time, the purchaser to accept the property, but the parties must give reasonable prior notice to each other, unless otherwise agreed.

3. Where the parties have no agreement as to the time-limit for payment, the purchaser must pay immediately upon receipt of the property.

Article 426 Place for Delivery of Property

Parties shall agree on a place for delivery of the property. If there is no agreement, article 289 of this Code shall apply.

Article 427 Methods of Delivery of Property

Property shall be delivered in accordance with the methods agreed by the parties, depending on the nature and subject matter of the contract. If there is no agreement as to the method for delivery of the property, the property shall be delivered at one time directly to the purchaser.

Article 428 Liability In Respect of Delivery of Objects in Incorrect Quantities

1. Where a seller delivers objects in a quantity which is more than that agreed, the purchaser may refuse to accept the excess. If, however, he or she accepts [the excess], the purchaser must pay for the excess at the agreed price.

2. Where a seller delivers objects in a quantity which is less than that agreed, the purchaser may:

(a) Cancel the contract and demand compensation for any damage;

(b) Accept the amount delivered and demand compensation for any damage; or

(c) Accept the amount delivered and set a time-limit for the seller to deliver the amount outstanding.

Article 429 Liability In Respect of Delivery of Incomplete Integrated Objects

1. Where an integrated object is delivered incomplete, thereby rendering the object unusable, the purchaser may:

(a) Cancel the contract and demand compensation for any damage; or

(b) Accept [the object] and demand the seller to deliver the remaining parts, demand compensation for any damage, and postpone payment in respect of the parts received until the missing parts are delivered.

2. Where a purchaser has paid for, but not yet accepted, the delivery of an incomplete integrated object, the purchaser shall be paid interest on the amount pre-paid at the interest rate for overdue debts stipulated by the State Bank and may demand the seller to compensate for any damage due to the delivery of the incomplete integrated object from the time at which the contract is required to be performed to the time at which the complete integrated object is delivered.

Article 430 Liability In Respect of Delivery of Objects of Incorrect Type

Where an object delivered is of an incorrect type, the purchaser may:

1. Cancel the contract and demand compensation for any damage;

2. Accept the object and pay the agreed price; or

3. Demand delivery of an object of the correct type and compensation for any damage.

Article 431 Obligation to Make Payment

1. A purchaser must pay the full price at the agreed place and time.

2. A purchaser must pay interest from the day on which payment falls due in accordance with paragraph 2 of article 313 of this Code, except where otherwise agreed or stipulated by law.

Article 432 Time At Which Ownership Rights are Transferred

1. Ownership rights with respect to property for sale and purchase pass to the purchaser from the time at which the purchaser accepts the property, unless otherwise agreed or stipulated by law.

2. Where the law requires that ownership rights with respect to [certain] property which is the subject matter of a contract for sale and purchase must be registered, such rights shall pass to the purchaser upon completion of the registration procedures .

Article 433 Time for Passing of Risk

1. A seller has the risk with respect to property for sale and purchase until the property is delivered to the purchaser, and the purchaser has the risk with respect to property for sale and purchase from the time of acceptance of the property, unless otherwise agreed.

2. Where the law requires that ownership rights with respect to [certain] property which is the subject matter of a contract for sale and purchase must be registered, the seller has the risk until the completion of the registration procedures and the purchaser has the risk from the completion of the registration procedures, even where the purchaser has not yet accepted the property, unless otherwise agreed.

Article 434 Transport Costs and Costs related to Transfer of Ownership Rights

Where there is no agreement on, and the law does not stipulate, transport costs and costs related to transfer of ownership rights, the seller is liable for the costs of transportation to the place of performance of the obligation and the costs related to the transfer of the ownership rights.

Article 435 Obligation to Provide Information and Instructions for Use

A seller must provide a purchaser with [all] necessary information on the property for sale and purchase and instructions on the use of the property. If the seller fails to perform this obligation, the purchaser may demand the seller to perform [such obligation] and, if the seller fails to satisfy such demand, the purchaser may cancel the contract and demand compensation for any damage.

Article 436 Assurances as to Ownership Rights of Purchasers With Respect to Purchased Property

1. A seller must assure that the ownership rights with respect to the property sold to a purchaser are not disputed by a third party.

2. Where [ownership rights with respect to] property are disputed by a third party, the seller must support the purchaser in protecting the interests of the purchaser. If a third party has the ownership rights with respect to all or part of the property for sale and purchase, the purchaser may cancel the contract and demand the seller to compensate for any damage.

Where a purchaser knows, or should know, that property for sale and purchase is under the ownership of a third party but, nevertheless, purchases [the property], [the purchaser] must return the property to the owner and may not demand compensation for damage.

Article 437 Assurances as to Quality of Objects for Sale and Purchase

1. A seller must assure the utility value or the function of the object for sale and purchase. If, after having purchased an object, a purchaser discovers defects which cause the object to lose its value or diminish its utility value, the purchaser must notify [the seller] immediately of such defects and may demand the seller to repair or replace the defective object with another object, to reduce its price and to compensate for any damage, unless otherwise agreed.

2. A seller must assure that an object for sale corresponds to descriptions on any package, to any trademarks or to any samples selected by the purchaser.

3. A seller shall not be liable for any defect of an object in any of the following cases:

(a) Where the purchaser knew, or should have known, of the defect at the time of purchase;

(b) Where the object was sold at an auction or a second-hand shop; and

(c) Where the purchaser was at fault for causing the defect.

Article 438 Warranty Obligations

If agreed by parties or stipulated by law, a seller must provide a warranty for the object for sale and purchase for a [certain] period, hereinafter referred to as the warranty period.

The warranty period shall be calculated from the time at which the purchaser is obliged to accept the object.

Article 439 Right to Claim On Warranty

If a purchaser discovers a defect in a purchased object during the warranty period, it may demand the seller to repair the object free of charge, to reduce its price or to replace it with another object, or it may return the object in exchange for a refund.

Article 440 Repairs of Objects During Warranty Periods

1. A seller must repair a [defective] object and assure that it then satisfies the quality standards or nature undertaken.

2. A seller must pay the costs for repairing a [defective] object and for transporting it from the place of residence or head office of the purchaser to the place of repair and vice versa.

3. A purchaser may demand the seller to complete the repairs within a time-limit agreed by the parties, or within a reasonable time. If the seller is unable to make or complete the repairs within such time, the purchaser may demand a price reduction or replacement of the defective object with another object, or it may return the object in exchange for a refund.

Article 441 Compensation for Damage During Warranty Periods

1. In addition to demanding the performance of warranty obligations, a purchaser may demand the seller to compensate for any damage caused during the warranty period due to technical defects of the object.

2. A seller is not liable to compensate for damage if it can prove that the damage was caused due to the fault of the purchaser. The seller shall be entitled to a reduction in the amount of compensation for the damage where the purchaser has failed to take [all] necessary measures available to it to mitigate the damage.

Article 442 Sale and Purchase of Property Rights

1. Where property rights are sold and purchased, a seller must deliver the relevant documents and complete the procedures for transferring the ownership rights to the purchaser and the purchaser must pay the seller.

2. Where property rights are the right to demand payment of a debt and the seller has guaranteed the ability to pay of the debtor, the seller shall be jointly liable for payment if the debt falls due and the debtor fails to pay.

3. The time at which the ownership rights with respect to property rights are transferred is the time at which a purchaser receives documents evidencing the ownership rights with respect to the property rights, or the time at which the transfer of the ownership rights is registered, if the law so provides.

II. CONTRACTS FOR SALE AND PURCHASE OF HOUSES

1 - Contracts for Sale and Purchase of Residential Houses

Article 443 Formalities for Contracts for Sale and Purchase of Residential Houses

A contract for sale and purchase of a residential house must be in writing and notarized by a State notary public or certified by the authorized people's committee.

Article 444 Procedures for Sale and Purchase of Residential Houses

Parties must register the transfer of the title to a residential house with the authorized State body. The title to a residential house shall pass to the purchaser upon registration thereof.

Article 445 Sales of Residential Houses Under Multiple Ownership

The sale of a residential house under the joint ownership of several persons must have the written consent of all owners.

The sale of a residential house under ownership in common must not [adversely] affect the rights or interests of the other owners in common. Such other owners shall have a right of refusal to purchase as stipulated in paragraph 3 of article 237 of this Code.

Article 446 Sales of Leased Residential Houses

[Any] lessee of a residential house which is to be sold shall have a right of first refusal to purchase the house if the lessee has no other place to live and has fulfilled all obligations as lessee.

The owner of a leased residential house shall notify the lessee of the terms of sale no later than three months before the sale. The owner may sell the residential house to another person if the lessee refuses to purchase, or fails to reply, before the expiry of such period .

Article 447 Obligations of Sellers of Residential Houses

A seller of a residential house is obliged to:

1. Notify the purchaser of restrictions, if any, on the title of the residential house for sale and purchase;

2. Take care of the residential house during the period prior to delivery to the purchaser;

3. Deliver the residential house to the purchaser in the same condition as stipulated in the contract, together with the documents relating to the house;

4. Comply strictly with the procedures for the purchase and sale of residential houses stipulated in article 444 of this Code; and

5. Pay taxes in accordance with law.

Article 448 Rights of Sellers of Residential Houses

A seller of a residential house is entitled to:

1. Demand the purchaser to accept the house strictly at the time agreed;

2. Demand the purchaser to make timely payment strictly in the manner agreed;

3. Demand the purchaser to complete the procedures for the purchase and sale of the residential house within the agreed time-limit; and

4. Not deliver the house until the agreed payment is received in full.

Article 449 Obligations of Purchasers of Residential Houses

A purchaser of a residential house is obliged to:

1. Pay the full price for the house strictly within the time-limit and in accordance with the method agreed. If the contract does not stipulate a time-limit and place of payment, the purchaser must make payment at the time when the seller delivers the house at the place where the house is located;

2. Accept the house strictly at the agreed time;

3. Where a leased house is purchased, assure the rights and interests of the lessee as agreed in the lease contract for the remainder of the term of the contract; and

4. Comply strictly with the procedures for the purchase and sale of residential houses stipulated in article 444 of this Code.

Article 450 Rights of Purchasers of Residential Houses

A purchaser of a residential house is entitled to:

1. Receive the house in the same condition as stipulated in the contract, together with the documents relating to the house;

2. Demand the seller to complete the procedures for the purchase and sale of residential houses within the agreed time-limit; and

3. Demand the seller to deliver the house strictly within the time-limit. If the seller fails to deliver, or is late in delivering, the house, the seller must pay compensation for any damage.

2 - Contracts for Sale and Purchase of Houses for Other Purposes

Article 451 Purchases of Houses for Other Purposes

The provisions of articles 443 to 450 of this Code, except those relating to the right of first refusal to purchase stipulated in article 446 of this Code, shall also apply to the purchase of houses which are used for purposes other than residency, unless otherwise stipulated by law.

III. PARTICULAR PROVISIONS RELATING TO SALE AND PURCHASE OF PROPERTY

Article 452 Sales by Auction

1. Property may be sold at an auction as required by the owner or stipulated by law.

2. A sale by auction of multiple ownership property must have the consent of all owners, unless otherwise agreed or stipulated by law.

3. An auctioneer shall be a body or organization stipulated by law.

Article 453 Announcements of Auctions

1. An auctioneer must make a public announcement at the place of auction and in the mass media as to the time, place, quantity, quality and the list of properties to be auctioned no less than seven days before the date of the auction in respect of moveable property, and no less than thirty (30) days in respect of immoveable property, unless otherwise agreed or stipulated by law.

2. Owners and persons to whom the auctioned property relates must be informed of the auction in order that they may take part in fixing the reserve price, unless otherwise agreed or stipulated by law.

Article 454 Conduct of Auctions

1. At an auction, the auctioneer must announce the reserve price.

2. The person who makes the highest bid, being at least equal to the reserve price, shall be the person who purchases the auctioned property and shall be deemed to have accepted to enter into the contract.

3. A sale by auction shall be recorded in writing, signed by the purchaser, the seller and two witnesses.

4. The time-limit for delivery of auctioned property and the time and method of payment shall be in accordance with the law on auctions.

5. The auctioneer shall not be liable for the value and quality of the auctioned property.

6. Where the highest bid is lower than the reserve price, the auction shall be deemed to have been unsuccessful.

7. Where the first auction is unsuccessful, a second auction shall be held.

The Government shall issue regulations on auctions.

Article 455 Auctions of Immoveable Property

1. An auction of immoveable property shall be conducted at the place where the immoveable property is located or at a place determined by the body or organization which holds the auction.

2. After the announcement of an auction of immoveable property, persons who wish to bid must register to bid and lodge an advance cash deposit. If the auctioned property is purchased, the advance deposit shall be deducted from the purchase price. If the successful bidder refuses to purchase, the advance deposit shall be forfeited.

The auctioneer must refund the advance deposit to persons who have registered to bid but were not successful in purchasing the auctioned property.

The list of registered bidders must be announced publicly at the place of the auction.

3. The purchase and sale of auctioned immoveable property shall be recorded in writing, notarized by a State notary public and registered with the authorized State body.

Article 456 Purchases After Trial Use

1. Parties may agree on the trial use of purchased property by the purchaser for a period, hereinafter referred to as the trial use period. During the trial use period, the prospective purchaser may inform the seller whether or not the purchaser wishes to make the purchase. If the purchaser fails to inform the seller before the expiry of the trial use period, the purchaser shall be deemed to have accepted the purchase on the terms agreed before the property was received for trial use.

2. During the trial use period, property will remain under the ownership of the seller. The seller has all risks with respect to the property, unless otherwise agreed. During the trial use period, the seller may not sell, give, lease, exchange, mortgage or pledge the property, or offer it as a guarantee, until the purchaser informs the seller whether or not it wishes to make the purchase.

3. Where a prospective purchaser informs [the seller] that it does not wish to make the purchase, the prospective purchaser must return the property to the seller and must compensate the seller if the prospective purchaser loses or damages the trial property. The prospective purchaser shall not be liable for normal wear and tear caused by the trial use and shall not have to return any benefits derived from the trial use.

Article 457 Purchases by Deferred Payment or Payment in Instalments

1. Parties may agree that the purchaser may purchase by deferred payment or payment in instalments of the purchase price within a time-limit after delivery of the purchased property. The seller is entitled to retain ownership of the property sold until the purchaser has paid the purchase price in full, unless otherwise agreed.

2. Contracts for purchase by deferred payment or payment in instalments shall be made in writing. The purchaser may use the property purchased by deferred payment or payment in instalments and has the risk during the period of use, unless otherwise agreed.

Article 458 Buy-Back of Property Sold

1. A seller and purchaser [of property] may agree that the seller has the right to buy-back the property within a period of time following the sale , hereinafter referred to as the buy-back period.

The buy-back period for property shall be agreed by the parties but shall not exceed one year in respect of moveable property, and five years in respect of immoveable property, from the time of delivery of the property. During this period, the seller may buy-back the property at any time provided that reasonable prior notice is given to the purchaser. The buy-back price shall be the market price at the time when, and place where, the buy-back occurs, unless otherwise agreed.

2. During the buy-back period, a purchaser may not sell, exchange, give, lease, mortgage or pledge the property, or offer it as a guarantee, and has all risks with respect to the property.

Section 2

CONTRACTS FOR EXCHANGE OF PROPERTY

Article 459 Contracts for Exchange of Property

1. A contract for the exchange of property is an agreement between parties whereby they deliver property, and transfer the ownership rights thereto, to each other.

2. A contract for the exchange of property must be made in writing and notarized by a State notary public, certified by the authorized people's committee or registered with the authorized State body, as stipulated by law.

3. Where one party exchanges with another party property which it does not own, or in respect of which it has no authorization from the owner, the other party may cancel the contract and demand compensation for any damage.

4. Each party is deemed to be the seller of the property delivered to the other party and the purchaser of the property delivered to it. The provisions on contracts for sale and purchase in articles 421 to 430 and articles 432 to 441 of this Code shall also apply with respect to contracts for the exchange of property.

Article 460 Settlement of Differences in Value

Where exchanged property differs in value, the parties must settle that difference between themselves, unless otherwise agreed or stipulated by law.

Section 3

CONTRACTS FOR GIFTS OF PROPERTY

Article 461 Contracts for Gifts of Property

A contract for a gift of property is an agreement between parties whereby the giver delivers its property and transfers its ownership rights to the recipient without requiring compensation and the recipient agrees to accept the gift.

Article 462 Gifts of Moveable Property

A contract for a gift of moveable property shall take effect when the recipient accepts the property. Where the law requires the ownership rights with respect to [such] property to be registered, the contract shall take effect from the time at which the registration procedures are completed.

Article 463 Gifts of Immoveable Property

1. A gift of immoveable property must be recorded in writing and notarized by a State notary public or certified by the authorized people's committee and, if the law on immoveable property requires registration of ownership rights, it must be registered with the authorized State body.

2. A contract for a gift of immoveable property shall take effect from the time of registration. In the case of immoveable property for which no registration of ownership rights is required, the gift contract shall take effect from the time at which the property is delivered.

Article 464 Liability in Respect of Intentional Giving of Property Not Under One's Ownership

Where a giver intentionally gives property which is not under its ownership and the recipient does not know, or cannot know, then such giver must reimburse the recipient for any costs incurred by the recipient in increasing the value of the property at such time as it is reclaimed by the owner.

Article 465 Obligation to Disclose Defects in Gifts

A giver must notify the recipient of any defects in a gift.

Article 466 Conditional Gifts of Property

1. A giver may demand a recipient to perform one or several civil obligations before or after the giving of a gift. The preconditions for giving a gift must not contravene the law or social morals.

2. Where a recipient performs an obligation required to be performed as a precondition to the giving of a gift and the giver fails to deliver the gift , the giver must pay for such performance.

3. Where a recipient fails to perform an obligation required to be performed after the giving of a gift, the giver may reclaim the gift and demand compensation for any damage.

Section 4

CONTRACTS FOR LOAN OF PROPERTY

Article 467 Contracts for Loan of Property

A contract for the loan of property is an agreement between parties whereby a lender delivers a sum of money or a [generic] object to a borrower. When the loan falls due, the borrower must repay the sum of money or return an object of the same type , quantity and quality and must pay interest, only as agreed or stipulated by law.

Article 468 Formalities for Contracts for Loan of Property

A contract for the loan of property may be made orally or in writing. If the parties agree, or the law stipulates, that a loan contract must be in writing, then such formality must be complied with.

Article 469 Ownership Rights With Respect to Property Lent

A borrower shall become the owner of borrowed property from the time of delivery of the property.

Article 470 Obligations of Lenders

A lender is obliged to:

1. Deliver the property to the borrower in full, strictly in accordance with the quality, and at the time and place, agreed;

2. Where the lender knows that the property is not of the agreed quality, but fails to notify the borrower, compensate the borrower for any damage, unless the borrower accepts the property with knowledge [that the property is not of the agreed quality]; and

3. Not demand the borrower to return the property before the due date, except in the cases provided in article 475 of this Code.

Article 471 Obligations of Borrowers to Repay Loans

1. Where the property lent is a sum of money, the borrower must repay [the lender] the loan in full when due. If the property is an object, then the borrower must deliver [to the lender] an object of the same type, quantity and quality, unless otherwise agreed.

2. Where a borrower is unable to deliver an object, it may, with the consent of the lender, repay the value of the borrowed object, in cash, as at the time and place of delivery.

3. The place for repayment of a loan shall be the place of residence or head office of the lender, unless otherwise agreed.

4. If a borrower fails to repay [all or any instalment of] an interest-free loan, in whole or in part, when payment falls due, the borrower must, if the parties so agree, pay interest on the overdue amount from the due date until the date on which payment is made, at the rate for time savings deposits stipulated by the State Bank as at the date on which payment is made.

5. If a borrower fails to repay, in whole or in part, a loan with interest, the borrower must pay interest on the principal and [accrued] interest at the rate for overdue debts stipulated by the State Bank as at the date on which payment is made.

Article 472 Use of Borrowed Property

Parties may agree that borrowed property may only be used for the agreed purpose of the loan. The lender may check the use of the property and may demand its early return if, despite warning, the borrower continues to use the property contrary to the agreed purpose.

Article 473 Interest

1. The rate of interest for a loan shall be agreed by the parties but may not exceed fifty (50) per cent of the highest rate stipulated by the State Bank for similar types of loans.

2. Where parties agree that interest will be payable on a loan but fail to specify the interest rate, or where there is a dispute as to the interest rate, the interest rate for the duration of the loan shall be that stipulated by the State Bank in respect of time savings deposits as at the date on which payment is made.

Article 474 Performance of Contracts for Loans Without Fixed Term

1. With respect to a contract for an interest-free loan without a fixed term, the lender may reclaim the property, and the borrower may repay the debt, at any time provided that each party gives reasonable prior notice to the other, unless otherwise agreed.

2. With respect to a contract for a loan with interest without a fixed term, the lender may reclaim the property at any time, subject to giving reasonable prior notice to the borrower, and shall be paid interest until the time at which the property is returned. The borrower may also return the property at any time, subject to giving reasonable prior notice to the lender, in which case the borrower shall pay interest only up to the date on which payment is made.

Article 475 Performance of Contracts for Fixed Term Loans

1. With respect to a contract for a fixed term interest-free loan, the borrower may return the property at any time, subject to giving reasonable prior notice to the lender. The lender may reclaim the property before the due date, subject to the consent of the borrower.

2. With respect to a contract for a fixed term loan with interest, the borrower may return the property before the due date, but must pay interest for the entire term, unless otherwise agreed.

Section 5

CONTRACTS FOR LEASE OF PROPERTY


I. GENERAL PROVISIONS ON CONTRACTS FOR LEASE OF PROPERTY

Article 476 Contracts for Lease of Property

A contract for lease of property is an agreement between parties whereby a lessor delivers property to a lessee for use during a fixed term and the lessee is required to pay rent.

Article 477 Formalities for Contracts for Lease of Property

A contract for lease of property must be made in writing and notarized by a State notary public or certified by the authorized people's committee, if so agreed or stipulated by law.

Articles 714 to 726 of this Code shall apply to the lease of land use rights.

Article 478 Rent

Rent for a lease of property shall be agreed by the parties.

Where the law prescribes a range of rent, the parties may only agree on a rent within such range.

Article 479 Lease Term

1. The term of a lease shall be agreed by the parties. If there is no agreement, then the term of the lease shall be determined according to the purpose of the lease.

2. Where parties have not agreed on the term of a lease, or where the term of a lease cannot be determined according to the purpose of the lease, the lease shall terminate when the lessee has achieved the purpose of the lease.

Article 480 Sub-Leases

A lessee may sub-lease leased property with the consent of the lessor.

Article 481 Delivery of Leased Property

1. A lessor must deliver property [to the lessee] strictly in accordance with the agreed quantity, quality, type and condition and at the agreed place and time and must provide [all] information necessary for use of the property.

2. Where a lessor is late in delivering property, the lessee may extend the time for the delivery of the property or may cancel the contract and demand compensation for any damage. If the leased property is not of the quality agreed, the lessee may demand the lessor to repair the property, to reduce the rent, or to cancel the contract and demand compensation for any damage.

Article 482 Obligation to Assure Utility Value of Leased Property

1. A lessor must assure that leased property is in the condition agreed and is suitable for the purpose of the lease contract for the entire term of the lease. The lessor must repair any damage to, or defect in, the leased property, with the exception of minor damage which the lessee must repair in accordance with customary practice .

2. Where the utility value of leased property decreases otherwise than due to the fault of the lessor, the lessee may demand the lessor to:

(a) Repair the property;

(b) Reduce the rent; or

(c) Replace the property, or, if the leased property is beyond repair and the purpose of the lease cannot, therefore, be achieved, or the property has defects which the lessee did not know of, then the lessee may suspend unilaterally the performance of the contract and demand compensation for any damage.

3. Where a lessee demands repair, but the lessor fails to repair in time or at all, the lessee may, provided that it informs the lessor, personally repair the leased property and may demand the lessor to reimburse the costs of repair.

Article 483 Obligation to Assure Right of Lessees to Use Property

A lessor must assure the right of a lessee to uninterfered use of the property.

In the event of a dispute as to the ownership rights with respect to leased property, which interferes with the use of that property by the lessee, the lessee may suspend unilaterally the performance of the contract and demand compensation for any damage.

Article 484 Obligation to Take Care of Leased Property

1. A lessee shall take care of leased property as if it were its own and shall carry out minor repairs and maintenance. If the lessee causes any loss of, or damage to, the property, it must compensate the lessor.

The lessee shall not be liable for normal wear and tear due to the use of the leased property.

2. A lessee may, with the consent of the lessor, carry out repairs and improvements to leased property which increase its value and may demand reimbursement from the lessor for reasonable costs incurred.

Article 485 Obligation to Use Leased Property Strictly in Accordance with Utility and Purpose

1. A lessee must use leased property strictly in accordance with its utility and the agreed purpose.

2. Where a lessee fails to use leased property strictly in accordance with its utility and purpose, the lessor may suspend unilaterally the performance of the contract and may demand compensation for any damage.

Article 486 Payment of Rent

1. A lessee must pay rent in full and on time as agreed. If there is no agreement as to the time for payment of rent, the time shall be determined in accordance with the customary practice at the place of payment. If it is not possible to determine the time of payment in accordance with such customary practice, the lessee must make payment when the lessee returns the leased property.

2. Where the parties have agreed on payment of rent in instalments, if the lessee fails to make payment for three consecutive instalments, the lessor may suspend unilaterally the performance of the lease contract , unless otherwise agreed or stipulated by law.

Article 487 Return of Leased Property

1. A lessee must return leased property in the same condition in which it was received, normal wear and tear excepted, or in the condition agreed in the contract. If the value of the leased property has decreased in comparison with its condition at the time it was received, the lessor may demand compensation for any damage, normal wear and tear excepted.

2. Where leased property is moveable property, the place for returning the leased property shall be the place of residence or head office of the lessor, unless otherwise agreed.

3. Where a lessee is late in returning leased property, the lessor may demand the lessee to return the leased property and to pay rent for the period of delay and the lessee must pay compensation for any damage. The lessee must pay a penalty for the late return of the leased property, if so agreed.

The lessee has the risk in relation to the leased property during the period of delay.

4. Where leased property is livestock, the lessee must return both the leased livestock and any offspring born during the term of the lease, unless otherwise agreed. The lessor must reimburse the lessee for expenses incurred in caring for the offspring.

Article 488 Termination of Leases

A lease terminates in any of the following cases:

1. The term of the lease has expired;

2. The parties agree on early termination. If the lessor wishes to terminate a lease without a fixed term and there is no agreed notice period, the lessor must give reasonable prior notice;

3. The performance of the contract is suspended unilaterally or the contract is cancelled; and

4. The leased property ceases to exist.

II. CONTRACTS FOR LEASE OF RESIDENTIAL HOUSES

1 - Contracts for Lease of Residential Houses

Article 489 Formalities for Contracts for Lease of Residential Houses

A contract for lease of a residential house must be made in writing and, if the term of the lease is six or more months, the contract must be notarized by a State notary public or certified by the authorized people's committee, and registered with the authorized State body.

Article 490 Rent for Lease of Residential Houses

1. Rent for a residential house shall be agreed by the parties. Where the law prescribes a range of rents for residential leases, the rent may not exceed such rent range.

2. With respect to a contract for lease of a residential house having a term of two or more years, if the State adjusts the range of rents for residential leases, then the rent must be adjusted accordingly.

3. With respect to a contract for lease of a residential house having a term of two or more years, if the lessor has improved or upgraded the property, the lessor may increase the rent, subject to giving the lessee at least three months' prior notice from the time at which the improvement or upgrading works are completed.

If the lessee does not agree to the increase in rent, the lessee may initiate a legal action by petitioning a court to resolve the dispute. The new rent shall be determined by the court on the basis of the increase in the utility value [of the property] as a result of the improvements and upgrading.

Article 491 Obligations of Lessors of Residential Houses

A lessor of a residential house is obliged to:

1. Deliver the house to the lessee strictly in accordance with the contract;

2. Ensure the uninterfered use of the house by the lessee during the term of the lease; and

3. Take care of and repair the house periodically, or as agreed. If the lessor fails to take care of and repair the house, thereby causing damage to the lessee, the lessor must pay compensation.

Article 492 Rights of Lessors of Residential Houses

A lessor of a residential house is entitled to:

1. Receive the rent in full and strictly at the time agreed;

2. Suspend unilaterally the performance of the contract for lease of the residential house in accordance with paragraphs 1 and 3 of article 497 of this Code;

3. Improve and upgrade the leased house with the consent of the lessee, but without interfering with the use of the house by the lessee; and

4. Recover the leased house upon the expiry of the contract for lease. If the contract specifies a lease term, the lessor may recover the house provided that it gives the lessee [at least] six months prior notice.

Article 493 Obligations of Lessees of Residential Houses

A lessee of a residential house is obliged to:

1. Use the house strictly for the agreed purpose;

2. Pay the rent in full and strictly at the agreed time;

3. Take care of the house and repair any damage caused by the lessee;

4. Observe any communal rules; and

5. Return the house to the lessor strictly as agreed.

Article 494 Rights of Lessees of Residential Houses

A lessee of a residential house is entitled to:

1. Take possession of the leased house strictly as agreed;

2. Assign the lease to another lessee, subject to the written consent of the lessor;

3. Sub-lease the leased house, subject to the written consent of the lessor;

4. Where the ownership of the house changes, continue to lease the house on the terms agreed with the previous lessor;

5. Right of first refusal to enter into a new contract for lease if the house is to be leased after the expiry of the original contract;

6. Right of first refusal to purchase the leased house in accordance with article 446 of this Code; and

7. Suspend unilaterally performance of the contract for lease in accordance with paragraphs 2 and 3 of article 497 of this Code.

Article 495 Repairs of Leased Residential Houses

1. If a lessor wishes to make periodic, or unexpected but major, repairs to a house, the lessor must notify the lessee [at least] one month prior [to the commencement of repairs] of the time at which the repairs will commence and of their duration.

2. A lessee must arrange its own temporary accommodation for the duration of any periodic repairs. Unless otherwise agreed, the lessor must provide temporary accommodation for the lessee for the duration of any unexpected, but major, repairs.

3. Where repair work lasts one or more months and the lessee has arranged temporary accommodation, the lessee shall not [be required to] pay rent for the whole duration of repairs and may extend the term of lease by a period equal to the duration of repairs.

4. A lessee may demand a lessor to repair a house if it is seriously damaged. If the lessor fails to make the repairs, the lessee may make the repairs or suspend unilaterally the performance of the contract and demand compensation for any damage. If the lessee repairs the house, the lessee must notify the lessor of the repair and may demand the lessor to reimburse the costs of repair or [may] deduct such costs from the rent.

Article 496 Rights and Obligations of Persons Belonging to Lessees Named in Lease of Residential Houses

Persons belonging to a lessee named in a contract for lease of a residential house have equal rights and obligations with respect to the lessor and must perform jointly the obligations of the lessee with respect to the lessor.

Article 497 Unilateral Suspension of Performance of Contracts for Lease of Residential Houses

1. A lessor may suspend unilaterally the performance of a contract for lease and demand compensation for any damage, if the lessee commits any of the following acts:

(a) Failure to pay rent for three or more consecutive months without a legitimate reason;

(b) Failure to use the house strictly in accordance with the purpose of the lease;

(c) Intentional causing of serious damage to the house;

(d) Repair, exchange or sub-lease of all or part of the leased house without the consent of the lessor;

(e) Repeated disturbance of public order and serious interference with the normal living activities of people in the vicinity; or

(f) Causing of serious impact on environmental hygiene.

2. A lessee may suspend unilaterally the performance of a contract for lease and demand compensation for any damage, if the lessor commits any of the following acts:

(a) Failure to repair the house when its condition has deteriorated seriously; or

(b) Unreasonable increase of rent.

A lessee may also suspend unilaterally the performance of a contract for lease if the right to use the house is restricted in the interests of a third party.

3. A party which suspends unilaterally the performance of a contract for lease must give one month's prior notice to the other party, unless otherwise agreed.

Article 498 Termination of Contracts for Leases of Residential Houses

A contract for lease of a residential house terminates in any of the following cases:

1. The lease contract has expired. If the contract does not specify the term of lease, the contract shall terminate six months after the date on which the lessor informs the lessee of the intention of the lessor to recover the house;

2. The leased house ceases to exist;

3. The lessee dies and there is no co-habitant living in the house; or

4. The leased house has to be demolished due to serious damage which renders the house likely to collapse or due to the implementation of construction plans of the State.

Article 499 Right to Remain in Occupation

A lessee may remain in occupation for a duration of no more than three months following the expiry of the lease where it encounters difficulties in finding accommodation and such extension of the lease does not seriously affect the interests of the lessor.

Article 500 Right to Continue Performance of Contracts for Lease of Residential House Upon Death of Lessee

Where a lessee dies before the expiry of the term of lease, the surviving co-habitants of the lessee may continue the performance of the contract for lease until its expiry.

Article 501 Right to Continue Leases Upon Change of Ownership

Where there is a change of ownership of a leased house before the expiry of the term of lease or the right of the lessee to remain in occupation, the lessee may continue to lease the house on the [same] terms as agreed with the previous lessor. The new owner shall have the rights and obligations of the previous lessor with respect to the lessee.

2 - Leases of Houses for Other Purposes

Article 502 Leases of Houses for Other Purposes

Except as otherwise stipulated by law, articles 489 to 501 of this Code shall also apply to a lease of a house used for other than residential purposes, with the exception of the right of first refusal to enter into a subsequent lease, the right of first refusal to purchase, the right to remain in occupation after the expiry of the term of lease, and the right to continue performance of the lease stipulated in paragraphs 5 and 6 of article 494, and in articles 499 and 500 of this Code.

III. CONTRACTS FOR “THUE KHOAN” OF PROPERTY

Article 503 Contracts for "Thue Khoan" of Property

A contract for "thue khoan" of property is an agreement between parties whereby a "thue khoan" lessor delivers the property to a "thue khoan" lessee for the exploitation of its utility and for the enjoyment of the benefits and income derived from such property and the lessee must pay rent.

Article 504 Subject Matters of Contracts for "Thue Khoan" of Property

The subject matter of a contract for "thue khoan" may be land, forest, [and] water surfaces which have not been exploited , livestock, production and business facilities and other means of production together with the equipment required to exploit the utility of such property and to enjoy the benefits and income derived therefrom, unless otherwise stipulated by law.

Article 505 Terms of "Thue Khoan"

The term of a "thue khoan" shall be agreed by parties according to the production or business cycle appropriate to the nature of the subject matter of the "thue khoan".

Article 506 Formalities for Contracts for "Thue Khoan"

A contract for "thue khoan" must be made in writing, notarized by a State notary public or certified by the authorized people's committee and registered with the authorized State body, if so stipulated by law.

Article 507 Rent In Respect of "Thue Khoan"

Rent in respect of a "thue khoan" shall be agreed by the parties. If a "thue khoan" is awarded by tender, the rent in respect of such "thue khoan" shall be determined in the bidding process.

Article 508 Delivery of "Thue Khoan" Property

Upon delivery of "thue khoan" property, parties must record their assessment of the condition and value of the property.

If the parties are unable to determine the value, a third party shall be invited to determine the value. Such determination shall be made in writing.

Article 509 Payment of "Thue Khoan" Rent and Method of Payment

1. Rent may be paid in kind or money or by performance of an act.

2. A "thue khoan" lessee must pay "thue khoan" rent in full even where the lessee does not exploit the utility of the "thue khoan" property.

3. When entering into a contract for "thue khoan", parties may agree on conditions for a reduction in rent. If at least one third of the benefits, or income, is lost due to an event of force majeure, a "thue khoan" lessee may demand a reduction of, or exemption from, rent, unless otherwise agreed.

4. Where a "thue khoan" lessee must pay in kind according to the season or cycle in the exploitation of the utility of the "thue khoan" property, payment must be made at the end of such season or cycle, unless otherwise agreed.

5. Where a "thue khoan" lessee is required to perform an act, the "thue khoan" lessee must perform that particular act.

Article 510 Exploitation of "Thue Khoan" Property

A "thue khoan" lessee must exploit "thue khoan" property strictly in accordance with the agreed purpose and must inform the "thue khoan" lessor periodically of its condition and its exploitation. If the "thue khoan" lessor demands information at any other time, the "thue khoan" lessee shall provide such information promptly. If the "thue khoan" lessee does not exploit the "thue khoan" property strictly in accordance with the agreed purpose, the "thue khoan" lessor may suspend unilaterally the performance of the contract and demand compensation for any damage.

Article 511 Taking Care, Maintenance, and Disposal of "Thue Khoan" Property

1. During the period of exploitation of the "thue khoan" property , the "thue khoan" lessee must take care of and preserve the "thue khoan" property and any related equipment at its own expense, unless otherwise agreed. If the "thue khoan" lessee loses or damages the "thue khoan" property or causes any reduction in its value, the "thue khoan" lessee must pay compensation for any damage. The "thue khoan" lessee shall not be liable for normal wear and tear due to the use of the "thue khoan" property.

2. A "thue khoan" lessee may replace or improve "thue khoan" property, if [the parties] so agree, but must preserve its value.

3. A "thue khoan" lessor must reimburse a "thue khoan" lessee for the reasonable expenses incurred in replacing or improving the "thue khoan" property as agreed.

4. A "thue khoan" lessee may not sub-lease "thue khoan" property without the consent of the "thue khoan" lessor.

Article 512 Enjoyment of Benefits and Liability for Losses With Respect to "Thue Khoan" Livestock

During the term of a "thue khoan" of livestock, the "thue khoan" lessee shall be entitled to enjoy half of any offspring born and shall be liable for half of any losses of the "thue khoan" livestock caused by an event of force majeure, unless otherwise agreed.

Article 513 Unilateral Suspension of Performance of Contracts for "Thue Khoan"

1. Where a party suspends unilaterally the performance of a ["thue khoan"] contract, that party must give reasonable prior notice to the other party. If the "thue khoan" is based on a season or cycle of exploitation, the period of prior notice must conform to such season or cycle.

2. Where a "thue khoan" lessee breaches an obligation and the exploitation of the "thue khoan" property is the sole means of livelihood of the lessee and continuation of the "thue khoan" would not seriously affect the interests of the "thue khoan" lessor, then the "thue khoan" lessor may not suspend unilaterally the performance of the contract [for "thue khoan"]. In such case, the "thue khoan" lessee must undertake to the "thue khoan" lessor not to commit further breaches of the contract.

Article 514 Return of "Thue Khoan" Property

Upon termination of a "thue khoan" contract, the "thue khoan" lessee must return the "thue khoan" property in a condition which takes into account agreed depreciation. If the "thue khoan" lessee has caused any reduction in the value of the "thue khoan" property, the "thue khoan" lessee must compensate for any damage.

Section 6

CONTRACTS FOR BORROWING PROPERTY

Article 515 Contracts for Borrowing Property

A contract for borrowing property is an agreement between parties whereby a lender delivers property to a borrower for use free of charge for a period of time and the borrower returns the property at the end of the period of time or when the purpose of the borrowing has been achieved.

Article 516 Subject Matter of Contracts for Borrowing Property

Any non-consumable object can be the subject matter of a contract for borrowing property.

Article 517 Obligations of Borrowers of Property

A borrower of property is obliged to:

1. Take care of and preserve the borrowed property as if it were its own property, and not change its condition of its own volition. The borrower must repair any minor damage to the property;

2. Not on-lend the property to any other person without the consent of the lender;

3. Return the borrowed property on the due date. In the absence of agreement as to the time for returning the property, the borrower must return the property immediately after the purpose of the borrowing has been achieved; and

4. Compensate for any damage where the borrower causes damage to, or the loss of, the borrowed property.

A borrower is not liable for normal wear and tear of borrowed property.

Article 518 Rights of Borrowers of Property

A borrower of property is entitled to:

1. Use the borrowed property strictly in accordance with its utility and agreed purpose; and

2. Demand the lender to reimburse reasonable expenses incurred in carrying out repairs or improvements to the borrowed property which increase its value, if so agreed.

Article 519 Obligations of Lenders of Property

A lender of property is obliged to:

1. Provide [all] necessary information on the use of the property and its defects, if any;

2. Reimburse the borrower for expenses incurred in carrying out repairs or improvements to the borrowed property which increase its value, if so agreed; and
3. Where the lender knows, but fails to notify the borrower, of a defect in the property which results in damage to the borrower, compensate the borrower for such damage, except where the borrower knows, or should know, of such defects.

Article 520 Rights of Lenders of Property

A lender of property is entitled to:

1. In the absence of an agreement on the borrowing period, reclaim the property immediately after the borrower has achieved its purpose. If the lender suddenly and urgently needs to use the borrowed property, the lender may reclaim it upon giving reasonable prior notice to the borrower, even if the borrower has not yet achieved its purpose;

2. Reclaim the property where the borrower fails to use it strictly in accordance with its purpose, utility, or the agreed method or where the borrower on-lends the property without the consent of the lender; and

3. Demand compensation for any damage to the property caused by the borrower.

Section 7

CONTRACTS FOR SERVICES

Article 521 Contracts for Services

A contract for services is an agreement between parties whereby a service provider performs an act for a client which pays a fee for that act.

Article 522 Subject Matter of Contracts for Services

The subject matter of a contract for services must be an act which is capable of being performed, not prohibited by law and which does not contravene social morals.

Article 523 Obligations of Clients

A client is obliged to:

1. Supply the service provider with the information, documentation and facilities necessary for the performance of the act, if so agreed or required for the performance of the act; and

2. Pay a fee to the service provider, as agreed.

Article 524 Rights of Clients

A client is entitled to:

1. Demand the service provider to perform the act strictly in accordance with the agreement as to quality, quantity, time, location and other matters; and

2. Where a service provider breaches its obligations, the client may terminate the contract or suspend unilaterally its performance of the contract and demand compensation for any damage.

Article 525 Obligations of Service Providers

A service provider is obliged to:

1. Perform the act strictly in accordance with the agreement as to quality, quantity, time, location and other matters;

2. Not assign the act to another person for performance on its behalf without the consent of the client;

3. Take care of, and return to the client after completion of the act, the documents and facilities provided to it;

4. Notify the client promptly of any inadequacy in the information or documents and any failure of the facilities to satisfy the quality required for the completion of the act;

5. Keep confidential any information of which it has had knowledge during the period of providing the service, as agreed or stipulated by law; and

6. If the service provider causes any loss of, or damage to, the documents or facilities supplied, or discloses confidential information, compensate the client for any damage.

Article 526 Rights of Service Providers

A service provider is entitled to:

1. Demand the client to provide information, documents and facilities;

2. Amend the terms of service in the interests of the client without necessarily asking for the consent of the client where waiting for [such consent] would cause damage to the client provided that the service provider promptly informs the client thereof; and

3. Demand the client to pay the fee.

Article 527 Payment of Fees

1. A client must pay the agreed fee upon completion of the act. In the absence of an agreement as to the fee rate, the applicable rate shall be the average rate charged for acts of the same type at the time when, and place where, the act is completed.

2. A client must pay the fee at the place where the service is provided and at the time of its completion, unless otherwise agreed.

3. Where the quality or quantity of the services fails to meet the terms of the agreement, or the act is not completed in time due to the fault of the service provider, the client may reduce the fee and demand compensation for any damage.

Article 528 Unilateral Suspension of Performance of Contracts for Services

1. Where the continued provision of services does not benefit the client, the client may suspend unilaterally the performance of the contract provided that reasonable prior notice is given to the service provider, in which case the client must pay a fee according to the quantity and quality of the services already provided and must compensate for any damage.

2. Where the client fails to perform, properly or at all, its obligations in accordance with the contract, the service provider may suspend unilaterally the performance of the contract and demand compensation for any damage.

Article 529 Continuation of Contracts for Services

If, after the expiry of the [agreed] period [for the provision of services], the act has not been completed and the service provider continues its performance and the client is aware of this but does not object, then the performance of the contract for services shall automatically be deemed to continue in accordance with the agreed terms until the act is completed.

Section 8

TRANSPORT CONTRACTS


I. CONTRACTS FOR TRANSPORT OF PASSENGERS

Article 530 Contracts for Transport of Passengers

A contract for the transport of passengers is an agreement between parties whereby a carrier transports passengers and luggage to an agreed destination and the passengers pay transport fares.

Article 531 Formalities for Contracts for Transport of Passengers

1. A contract for transport of passengers may be made in writing or orally.

2. A ticket is evidence of the entry into a contract by the parties.

Article 532 Obligations of Carriers

A carrier is obliged to:

1. Carry the passengers safely from the place of departure to the agreed destination on time, in a civilized and courteous manner, by the means agreed, on the agreed route and at a transport fare which is reasonable for the means of transport on that route. It must also ensure that there are sufficient seats for the passengers and that the transport capacity of the carrier is not exceeded;

2. Purchase civil liability insurance for the passengers, as stipulated by law;

3. Ensure that the departure time is adhered to as stipulated or agreed;

4. Carry and return the luggage to the passenger or person entitled to receive the luggage in accordance with the agreed destination, time and route; and

5. Refund the transport fare to any passenger who suspends unilaterally the performance of the contract and returns his or her ticket within the time-limit stipulated in the transport regulations issued by the authorized State body.

Article 533 Rights of Carriers

A carrier is entitled to:

1. Demand the passengers to pay in full the passenger transport fares and fares for the transport of personal luggage in excess of the prescribed limit;

2. Refuse to carry a passenger who is holding a ticket or whose journey is already under way in any of the following cases:

(a) Where the passenger fails to follow the regulations of the carrier, where the acts of the passenger disturb public order, obstruct the work of the carrier, pose a threat to life, or affect the health or property of other persons, or where a passenger commits other acts which make it impossible to ensure safety during the journey;

(b) Where the health of the passenger is such that it is obvious to the carrier that the transport [of such person] will endanger the passenger or other persons during the journey; and

(c) In order to prevent the spread of contagious diseases.

In the cases referred to in paragraph 2(a) of this article, the passenger shall not receive a refund of the fare and must pay a fine, if so stipulated by the transport regulations.

In the cases referred to in paragraphs 2(b) and (c) of this article, the passenger shall receive a refund of the fare or an amount of money corresponding to the unused portion of the ticket, after the deduction of fees.

Article 534 Obligations of Passengers

A passenger is obliged to:

1. Pay in full the passenger transport fare and fares for the transport of luggage in excess of the prescribed limit, and take care of his or her hand-luggage;

2. Be present at the place of departure at the agreed time; and

3. Respect and comply strictly with the regulations of the carrier and all other regulations ensuring traffic safety.

Article 535 Rights of Passengers

A passenger is entitled to:

1. Request to be transported by the agreed means of transport, in the class commensurate with the value of the ticket and in accordance with the route agreed;

2. Be exempt from transport fares for check-in luggage and hand-luggage within the limits agreed or stipulated by law;

3. Demand reimbursement of expenses incurred, or compensation for any damage, if the carrier is at fault in failing to transport according to the time schedule and destination agreed;

4. Receive a refund of all or part of the transport fare in the cases stipulated in paragraphs 2(b) and (c) of article 533 of this Code, and in other cases agreed or stipulated by law;

5. Receive the luggage at the agreed destination in accordance with the agreed time and route; and

6. Interrupt temporarily the journey for the duration, and in accordance with the procedures, stipulated in the transport regulations.

Article 536 Liability to Compensate for Damage

1. In case of loss of life, or damage to the health, of a passenger, the carrier must compensate for any damage in accordance with this Code.

2. Unless otherwise stipulated by law, a carrier is not liable to compensate for loss of life, or damage to the health and luggage, of a passenger, where such loss or damage is entirely due to the fault of the passenger.

3. Where a passenger breaches agreed terms for transport or the transport regulations, thereby causing damage to the carrier or a third party, the carrier must compensate.

Article 537 Unilateral Suspension of Contracts

1. A carrier may suspend unilaterally the performance of a contract in the cases stipulated in paragraph 2 of article 533 of this Code.

2. A passenger may suspend unilaterally the performance of a contract where the carrier breaches the obligations stipulated in paragraphs 1, 3 and 4 of article 532 of this Code.

II. CONTRACTS FOR TRANSPORT OF PROPERTY

Article 538 Contracts for Transport of Property

A contract for the transport of property is an agreement between parties whereby a carrier is obliged to transport property to an agreed destination and to deliver it to the authorized recipient, and the customer is obliged to pay the freight charges.

Article 539 Formalities for Contracts for Transport of Property

1. A contract for the transport of property may be entered into orally or in writing. Where the parties agree, or the law stipulates, that the contract must be made in writing, such formality must be complied with.

2. Where the transport of property involves a bill of lading, the bill of lading is evidence of the entry into a contract by the parties.

Article 540 Delivery of Property to Carriers

1. A customer must deliver property to a carrier at the agreed time and place and pack the property in accordance with the agreed specifications. The customer must bear the costs of loading the property onto the means of transport, unless otherwise agreed.

2. Where a customer is late in delivering property to the agreed place, the customer must reimburse the carrier for the costs associated with the delay and pay the freight charges for transporting the property to the place agreed in the contract, or must pay a penalty for breach of the contract. If the carrier is late in accepting the property at the point of collection, it shall be liable for the costs incurred due to such late acceptance.

Article 541 Freight Charges

1. The rate of freight charges shall be agreed by the parties. If the law regulates freight charges, then such regulated charges shall apply.

2. A customer must pay freight charges in full after the property is loaded onto the means of transport, unless otherwise agreed.

Article 542 Obligations of Carriers

A carrier is obliged to:

1. Transport [the property] in its entirety and safely to the stated destination at the specified time; deliver the property to a carrier at the agreed time and place;

2. Deliver the property to the person entitled to receive it;

3. Bear all costs related to the transport of the property, unless otherwise agreed;

4. Purchase civil liability insurance for the property as required by law; and

5. Compensate the customer for any damage where the loss of, or damage to, the property is caused by the fault of the carrier, unless otherwise agreed or stipulated by law.

Article 543 Rights of Carriers

A carrier is entitled to:

1. Check the authenticity of the property and the bill of lading;

2. Refuse to transport property which is different from that agreed in the contract;

3. Demand the full and timely payment of the freight charges by the customer;

4. Refuse to transport property if the carrier knows, or should know, that the transacting of such property is prohibited or the property is of a dangerous or toxic nature; and

5. Demand the customer to pay compensation for any damage.

Article 544 Obligations of Customers

A customer is obliged to:

1. Pay in full the freight charges to the carrier, at the agreed time and by the agreed method of payment; and

2. Take care of the property during transport, if so agreed. Where the customer takes care of the property, the customer must bear the liability for any loss or damage.

Article 545 Rights of Customers

A customer is entitled to:

1. Demand the carrier to transport the property to the agreed destination at the agreed time;

2. Receive directly the property which has been transported, or appoint a third party receive it; and

3. Demand the carrier to compensate for any damage.

Article 546 Delivery of Property to Recipients

1. A recipient of property may be the customer or a third party appointed by the customer to receive the property.

2. A carrier must deliver the property to a recipient in full, at the agreed time and place and in the agreed method.

3. Where property has been delivered to the point of delivery on time but there is no recipient of the property, the carrier may deposit such property at a place of safekeeping and must notify immediately the customer or the recipient of the property. The customer or recipient of the property must bear the reasonable expenses incurred in relation to the safekeeping of the property.

The obligation to deliver property shall be completed upon the property being delivered to the place of safekeeping in compliance with the agreed quantity, quality and other agreed terms and the carrier having notified the customer or the recipient of the property of such delivery for safekeeping.

Article 547 Obligations of Recipients of Property

A recipient of property is obliged to:

1. Produce to the carrier the bill of lading or other documents evidencing the right of the recipient to receive the property, and receive the property at the agreed time and place;

2. Bear the costs for unloading the delivered property, unless otherwise agreed or stipulated by the transport regulations;

3. Reimburse [the carrier] for any costs incurred due to late acceptance of the property;

4. Notify the customer of the acceptance of the property and [provide] other necessary information required by the customer. If the recipient fails to do so, it shall not be entitled to demand the customer to protect the rights and interests related to the delivered property .

Article 548 Rights of Recipients of Property

A recipient of property is entitled to:

1. Verify the quantity and quality of the delivered property;

2. Accept the delivered property;

3. Demand the carrier to reimburse for any costs incurred due to any delay by the carrier in delivering the property ;

4. Personally demand, or notify the customer to demand, the carrier to compensate for any loss of, or damage to, the property.

Article 549 Liability to Compensate for Damage

1. Where a carrier is responsible for the loss of, or damage to, property, the carrier must compensate the customer for any damage, except for the case stipulated in paragraph 2 of article 544 of this Code.

2. A customer must compensate a carrier and any third parties for any damage caused by the transport of dangerous or toxic property which is not safely packaged or the safety of which is not otherwise ensured.

3. A carrier shall not be liable to compensate for damage in the event of force majeure causing loss or deterioration of, or damage to, the property during transport, unless otherwise agreed or stipulated by law.

Section 9

PROCESSING CONTRACTS

Article 550 Processing Contracts

A processing contract is an agreement between parties whereby a processor carries out work to create products at the request of a supplier, and the supplier receives the products and pays fees.

Article 551 Subject Matter of Processing Contracts

The subject matter of a processing contract shall be items which are specified by samples, the standard of which is agreed by the parties or stipulated by law.

Article 552 Obligations of Suppliers

A supplier is obliged to:

1. Supply raw materials to the processor strictly in accordance with the quantity, quality, time and place agreed, unless otherwise agreed by the parties; to provide [all] necessary documents relating to the processing;

2. Provide the processor with instructions as to how to perform the contract;

3. Pay agreed fees.

Article 553 Rights of Suppliers

A supplier is entitled to:

1. Accept the processed products in the manner and at the time and place agreed;

2. Suspend unilaterally performance of the contract and demand compensation for any damage if the processor breaches the contract; and

3. Where the products are not of the agreed quality and the supplier accepts the products subject to [certain] repairs [to be performed within an agreed time], if the processor is unable to perform the repairs requested by the supplier within the agreed time, the supplier may terminate the contract and demand compensation for any damage.

Article 554 Obligations of Processors

A processor is obliged to:

1. Take care of the raw materials supplied by the supplier;

2. Notify the supplier to replace any raw materials supplied which are not of the agreed quality; to refuse to perform the processing if the use of the raw materials may create products which pose a danger to society. If the processor fails to notify, or performs , it shall be liable for the products processed;

3. Deliver the products to the supplier strictly in accordance with the quantity, quality, method, time and place agreed;
4. Keep confidential all information relating to the processing and the products;

5. If the processor carries out the processing using its own raw materials, be responsible for the quality of the products; and

6. Return any leftover raw materials to the supplier after completing performance of the contract.

Article 555 Rights of Processors

A processor is entitled to:

1. Demand the supplier to deliver the raw materials strictly in accordance with the quality, quantity, time and place agreed;

2. Refuse [to comply with] unreasonable instructions of the supplier where the processor is of the view that [compliance with] such instructions could decrease the quality of the products provided that the processor immediately informs the supplier; and

3. Demand the supplier to make full payment of the fees at the time and in the manner agreed.

Article 556 Liability for Risk

Unless otherwise agreed, the owner of the raw materials has the risk with respect to such materials and the products processed therefrom until the products are delivered to the supplier.

If the supplier is late in accepting the products, it has the risk during the period of delayed acceptance, including where the products are processed from the raw materials of the processor, unless otherwise agreed.

If the processor delays delivery of the products and the delay damages the processed property, the processor must compensate for any damage suffered by the supplier.

Article 557 Delivery and Acceptance of Processed Products

A processor must deliver, and the supplier must accept, products at the agreed time and place.

Article 558 Late Delivery and Acceptance of Processed Products

Where the processor is late in delivering processed products, the supplier may extend the time of delivery. If, upon the expiry of such extension, the processor still has not delivered the products, the supplier may suspend unilaterally the performance of the contract and demand compensation for any damage.

Where the supplier is late in accepting the products, the processor may deposit the products at a place of safekeeping and must notify the supplier immediately. The obligation to deliver the products shall be fulfilled when the agreed terms are satisfied and the supplier has been notified. The supplier bears all costs incurred for safekeeping.

Article 559 Unilateral Suspension of Performance of Processing Contracts

1. Unless otherwise agreed or stipulated by law, each party may suspend unilaterally the performance of a processing contract if continued performance would not benefit that party and it gives reasonable prior notice to the other party. If the supplier suspends unilaterally the performance of the contract, the supplier must pay fees for the work already performed. If the processor suspends unilaterally the performance of the contract, it shall not be paid fees, unless otherwise agreed.

2. A party which unilaterally suspends the performance of a contract, and thereby causes damage to the other party, must compensate.

Article 560 Payment of Fees

1. Unless otherwise agreed, the supplier must pay fees in full at the time of accepting the products.

2. If there is no agreement on the rate of fees, the applicable rate shall be the average rate charged for the production of products of the same type at the place of processing at the time of payment.

3. If the products fail to meet the [agreed] quality due to [the poor quality of] the raw materials supplied, or the inadequate instructions provided, by the supplier, the supplier may not reduce the fees.

Article 561 Leftover Raw Materials

Unless otherwise agreed, the processor must return the leftover raw materials to the supplier upon termination of the processing contract.

Section 10

CONTRACTS FOR BAILMENT OF PROPERTY

Article 562 Contracts for Bailment of Property

A contract for bailment of property is an agreement between parties whereby a bailee accepts the property of a bailor for safekeeping, for return to the bailor upon expiry of the duration of the contract, and the bailor must pay a fee to the bailee, except where the bailment is free of charge.

Article 563 Formalities for Contracts for Bailment of Property

A contract for bailment may be made orally or in writing. If the law provides that a bailment contract must be made in writing and notarized by a State notary public, such formalities must be complied with.

Property bailment receipts and records are evidence of entering into a contract [for bailment].

Article 564 Obligations of Bailors of Property

A bailor of property is obliged to:

1. Upon delivery of the property, inform the bailee of the condition of the property and the appropriate bailment conditions . If the bailor fails to do so, and the property [deteriorates,] is destroyed or damaged as a result of being bailed in inappropriate conditions, the bailor shall be liable for any loss of, or damage to, [the bailed property] and must compensate for any [other] damage caused thereby.

2. Pay the bailment fees in full, at the agreed time and in accordance with the agreed method.

Article 565 Rights of Bailors of Property

A bailor of property is entitled to:

1. If the bailment contract does not specify a duration, reclaim the property at any time subject to giving reasonable prior notice to the bailee; and

2. Demand compensation for any loss of, or damage to, the bailed property caused by the bailee.

Article 566 Obligations of Bailees of Property

A bailee of property is obliged to:

1. Take care of the property as agreed and return it to the bailor in the same condition in which the bailee received it;

2. If it is necessary to improve the bailment conditions, change such conditions provided that it notifies the bailor immediately;

3. If, due to its nature, the bailed property is in danger of [deteriorating,] being damaged or destroyed, notify promptly the bailor in writing [of the danger] and request the bailor to advise, within a certain period of time, a solution. If the bailor fails to reply within such period of time, the bailee may take all necessary measures to take care of the property and demand the bailee to reimburse the costs incurred; and

4. If the bailee causes any loss of, or damage to, the bailed property, compensate for any damage, except in an event of force majeure.

Article 567 Rights of Bailees of Property

A bailee of property is entitled to:

1. Demand the bailor to pay the agreed [bailment] fees;

2. Where the bailment is free of charge, demand the bailor to pay the reasonable costs of taking care of the property;

3. Where the bailment is for an indefinite period of time, request, at any time, the bailor to take back the property subject to giving reasonable prior notice to the bailor; and

4. Where the bailed property is in danger of [deteriorating,] being damaged or destroyed, sell the property in the interests of the bailor, inform the bailor thereof and pay the proceeds of the sale to the bailor after deduction of reasonable expenses incurred for the sale of the property.

Article 568 Return of Bailed Property

1. A bailee must return the same property that was received, including any benefits derived therefrom, unless otherwise agreed.

The bailed property shall be returned [to the bailor] at the place where it was delivered. If the bailor wishes to have the property returned at another place, the bailor shall bear the transport costs to such place, unless otherwise agreed.

2. A bailee must return property at the agreed time and may only request the bailor to take back the property before such time for a legitimate reason.

Article 569 Late Taking Back of Bailed Property

Where a bailor is late in taking back property, the bailor must pay all costs for taking care of the property, and the bailment fees, to the bailee and has the risk with respect to the property during the period for which the bailor is late.

If a bailee is late in returning the property, the bailee may not demand the bailor to pay bailment fees and costs for taking care of the property incurred from the agreed time for return of the property [to the time it is actually returned] and has the risk with respect to the property during such period.

Article 570 Payment of Bailment Fees

1. A bailor must pay the bailment fees in full when taking back the bailed property, unless otherwise agreed.

2. Where parties have no agreement as to the rate of bailment fees, the applicable rate shall be the average rate of bailment fees at the time when, and place where, the bailment fee is paid.

3. Where the bailor takes back the property before the agreed time, the bailor must, nevertheless, pay the bailment fees in full and must pay the necessary costs which the bailee incurs due to the taking back of the property before the agreed time, unless otherwise agreed.

4. Where a bailee requests a bailor to take back the property before the agreed time, the bailee shall not [be entitled to] be paid bailment fees and must compensate for any damage to the bailor, unless otherwise agreed.

5. A bailee may retain the bailed property until it receives payment of the bailment fees in full or compensation for any damage.

Section 11

INSURANCE CONTRACTS

Article 571 Insurance Contracts

An insurance contract is an agreement between parties whereby a purchaser of insurance must pay insurance premiums and an insurer must pay insurance benefits to the insured if an insured event occurs.

Article 572 Types of Insurance Contracts

Insurance contracts include contracts for voluntary insurance and contracts for compulsory insurance.

A contract for voluntary insurance is an agreement between parties on the terms of insurance and the rates of insurance premiums.

A contract for compulsory insurance is a contract, the insurance terms and premium rate of which are stipulated by law and must be implemented by the parties.

Article 573 Subject Matter of Insurance Contracts

The subject matter of an insurance contract may be persons, property, civil liabilities and other subject matters stipulated by law.

Article 574 Formalities for Insurance Contracts

An insurance contract must be made in writing.

An insurance certificate, or the insurance application, is evidence of entering into an insurance contract.

Article 575 Insured Events

An insured event shall be an objective event agreed by the parties, or stipulated by law, upon the occurrence of which the insurer must pay the insurance benefits to the insured.

Article 576 Insurance Premiums

An insurance premium is an amount of money which the purchaser of insurance must pay to the insurer.

The time-limits for the payment of insurance premiums shall be agreed or stipulated by law. Insurance premiums can be paid once or in instalments.

Where a purchaser of insurance is late in paying an insurance premium instalment, the insurer shall set a time-limit within which the purchaser of insurance must make payment. If the purchaser of insurance fails to pay the insurance premium within such time-limit, the contract shall terminate.

Article 577 Obligations of Purchasers of Insurance to Provide Information

1. When entering into an insurance contract, a purchaser of insurance must provide all information relating to the subject matter of the insurance as requested by the insurer, except for information which the insurer already knows, or should know.

2. Where a purchaser of insurance intentionally provides false information in order to enter into the insurance contract for the purpose of enjoying the insurance coverage, the insurer may suspend unilaterally the performance of the contract and collect insurance premiums up to the time of suspension of the contract.

Article 578 Obligation to Prevent Damage

1. An insured must abide by the terms stipulated in the [insurance] contract and by the relevant legal regulations and take measures to avoid damage .

2. Where the insured fails to take those measures to avoid damage specified in the contract, the insurer may set a time-limit within which the insured must implement such measures. If the insured fails to take such measures within such time, the insurer may suspend unilaterally the performance of the contract, or not pay the insurance benefits if an insured event occurs as a result of the failure to take such measures.

Article 579 Obligations of a Purchaser of Insurance, an Insured and an Insurer Upon Occurrence of an Insured Event

1. Upon the occurrence of an insured event, the purchaser of insurance or the insured must notify the insurer immediately and take all necessary measures possible within his or her capacity to avoid and minimize any damage.

2. An insurer must pay the necessary and reasonable expenses which third parties have incurred to avoid and minimize the [actual] damage.

Article 580 Payment of Insurance Benefits

1. An insurer must pay insurance benefits to an insured within the agreed time period. If there is no agreement as to the time period, the insurer must pay the insurance benefits within fifteen (15) days of receiving complete and proper documentation regarding the claim for payment of the insurance benefits.

2. Where the insurer is late in paying insurance benefits, the insurer must also pay interest on the amount overdue for the period it is overdue, at the interest rate for overdue debts set by the State Bank at the time of payment of the insurance benefits.

3. Where an insured intentionally allows damage to occur , the insurer shall not be required to pay insurance benefits. If damage occurs due to the inadvertence of the insured, the insurer shall not be required to pay that part of the insurance benefits which corresponds to the extent of the fault of the insured.

Article 581 Transfers of Claims for Indemnity

1. Where a third party is at fault for causing damage to the insured, and the insurer has paid insurance benefits to the insured, the insurer may demand the third party to indemnify the insurer for the insurance benefits already paid. The insured must provide the insurer with all necessary information, documentation and evidence of which the insured has knowledge in order to enable the insurer to exercise its right to demand the third party [to indemnify].

2. Where an insured has received monetary compensation for damage from a third party which is less than the amount payable by the insurer, the insurer is only required to pay the difference between the [total] insurance benefits [otherwise payable] and the amount paid by the third party, unless otherwise agreed. If the insured has received insurance benefits but the insurance benefits are less than the damage caused by the third party, the insured may demand the third party to indemnify [the insured] for the difference between the insurance benefits and the monetary compensation for the damage.

An insurer may demand the third party to indemnify fully [the insurer] for the amount it has paid to the insured.

Article 582 Life Insurance

In the case of life insurance, an insurer must pay insurance benefits to the insured or the authorized representative of the insured upon the occurrence of an insured event. If the insured dies, the insurance benefits shall be paid to the heir of the insured.

Article 583 Property Insurance

1. An insurer must compensate for any damage caused to insured property, in accordance with the terms agreed or stipulated by law.

2. Where the ownership rights with respect to insured property are transferred to another person, the new owner shall automatically substitute the former owner in the insurance contract upon the transfer of the ownership rights. The former owner which purchased the insurance must notify the new owner that the property is insured and shall inform the insurer promptly of the transfer of the ownership rights. In the case of voluntary insurance, the new owner may suspend unilaterally the performance of the insurance contract.

Article 584 Civil Liability Insurance

1. In the case of third party civil liability insurance which is agreed or stipulated by law, the insurer must, at the demand of the purchaser of insurance, compensate the purchaser of insurance [for money the purchaser of insurance has paid to a third party], or make direct payment to a third party, in respect of damage the purchaser of insurance has caused to the third party, subject to the total insurance benefits agreed or stipulated by law.

2. Where the purchaser of insurance has already compensated the third party for damage, the purchaser of insurance may demand the insurer to indemnify the amount the purchaser of insurance has already paid to the third party, which shall not exceed the insurance benefits agreed by the parties or stipulated by law.

Section l2

AUTHORIZATION CONTRACTS

Article 585 Authorization Contracts

An authorization contract is an agreement between parties whereby an attorney must perform an act in the name of a principal. The principal is only required to pay remuneration if so agreed or stipulated by law.

Article 586 Formalities for Authorization Contracts

An authorization contract must be made in writing. If so agreed or stipulated by law, the authorization contract must also be notarized by a State notary public or certified by the authorized people's committee.

Article 587 Duration of Authorization

The duration of the authorization shall be agreed by the parties or stipulated by law. If there is no agreement and the duration is not stipulated by law, the authorization contract shall be effective for one year from the date on which the authorization is made.

Article 588 Sub-Authorization

An attorney may only sub-authorize its authorization to a third party with the consent of the principal, or if so stipulated by law. The formalities of the sub-authorization contract must conform with the formalities of the original authorization contract.

A sub-authorization shall not exceed the scope of the original authorization.

Article 589 Obligations of Attorneys

An attorney is obliged to:

1. Perform the act in accordance with the authorization and inform the principal of such performance;

2. Notify any third parties involved in the performance of the authorized act of the duration and scope of the authorization, and any amendments or additions to such scope;

3. Take care of and preserve documents and facilities provided for the performance of the authorized act;

4. Keep all information confidential which the attorney comes to know during the performance of the authorized act;

5. Return to the principal any property received and benefits derived during the performance of the authorized act, as agreed or stipulated by law; and

6. Compensate for any damage caused by a breach of any of the obligations stipulated in paragraphs 1, 2, 3, 4 and 5 of this article.

Article 590 Rights of Attorneys

An attorney is entitled to:

1. Demand the principal to provide the information, documentation and facilities necessary for performance of the authorized act; and

2. Receive remuneration and be reimbursed for reasonable expenses incurred in the performance of the authorized act.

Article 591 Obligations of Principals

A principal is obliged to:

1. Provide the information, documentation and facilities necessary for the attorney to perform the [authorized] act;

2. Be liable for undertakings given by the attorney within the scope of the authorization; and

3. Reimburse the attorney for reasonable expenses incurred by the attorney in the performance of the authorized act and pay any agreed remuneration to the attorney.

Article 592 Rights of Principals

A principal is entitled to:

1. Demand the attorney to report fully on the performance of the authorized act;

2. Demand the attorney to return any property and benefits derived from the performance of the authorized act, unless otherwise agreed; and

3. If the attorney breaches any of the obligations stipulated in article 589 of this Code, be compensated for any damage.

Article 593 Unilateral Suspension of Performance of Authorization Contracts

1. Where an authorization involves payment of remuneration, the principal may, at any time, suspend unilaterally the performance of the contract but must remunerate the attorney in proportion to the work performed and compensate for any damage. If the authorization does not involve payment of remuneration, the principal may, at any time, suspend unilaterally the performance of the contract, subject to giving reasonable prior notice to the attorney.

A principal must notify [any] third party in writing of the unilateral suspension of the performance of the contract by the principal. If the principal fails to do so, any contract with the third party shall remain in effect, unless such third party knows, or should know, of the suspension of the performance of the contract.

2. Where an authorization does not involve payment of remuneration, the attorney may, at any time, suspend unilaterally the performance of the contract, subject to giving reasonable prior notice to the principal. If the authorization involves payment of remuneration, the attorney may, at any time, suspend unilaterally the performance of the contract and must compensate for any damage caused to the principal.

Article 594 Termination of Authorization Contracts

An authorization contract terminates in any of the following circumstances:

1. The authorization contract expires;

2. The authorized act has been completed;

3. The principal or the attorney suspends unilaterally the performance of the contract in accordance with articles 420 and 593 of this Code; or

4. The principal or attorney has died, has been declared missing or dead by a court, or has lost the capacity for civil acts, or his or her capacity for civil acts is restricted.

Section 13

PROMISES OF REWARDS AND PRIZE COMPETITIONS

Article 595 Promises of Rewards

1. A person who has made a public promise of a reward must pay that reward to a person who performs the act requested by the promissor.

2. An act for which a reward is promised must be specific and capable of being performed and must not be prohibited by law nor contravene social morals.

Article 596 Withdrawal of Promises of Rewards

A promissor may withdraw its promise of a reward at any time before the commencement of the performance of the act. A withdrawal of a promise of reward must be made in the manner, and by the same media, in which the promise of reward was announced.

Article 597 Payment of Rewards

1. Where a person performs an act for which a reward is promised, that person must be given the reward upon the completion of the act.

2. Where several persons perform an act for which a reward is promised, concurrently but independently, the person who first completes the act shall be given the reward.

3. Where more than one person complete, at the same time, an act for which a reward is promised, the reward shall be distributed in equal shares amongst such persons.

4. Where more than one person co-operate with each other to perform, at the request of the promissor, an act for which a reward is promised, each person shall receive a share of the reward in proportion to his or her contribution.

Article 598 Prize Competitions

1. A person who organizes a cultural, artistic, sports, scientific, technical or other competition which is lawful and does not contravene social morals, must announce publicly the terms of participation, the scale of marks, the prizes and the value of each prize.

2. Any alteration of the terms of participation must be [announced] in the manner in which the competition was announced, within a reasonable period of time before the competition is conducted.

3. A winner of a prize is entitled to demand the organizer of a competition to give a prize of the value announced.


Chapter III

PERFORMANCE OF ACTS WITHOUT AUTHORIZATION

Article 599 Performance of Acts Without Authorization

The performance of an act without authorization means the voluntary performance of an act by a person who is under no obligation to perform the act, solely for the benefit of a beneficiary, without the knowledge of the beneficiary, or with its knowledge but without the beneficiary raising any objection.

Article 600 Obligations [of Persons Who] Perform Acts Without Authorization

1. A person who performs an act without authorization must do so in accordance with his or her capabilities and conditions.

2. A person who performs an act without authorization must do so as if such person were performing such act for his or her own benefit. If such person knows, or should know, the wishes of the beneficiary, such person must perform the act in accordance with such wishes.

3. A person who performs an act without authorization must, if requested, notify the beneficiary of the progress and results of the performance, unless the beneficiary already knows such information or the person performing the act without authorization does not know the place of residence of the beneficiary.

4. If a beneficiary dies, the person performing an act without authorization must continue to perform the act until the heir or representative of the deceased takes over the act.

5. Where a person performing an act without authorization has legitimate reasons for being unable to continue performance, such person must notify the beneficiary, or the representative or close relatives of the beneficiary, or may ask another person to perform on his or her behalf.

Article 601 Obligations of Beneficiaries to Pay for Acts Performed Without Authorization

1. A beneficiary of an act performed without authorization must accept the result of the act when it is handed over to the beneficiary by the person who performed the act and must reimburse that person for reasonable expenses incurred in performing such act, even where the performance has failed to achieve the result desired by the beneficiary.

2. If a person has performed an act properly for the benefit of a beneficiary, the beneficiary must remunerate the person who performed the act, unless the person who has performed the act refuses to accept the remuneration.

Article 602 Obligation to Compensate for Damage

1. If a person who performs an act without authorization intentionally causes damage [to the beneficiary] while performing the act, such person must compensate for such damage.

2. If a person who performs an act without authorization unintentionally causes damage [to the beneficiary] while performing the act, the compensation by such person may be reduced on the basis of the circumstances in which the act was performed.

Article 603 Termination of Performance of Acts Without Authorization

The performance of an act without authorization terminates in any of the following cases:

1. The beneficiary so requests;

2. The beneficiary, or its heir or representative, takes over the act;

3. The person performing the act without authorization becomes unable to continue performance in accordance with paragraph 5 of article 600 of this Code; or

4. The person performing the act without authorization dies.


Chapter IV

OBLIGATIONS TO RETURN [PROPERTY] DUE TO UNLAWFUL POSSESSION OR USE OF PROPERTY OR UNLAWFUL DERIVING OF BENEFITS FROM PROPERTY

Article 604 Obligation to Return [Property]

1. A person who possesses or uses property of another unlawfully must return the property to its lawful owner or possessor. If the lawful owner or possessor of such property cannot be found, the person who possesses or uses property of another unlawfully must deliver the property to the authorized State body, except in the cases stipulated in paragraph 1 of article 255 of this Code.

2. A person who derives benefits from property unlawfully, thereby causing damage to another, must give such benefits to such other person, except in the cases stipulated in paragraph 1 of article 255 of this Code.

Article 605 Property to Be Returned

1. A person who possesses or uses property unlawfully must return the whole of such property. Where the property to be returned is a distinctive object, that particular object must be returned and, if such distinctive object is lost or damaged, monetary compensation must be paid, unless otherwise agreed. If the property to be returned is a generic object which has been lost or damaged, then an object of the same type must be returned or monetary compensation must be paid, unless otherwise agreed.

2. A person who derives benefits from property unlawfully must return, either in kind or in money, the benefits derived from the property to any person who has suffered loss of such benefits.

Article 606 Obligation to Return Benefits and Income

1. A person who possesses or uses property, or a person who derives benefits from a property, unlawfully and not in good faith, must give any benefits and income derived from the property during the time of unlawful possession or use of, or deriving benefits from, the property.

2. A person who possesses or uses property, or a person who derives benefits from a property, unlawfully but in good faith, must give any benefits and income derived from the property from the time at which he or she knew, or should have known, that the possession or use of, or deriving benefits from, the property was unlawful, except in the cases stipulated in paragraph 1 of article 255 of this Code.

Article 607 Right to Demand Third Party to Return Property

Where a person who unlawfully possesses or uses property transfers the property to a third party, the third party must return the property if so demanded by the lawful owner or possessor of the property. If money or compensation is paid for such property, the third party may demand the party who transfers the property to the third party to compensate for any damage.

Article 608 Obligation to Pay

Upon taking back property, an owner, lawful possessor or aggrieved person must reimburse the person who took possession of or used the property, or derived benefits from the property, unlawfully but in good faith, for the necessary expenses such person has incurred for taking care of the property and increasing its value.


Chapter V

LIABILITY FOR COMPENSATION FOR
NON-CONTRACTUAL DAMAGES


Section 1

GENERAL PROVISIONS

Article 609 Liability to Compensate for Damage

A person who intentionally, or unintentionally, harms the life, health, honour, dignity, reputation, property, or other legal rights or interests of an individual, or who harms the honour, reputation, or property of a legal entity or other subject, thereby causing damage, must compensate [for such damage].

Article 610 Principles of Compensation for Damage

1. Damage must be compensated in full and promptly. Unless otherwise stipulated by law, parties may agree on the amount of compensation, the form of compensation, which may be money, in kind or the performance of an act, and the method of compensation.

2. The compensation payable by a person who has caused damage may be reduced, if such damage was caused unintentionally and is very large in comparison to the short-term and long-term financial positions of such person.

3. If the amount of compensation [determined] becomes unrealistic, the aggrieved person, or the person who has caused damage, may petition a court or another authorized State body to change the amount of compensation.

Article 611 Capacity of Individuals for Liability to Compensate for Damage

1. A person of eighteen (18) or more years of age who causes damage shall be personally liable to compensate.

2. Where a minor under fifteen (15) years of age causes damage, his or her parents, if any, must compensate for the total damage. If the parents have insufficient property to compensate and the minor who has caused the damage has property of his or her own, such property shall be used to satisfy the outstanding amount of compensation, except in the cases stipulated in article 625 of this Code.

Where a person who is between fifteen (15) and eighteen (18) years of age causes damage, such person must compensate by recourse to his or her own property. If such person has insufficient property to compensate, the parents of such person must satisfy the outstanding amount by recourse to their own property.

3. Where a minor, or a person who has lost the capacity for civil acts, causes damage, but there is an individual or organization acting as his or her guardian, then such individual or organization may use the property of the ward to compensate. If the ward has no, or insufficient, property to compensate, then the guardian must do so by recourse to the property of the guardian. If the guardian is able to prove that he or she was not at fault in respect of guardianship, the guardian shall not be required to use its property to compensate.

Section 2

ASSESSMENT OF DAMAGE

Article 612 Damage Caused by Infringement of Property

In the event of an infringement of property, the compensatable damage may include lost, destroyed or damaged property, interests associated with the use and exploitation of the property, and reasonable costs for the prevention, mitigation and remedy of the damage.

Article 613 Damage Caused by Harm to Health

Damage caused by harm to health may include:

1. Reasonable costs for treating, nursing and rehabilitating health, and losses and impairment of the aggrieved person;

2. Loss of, or reduction in, the actual income of the aggrieved person. If the actual income of the aggrieved person is irregular and cannot be determined, the average income level for the type of work performed by the aggrieved person shall be applied;

3. Reasonable costs and actual income losses of the carers of the aggrieved person during the period of treatment. If the aggrieved person loses his or her ability to work and requires a permanent carer, the damage shall also include reasonable costs for taking care of the aggrieved person and support for any dependants .

4. Depending on the circumstances, a court may order a person who harms the health of another to pay an amount of money as compensation for any mental suffering of the aggrieved person.

Article 614 Damage Caused by Harm to Life

Damage caused by harm to life may include:

1. Reasonable costs for treating, nursing and caring for the aggrieved person prior to the death of the aggrieved person;

2. Reasonable funeral costs;

3. Support for the dependants of the aggrieved person; and

4. Depending on the circumstances, a court may order a person who harms the life of another to pay an amount of money as compensation for any mental suffering of the closest relatives of the aggrieved person.

Article 615 Damage Caused by Harm to Honour, Dignity or Reputation

Damage caused by harm to the honour, dignity or reputation of an individual, or harm to the honour or reputation of a legal entity or another subject may include:

1. Reasonable costs for mitigating and remedying the damage;

2. Loss of, or reduction in, actual income; and

3. Depending on the circumstances, in addition to ordering the cessation of the harmful act, a public apology or a public retraction, a court may order a person who causes damage by harm to honour, dignity or reputation to pay an amount of money as compensation for any mental suffering of the aggrieved person.

Article 616 Period of Entitlement to Compensation for Damage Caused by Harm to Life or Health

1. Where an aggrieved person totally loses the ability to work, the aggrieved person shall receive compensation until the time of his or her death.

2. Where the aggrieved person dies, his dependants shall be entitled to receive support for the following durations:

(a) A child of the deceased, whether living or conceived before his death, shall be entitled to compensation until the age of eighteen (18) years, except a child between fifteen (15) and eighteen (18) years of age who is employed and earns sufficient income to look after himself or herself; and

(b) An adult who is unable to work shall be entitled to receive support until his or her death.

Section 3

COMPENSATION FOR DAMAGE IN
A NUMBER OF SPECIFIC CASES

Article 617 Compensation for Damage by Persons Who Exceed Limits of Reasonable Self-Defence

1. A person who causes damage while acting in reasonable self-defence is not liable to compensate any aggrieved person .

2. A person who causes damage while not acting in reasonable self-defence must compensate any aggrieved person.

Article 618 Compensation for Damage by Persons Who Exceed Requirements of an Emergency Situation

1. A person who causes damage while acting [within the requirements of] an emergency situation is not liable to compensate any aggrieved person.

2. A person who causes damage as a result of exceeding the requirements of an emergency situation must compensate any aggrieved person.

3. A person who creates an emergency situation which leads to damage being caused must compensate any aggrieved person.

Article 619 Compensation for Damage Caused by Persons Using Stimulants

1. A person who, due to the consumption of alcohol or the use of other stimulants, becomes unaware of, or unable to control, his or her acts, thereby causing damage to another person, must compensate such person.

2. A person who intentionally causes another person to take alcohol or stimulants, thereby causing such person to become unaware of, or unable to control, his or her acts, must compensate any person aggrieved thereby.

Article 620 Compensation for Damage Caused Jointly by Several Persons

Where several persons jointly cause damage, they must jointly compensate any aggrieved person . Liability for compensation of each person who has jointly caused the damage shall be determined in proportion to the degree of fault of each person. If the degree of fault cannot be determined, the persons causing damage must compensate in equal shares.

Article 621 Compensation for Damage Where Aggrieved Person is At Fault

If an aggrieved person is at fault for causing the damage, then the person who has caused the damage shall only be liable for a share of the damage in proportion to the degree to which he or she is at fault for causing such damage. If the aggrieved person is totally at fault for causing the damage, then the person causing the damage shall not have to compensate.

Article 622 Compensation for Damage Caused by Persons Belonging to a Legal Entity

A legal entity must compensate for any damage caused by any person belonging to the legal entity during the performance of duties assigned by it [to such person]. If a legal entity has compensated for any damage, it may demand the person at fault for causing the damage to reimburse it, in accordance with law, the amounts of money paid in compensation to the aggrieved person.

Article 623 Compensation for Damage Caused by State Officials and Civil Servants

A State body must compensate for any damage caused by any official or employee belonging to it during the performance of his or her public duties.

If such an official or civil servant is at fault during the performance of his or her public duties, the State body must demand the official or employee to reimburse it, in accordance with law, the amounts of money paid as compensation to the aggrieved person.

Article 624 Compensation for Damage Caused by Authorized Persons of Bodies Performing Judicial Functions

A body which performs a judicial function must compensate for any damage caused by any authorized person during the course of the performance of his or her duties of investigation, prosecution, judgement or enforcement of judgement.

If the authorized person was at fault during the performance of his or her duties, the body must demand such person to reimburse it, in accordance with law, the amounts of money paid as compensation to the aggrieved person.

Article 625 Compensation for Damage Caused by Persons Under Fifteen Years of Age or Persons Who Have Lost Their Capacity for Civil Acts and Are Under Direct Supervision of a School, Hospital or Other Organization

Where a person under fifteen (15) years of age, or a person who has lost his or her capacity for civil acts, causes damage to another person while under the direct supervision of a school, hospital, or other organization, then such school, hospital or other organization must, if it is at fault for inadequate supervision, jointly with the parents or guardian of the person, compensate for any damage. If the school, hospital or other organization is not at fault [for inadequate supervision], the parents or guardian of the person must compensate.

Article 626 Compensation for Damage Caused by Workers and Trainees

An individual, legal entity or other subject must compensate for any damage caused by any worker or trainee belonging to it during the performance by the employee or trainee of his or her assigned duties. The individual, legal entity or other subject may demand such worker or trainee to reimburse it, in accordance with law, the amounts of money paid as compensation to the aggrieved person.

Article 627 Compensation for Damage Caused by Sources of Extreme Danger

1. Sources of extreme danger comprise motorized means of transport, power transmission systems, operating industrial plants, weapons, explosives, inflammable substances, toxic substances, radioactive substances, dangerous animals and other sources of extreme danger stipulated by law.

An owner of a source of extreme danger must comply strictly with the regulations on taking care of, preserving, transporting and using sources of extreme danger in accordance with law.

2. An owner of a source of extreme danger must compensate for any damage caused by such source. If the owner has transferred possession or use of the source of extreme danger to another person, such other person must compensate [for the damage], unless otherwise agreed.

3. An owner, or person to whom an owner has transferred the possession or use, of a source of extreme danger, must compensate for any damage caused by such source, even where such owner or person is not at fault, except in either of the following cases:

(a) The aggrieved person is entirely at fault for intentionally causing the damage;
(b) The damage occurred due to an event of force majeure or in an emergency situation, unless otherwise stipulated by law.

4. Where a source of extreme danger is taken into possession or used unlawfully, the person who possess or uses [it] unlawfully must compensate for any damage.

Where an owner, or a person to whom an owner has transferred possession or use, of a source of extreme danger is at fault by allowing the unlawful possession or use of the source of extreme danger, the owner, or the person to whom the owner has transferred possession or use, of the source of extreme danger, [as the case may be], must compensate jointly for the damage.

Article 628 Compensation for Damage Caused by Environmental Pollution

An individual, legal entity or other subject polluting the environment, thereby causing damage, must compensate in accordance with the law on environmental protection, unless the aggrieved person is at fault.

Article 629 Compensation for Damage Caused by Livestock

1. An owner of livestock must compensate for any damage caused to another person by such livestock. If the aggrieved person is entirely at fault in causing the livestock to cause the damage, the owner shall not be liable to compensate.

2. Where a third party is entirely at fault in causing livestock to cause damage to another person, the third party must compensate for any damage. If both the third party and the owner are at fault, then both of them must compensate jointly for the damage.

3. Where livestock which is possessed unlawfully causes damage, the unlawful possessor must compensate [for the damage]. If the owner is at fault by allowing the unlawful possession or use of the livestock, both [the owner and unlawful possessor or user] must compensate jointly for the damage.

4. Where livestock which is allowed to roam according to customary practice causes damage, its owner must compensate according to customary practice provided that such compensation does not contravene the law or social morals.

Article 630 Compensation for Damage Caused by Trees

An owner [of a tree] must compensate for any damage caused by all or part of the tree falling, unless the damage is caused entirely due to the fault of the aggrieved person or by an event of force majeure.

Article 631 Compensation for Damage Caused by Houses and Construction Works [or Buildings]

An owner of a house or construction works [or building], or a person to whom the owner has assigned the management or use thereof, must compensate for any damage if either of them allows such house or construction works [or building] to collapse, be damaged or partially collapse, thereby causing damage to another person, unless the damage is caused entirely due to the fault of the aggrieved person or by an event of force majeure.

Article 632 Compensation for Damage Caused by Infringement of Consumer Interests

An individual, legal entity or other subject carrying out production or business and failing to ensure [compliance with] the quality standards of food, foodstuff , medicine and other goods, thereby causing damage to consumers, must compensate [for such damage].

Article 633 Compensation for Damage Caused by Harm to Honour or Reputation in Production or Business

An individual, legal entity or other subject harming the honour or reputation of a producer or business , thereby causing damage to the production or business activities of such producer or business, must compensate [for such damage].

PART 4

INHERITANCE


Chapter I

GENERAL PROVISIONS

Article 634 Rights of Inheritance of Individuals

An individual may make a will to dispose of his or her estate , leave his or her property to an heir in accordance with law, or inherit an estate [left to him or her] under a will or in accordance with law.

Article 635 Equality of Individuals With Respect to Rights of Inheritance

All individuals are equal with respect to rights to bequeath their property to others and to inherit estates under wills or in accordance with law.

Article 636 Time and Place of Commencing Inheritance

1. The time of commencement of an inheritance shall be the time at which the deceased dies. Where a court declares that a person is dead, the time of commencement of the inheritance shall be the date stipulated in paragraph 2 of article 91 of this Code.

2. The place of commencement of the inheritance shall be the last place of residence of the owner of the estate. If the last place of residence cannot be determined, the place of commencement of the inheritance shall be the place at which all or most of the estate is located.

Article 637 Estates

1. An estate comprises property which the deceased owned and property which the deceased jointly owned with other persons.

2. Land use rights also form part of an estate and may be bequeathed in accordance with Part Five of this Code.

Article 638 Heirs

1. If an heir is a natural person, such person must be alive at the time of commencement of the inheritance, or have been conceived before such time and survive birth .

2. Where an heir under a will is a body or organization, it must be in existence at the time of commencement of the inheritance.

Article 639 Time At Which Rights and Obligations of Heirs Arise

From the time of commencement of an inheritance, the heirs have the property rights and obligations left by the deceased.

Article 640 Performance of Property Obligations Left by the Deceased

1. A person entitled to an inheritance must perform the property obligations left by the deceased.

2. Where an estate has not yet been divided, the property obligations left by the deceased shall be performed by the administrator of the estate as agreed by the heirs.

3. Where an estate has already been divided, each heir shall perform those property obligations left by the deceased corresponding to that part of the estate that the heir has inherited.

4. Where the State, or a body or organization, inherits an estate under a will, it must perform the property obligations left by the deceased in like manner as an individual heir.

Article 641 Administrators of Estates

1. The administrator of an estate is the person who is appointed in the will or by agreement of the heirs.

2. Where a will fails to appoint, and the heirs have not yet appointed, an administrator, the person who possesses, uses or manages the estate at the time of the commencement of the inheritance shall continue its administration until the heirs have appointed an administrator.

3. Where an heir has not yet been determined and there is not yet an administrator of the estate, the estate shall be administered by the authorized State body.


PART 5

PROVISIONS ON TRANSFER OF
LAND USE RIGHTS


Chapter I

GENERAL PROVISIONS

Article 690 Basis for Establishment of Land Use Rights

1. Land is under the ownership of the entire people and is administered uniformly by the State.

2. Land use rights of individuals and family households are established by the allocation or lease of land by the State.

3. Land use rights of individuals and family households are also established by the transfer of land use rights by other persons in accordance with this Code and the law on land.

Article 691 Formalities for Transfer of Land Use Rights

The exchange, transfer, lease or mortgage of a land use right in accordance with this Code and the law on land shall be conducted by way of contract.

A contract for transfer of a land use right must be made in writing and certified by the authorized people's committee.

A land use right shall be inherited in accordance with articles 738 to 744 of this Code and the law on land.

Article 692 Procedures for Transfer of Land Use Rights

The transfer of a land use right must be conducted according to the [prescribed] procedures and must be registered with the authorized State body.

Article 693 Conditions for Transfer of Land Use Rights

A family household or individual may transfer a land use right to another person provided that all of the following requirements are satisfied:

1. The household or individual has a land use right certificate issued by the authorized State body in accordance with the law on land;

2. The transfer is made within the authorized term of the land use right;

3. The household or individual is permitted to transfer the land use right in accordance with the provisions of this Code and the law on land; and

4. The land is not under any dispute.

Article 694 Price for Transfers of Land Use Rights

The parties shall agree upon the price for the transfer of a land use right on the basis of the table of prices issued by the people's committees of provinces or cities under central authority in accordance with the range of prices issued by the Government.

Article 695 Principles for Transfer of Land Use Rights

1. Only land users permitted by law to transfer a land use right may transfer that land use right.

2. When transferring a land use right, the parties may agree upon the contents of the contract for transfer of the land use right in accordance with this Code and the law on land.

3. A transferee of a land use right must: use the land for its designated purpose and for the duration as stated in the decision of the authorized State body on the allocation of the land to the transferee and in accordance with the local zoning plans; not use more than the prescribed area of land; protect, improve and enrich the land to increase its profitability; protect the environment; and not harm the legal rights or interests of the users of adjoining and neighbouring land.

Article 696 Effectiveness of Transfers of Land Use Rights

The transfer of a land use right shall be effective upon registration of the land use right with the authorized people's committee.

Article 697 Effect of Unlawful Transfers of Land Use Rights

Where a contract for transfer of a land use right breaches any of the requirements stipulated by the law on land or this Code with respect to the conditions and formalities for, and the contents of, transfers of land use rights, such contract shall not be legally effective. The person in breach shall be dealt with in accordance with law. The land may be confiscated and the transacted property, and any benefits derived therefrom, may be confiscated in accordance with law.

A person who, by taking advantage of his or her position and authority or by acting beyond his or her power, permits the transfer of a land use right, or changes of the land use purpose in contravention of the law, shall be dealt with in accordance with law.

Article 698 Basis for Termination of Land Use Rights

1. The land use right of an individual or family household terminates in any of the following circumstances:

(a) The duration for use of the land allocated or leased by the State has expired;

(b) The duration for use of the land under a contract for transfer of the land use right has expired;

(c) The land user voluntarily returns the allocated land;

(d) The land user dies without an heir;

(e) The authorized State body decides to recover the land use right;

(f) The parcel of land no longer exists due to a natural disaster; [and]

(g) Other cases stipulated by law.

2. Land which the State has not yet allocated, but which is used unlawfully, or which has been allocated, but not in accordance with the authority provided by the law on land, shall be recovered.

An authorized person who allocates land unlawfully shall be dealt with in accordance with law.
Chapter II

CONTRACTS FOR EXCHANGE OF LAND USE RIGHTS

Article 699 Contracts for Exchange of Land Use Rights

A contract for exchange of a land use right is an agreement between parties whereby they transfer [parcels of] land and the land use rights to each other in accordance with the conditions and formalities for, and the contents of, transfers of land use rights stipulated in this Code and the law on land.

Article 700 Conditions for Exchange of Land Use Rights

A family household or individual using agricultural land, forestry land for afforestation or residential land may exchange the land use right if all of the following conditions are satisfied:

1. The exchange is convenient for production and life;

2. After the exchange of land use rights, the [parcels of] land must be used in accordance with their designated purposes and durations and within the area limit applicable to the relevant category of land; and

3. The exchange is within the duration of land use stipulated by the State at the time of allocation of the land.

Article 701 Formalities for Exchanges of Land Use Rights

A contract for exchange of a land use right must be made in writing. The exchange of a land use right must be conducted according to the [prescribed] procedures and must be registered with the authorized people's committee in accordance with the law on land.

Article 702 Principal Contents of Contracts for Exchange of Land Use Rights

A contract for exchange of a land use right shall include the following principal contents:

1. Full names and addresses of the parties;

2. The reasons for the exchange of land use rights;
3. The rights and obligations of the parties;

4. The categories, class, areas, location, boundaries and condition of the [parcels of] land;

5. The time at which the [parcels of] land are transferred;

6. The duration of land use of the exchanger and the remaining duration of land use to which the exchangee is entitled;

7. The difference, if any, in the value of the land use rights;

8. Third party rights, if any, with respect to the exchanged [parcels of] land; and

9. The liability of each party for breach of contract.

Article 703 Obligations of Parties Exchanging Land Use Rights

Parties exchanging land use rights must:

1. Deliver to each other the full area of land strictly in accordance with the class, category, location and condition of the land as agreed in the contract;

2. Use the land for the designated purpose and duration;

3. Pay the fees for the exchange of land use rights with respect to the parcel of land received in the exchange, and perform the obligations of a land user in accordance with this Code and the law on land;

4. If the value of the land use right of one party to the exchange is higher [than the value of the land use right of the other party], settle the difference, unless otherwise agreed; and

5. A party entitled to receive the difference in value of the land use rights must pay tax on the transfer of land use rights in respect of such difference in accordance with the law on taxation of transfers of land use rights.

Article 704 Rights of Parties Exchanging Land Use Rights

Parties exchanging land use rights are entitled to:

1. Demand the other party to transfer the full parcel of land strictly in accordance with the class, category, location and condition of the land as agreed in the contract;

2. Demand the other party to deliver to it all legal documents relating to the land use right;

3. Be issued with a land use right certificate for the exchanged land; and

4. Use the land for the designated purpose and duration.


Chapter III

CONTRACTS FOR TRANSFER OF LAND USE RIGHTS

Article 705 Contracts for Transfer of Land Use Rights

A contract for transfer of a land use right is an agreement between parties in accordance with the conditions and formalities for, and the contents of, transfers of land use rights stipulated in this Code and the law on land, whereby a land user (hereinafter referred to as the transferor ) transfers the land and the land use right to another person (hereinafter referred to as the transferee ) and the transferee [of the land use right] pays money to the transferor.

Article 706 Conditions for Transfers of Land Use Rights

1. A family household or an individual using agricultural land or forestry land for afforestation may transfer the land use right in any of the following circumstances:

(a) Relocation to another place of residence to live or to carry on production or business;

(b) Engaging in another occupation; or

(c) Not having, or having lost, the capability to work.

2. A family household or an individual using residential land and moving to another place, or no longer needing to use such land, may transfer the land use right.

Article 707 Formalities for Contracts for Transfer of Land Use Rights

A contract for transfer of a land use right must be made in writing. The transfer of a land use right requires the permission of the authorized State body, must be conducted according to the [prescribed] procedures and must be registered with the authorized people's committee in accordance with the law on land.

Article 708 Principal Contents of Contracts for Transfer of Land Use Rights

A contract for transfer of a land use right shall include the following principal contents:

1. The full names and addresses of the parties;

2. The reasons for the transfer of land use right;

3. The rights and obligations of the parties;

4. The category, class, area, location, boundaries and condition of the land;

5. The duration of land use of the transferor and the remainder of the duration of land use to which the transferee is entitled;

6. The price of the transfer;

7. The method and time of payment;

8. Third party rights, if any, with respect to the transferred land; and

9. The liability of each party for breach of contract.

Article 709 Obligations of Transferors of Land Use Rights

The transferor of a land use right is obliged to:

1. Apply for permission from the authorized State body to transfer the land use right in accordance with the law on land;

2. Transfer the land use right within the duration allocated;

3. Transfer to the transferee the full area of land strictly in accordance with the class, category, location and condition of the land, as agreed in the contract and as stated in the documents relating to the land use right;

4. Notify the transferee of third party rights, if any, with respect to the transferred land use right; and

5. Pay tax on the transfer of land use rights, unless otherwise stipulated by law.

Article 710 Rights of Transferors of Land Use Rights

A transferor of a land use right is entitled to:

1. Receive payment for the transfer of the land use right. If the transferee is late in paying, paragraph 2 of article 313 of this Code shall apply; and

2. If the transferee fails to pay for the transfer on time or in full, revoke the contract and demand compensation for any damage.

Article 711 Conditions for Being Transferees of Land Use Rights

The transferee of a land use right must satisfy the following conditions:

1. Needing to use the land; and

2. Not having any land, or having land less than the area limit stipulated by the law on land, and, after receiving the transferred land use right, still having less than such area limit for such category.

Article 712 Obligations of Transferees of Land Use Rights

The transferee of a land use right is obliged to:

1. Pay the transferor in full, at the time and by the method of payment agreed;

2. Register the land use right with the authorized people's committee in accordance with article 707 of this Code;

3. Perform all other obligations stipulated in paragraphs 1, 2, 3, 4 and 7 of article 79 of the Land Law; and

4. Ensure third party rights with respect to the use of the land.

Article 713 Rights of Transferees of Land Use Rights

The transferee of a land use right is entitled to:

1. Demand the transferor of the land use right to deliver to the transferee all legal documents relating to the land use right;

2. Demand the transferor of the land use right to deliver the full area of land strictly in accordance with the class, category, location and condition of the land as agreed in the contract;

3. Be issued with a land use right certificate for the transferred land; and

4. Use the land for the designated purpose and duration.


Chapter IV

CONTRACTS FOR LEASE OF LAND USE RIGHTS

Article 714 Contracts for Lease of Land Use Rights

A contract for lease of a land use right is an agreement between parties in accordance with the conditions and formalities for, and the contents of, transfers of land use rights stipulated in this Code and the law on land, whereby the lessor transfers land to the lessee for use during a [certain] term. The lessee must use the land for the designated purpose, pay rent and return the land upon expiry of the term of lease.

Article 715 Conditions for Lease of Land Use Rights

1. A family household or individual using agricultural land for the cultivation of annual crops or for aquacultural purposes may lease its, his or her land use right in any of the following circumstances:

(a) The family is in poverty or encounters difficulties due to a shortage of labour or lack of capital; or

(b) The family or individual has changed to another occupation but is not yet settled.

2. The term of the lease of land use rights shall be agreed by the parties but shall not exceed three years. In the case of extraordinary difficulties, the term of lease may be extended in accordance with regulations of the Government.

Article 716 Formalities for Contracts for Lease of Land Use Rights

A contract for lease of a land use right must be made in writing.

A lease of land use rights must be conducted in accordance with the [prescribed] procedures and registered with the authorized people's committee in accordance with the law on land.

Article 717 Principal Contents of Contracts for Lease of Land Use Rights

A contract for lease of a land use right shall include the following principal contents:

1. The full names and addresses of the parties;

2. The reasons for leasing the land use right;

3. The rights and obligations of the parties;

4. The category, class, area, location, boundaries and condition of the land;

5. The term of lease;

6. The price of the lease;

7. The method and time of payment;

8. Third party rights, if any, with respect to the leased land;

9. Liability for breach of the contract for lease of a land use right; and

10. The [measures] to deal with any consequences upon expiry of the contract for lease of a land use right.

Article 718 Obligations of Lessors of Land Use Rights

A lessor of a land use right is obliged to:

1. Register the lease of the land use right;

2. Transfer to the lessee the full area of the land strictly in accordance with the class, category, location and condition of the land as agreed in the contract;

3. Lease the land use right within the term allocated;

4. Inspect and remind the lessee to protect and take care of the land and use it for the designated purpose;

5. Pay land use tax, unless otherwise agreed; and

6. Notify the lessee of third party rights, if any, with respect to the leased land.

Article 719 Rights of Lessors of Land Use Rights

A lessor of a land use right is entitled to:

1. Demand full payment of the land rent from the lessee;

2. Demand the lessee of the land use right to cease immediately any use of the land which is not for the designated purpose, or [which causes] any destruction or devaluation of the land. If the lessee fails to do so, the lessor may suspend unilaterally the performance of the contract and demand the lessee to return the leased land and to compensate for any damage;

3. Demand the lessee to return the land upon expiry of the term of lease.

Article 720 Obligations of Lessees of Land Use Rights

A lessee of a land use right is obliged to:

1. Use the land for the designated purpose, within the boundaries and for the term of lease agreed;

2. Not destroy the land or reduce its utility value. [The lessee must also] satisfy all other requirements as agreed in the contract for lease of the land use right;

3. Pay the rent for the lease of the land use right in full, at the time and place, and in accordance with the method of payment, agreed. If the land use fails to generate a profit, the lessee must, nevertheless, pay land rent in full unless otherwise agreed;

4. Comply with the regulations on environmental protection and not harm the legal rights or interests of users of the neighbouring land;

5. Upon expiry of the term of the lease of the land use right, return the land in the same condition as it was received, unless otherwise agreed;

6. Not sub-let the land use right to other persons, unless otherwise stipulated by law.

Article 721 Rights of Lessees of Land Use Rights

A lessee of a land use right is entitled to:

1. Demand the lessor to deliver the land strictly as agreed;

2. Enjoy the stable use of the leased land for the term agreed;

3. Enjoy the benefits and income derived from the land use;

4. Suspend unilaterally the performance of the contract in accordance with article 420 of this Code; and

5. In the event that an event of force majeure results in loss or reduction of benefits and income, request the lessor to reduce the rent or exempt the lessee from paying any rent.

Article 722 Late Payment of Rent for Lease of Land Use Rights

If the lessee is late in paying the agreed rent for the lease of the land use right, the lessor may grant an extension. If the lessee fails to pay the rent within such extension, the lessor may suspend unilaterally the performance of the contract for lease of the land use right and demand the lessee to return the land. The lessor may demand the lessee to pay full rent with respect to the period of time for which the land has been leased, including interest on the rent outstanding, for the period of time for which it remains outstanding, at the rate for overdue debts set by the State Bank at the time when payment is made.

Article 723 Compensation for Damage Caused by Compulsory Acquisition of Land

1. If a lessor or lessee deliberately breaches the obligations of a land user, such party must compensate the other party for any damage.

2. Where a contract for lease of a land use right is in effect, but the State compulsorily acquires the land due to security or national defence requirements or in the national or public interest, then the contract for lease of the land use right shall terminate prior to its full term.

Where the lessee has paid rent in advance, the lessor must refund to the lessee the rent prepaid . If the lessee has not yet paid rent, the lessee must pay rent for the period of time for which it used the land.

A lessor shall be compensated by the State for any damage caused by the repossession of the land in accordance with law and the lessee shall be compensated by the State for the loss of benefits from the land.

Article 724 Right to Continue Lease of Land Use Rights Upon Death of a Party

1. Where the lessor of a land use right dies, the lessee may, nevertheless, continue the lease of the land use right until the expiry of the term of lease.

2. Where the lessee of a land use right dies, the members of the family household of the lessee may continue the lease of the land use right until the expiry of the term of lease provided that the authorized State authorities are notified thereof.

Article 725 Transfer of Land Use Rights During Term of Lease of Land Use Rights

As long as the term of lease of a land use right remains in effect, the lessor has the right to transfer the land use right to another person, if so permitted by the authorized State body, but the lessor must notify the lessee in order for the lessee to perform the obligations of the lessee to the transferee of the land use right.

A lessee may still continue the lease of the land use right until the expiry of its term under the contract.

Article 726 Termination of Contracts for Lease of Land Use Rights

1. A contract for lease of a land use right terminates in any of the following cases:

(a) The lease expires without extension;

(b) In accordance with an agreement between parties;

(c) The State repossesses the land;

(d) One of the parties suspends unilaterally the performance of the contract or revokes the contract in accordance with an agreement or as stipulated by law; or

(e) The lessee of the land use right dies and there are no surviving members of his or her family household nor any heirs, or the lessee has heirs but the heirs do not wish to continue the lease.

2. Upon termination of the contract for lease of a land use right, the lessee must restore the land to the condition in which he or she received it, except where otherwise agreed or provided by the law on land. Property attached to the land shall be dealt with as agreed by the parties.


Chapter V

CONTRACTS FOR MORTGAGE OF LAND USE RIGHTS

Article 727 Mortgage of Land Use Rights

A contract for mortgage of a land use right is an agreement between parties in accordance with the conditions, contents and forms of transfer of land use rights provided by this Code and the law on land, pursuant to which the land user uses the land use right to secure the performance of civil obligations.

A mortgagor is permitted to continue to use the land during the term of the mortgage.

Article 728 Conditions of Mortgage of Land Use Rights

A family household or an individual using land for which it [or he or she] holds a land use right certificate issued by the authorized State body in accordance with the law on land may mortgage the land use right in accordance with this Code and the law on land.

Article 729 Mortgage of Land Use Rights In Respect of Agricultural Land and Forestry Land Used for Afforestation

A family household or an individual using agricultural land or forestry land for afforestation may mortgage the land use right at a Vietnamese bank or at a credit organization established with the approval of the State in order to borrow capital for production purposes.

Article 730 Mortgage of Land Use Rights In Respect of Residential Land

A family household or an individual using residential land may, due to production or living requirements, mortgage the land use right in respect of the residential land to Vietnamese economic organizations or individuals in Vietnam.

Article 731 Formalities for Contracts for Mortgage of Land Use Rights

A contract for mortgage of a land use right must be made in writing.

A mortgage of a land use right must [also] be made according to the prescribed procedures and registered with the authorized people's committee in accordance with the law on land.

Article 732 Scope of Mortgages of Land Use Rights

1. Land use rights may be mortgaged in part or in whole.

2. Where a family household or an individual stipulated in articles 729 and 730 of this Code mortgages a land use right, any residential house or other constructed facility, planted forest, tree or other property of the mortgagor attached to the land shall only form part of the mortgaged property if there is an agreement to such effect.

Article 733 Obligations of Mortgagors of Land Use Rights

A mortgagor of a land use right is obliged to:

1. Deliver the land use right certificate to the mortgagee;

2. Complete the procedures for registering the mortgage and cancel such registration when the contract for mortgage terminates;

3. Not exchange, transfer or lease the mortgaged land use right;

4. Use the land for its designated purpose and not destroy or diminish the value of the land; and

5. Repay the loan at the time, and in accordance with the method, agreed in the contract.

Article 734 Rights of Mortgagors of Land Use Rights

A mortgagor of a land use right is entitled to:

1. Use the land during the term of the mortgage;

2. Obtain the loan in respect of which the land use right is mortgaged in accordance with the method agreed;

3. Take the benefits derived from the land unless the benefits form part of the mortgaged property; and

4. Receive back the land use right certificate after fulfilling the mortgage obligations.

Article 735 Obligations of Mortgagees of Land Use Rights

A mortgagee of a land use right is obliged to:

1. With the mortgagor, register the mortgage; and

2. Return the land use right certificate when the mortgagor has fulfilled the obligations secured by the mortgage.

Article 736 Rights of Mortgagees of Land Use Rights

A mortgagee of a land use right is entitled to:

1. Inspect [the use by the mortgagor of the land use right] and remind the mortgagor to protect and take care of the land and use it for the designated purpose; and

2. Where an auction of the mortgaged land use right is held, enjoy priority with respect to the repayment of debts, after deduction of auction fees.

Article 737 Settlement of Mortgaged Land Use Rights

If the mortgagor fails to perform properly, or at all, the obligations secured by the mortgage of the land use right by the time that performance falls due, then the land use right shall be settled as follows:

1. Where the land use right is in respect of agricultural land or forestry land for afforestation which has been mortgaged to a Vietnamese bank or Vietnamese credit organization, the mortgagee shall be entitled to request the authorized State body to organize an auction of the land use right in order to recover the principal and interest thereon;

2. Where the land use right is in respect of residential land which has been mortgaged to a Vietnamese economic organization or an individual in Vietnam, the mortgagee shall be entitled to request the authorized State body to organize an auction of the land use right in order to recover the principal and interest thereon; and

3. The organization of auctions of land use rights mentioned in this article must comply with this Code and the law on land.


Chapter VI

INHERITANCE OF LAND USE RIGHTS

Article 738 Inheritance of Land Use Rights

The inheritance of a land use right is the passing of a land use right of a deceased to his or her heirs under a will or by inheritance at law in accordance with this Code and the law on land.

Article 739 Persons Entitled to Bequeath Land Use Rights

The following persons may bequeath a land use right:

1. Individuals to whom the State has allocated agricultural land for the cultivation of annual crops or for aquacultural purposes;

2. Individuals and members of family households to whom the State has allocated agricultural land for the cultivation of perennial crops, forestry land for afforestation or residential land; and

3. Individuals who have acquired a land use right through a transfer from another person in accordance with this Code and the law on land.

Article 740 Conditions for Inheritance of Land Use Rights In Respect of Agricultural Land for Cultivation of Annual Crops and for Aquacultural Purposes

A person who satisfies the following conditions may inherit a land use right under a will or at law in respect of agricultural land for the cultivation of annual crops or for aquacultural purposes:

1. Needing to use the land, and being capable of using the land himself or herself for the designated purpose; and

2. Not having any land, or having land less than the area limit stipulated by the law on land.

Article 741 Inheritance under Wills of Land Use Rights In Respect of Agricultural Land for Cultivation of Annual Crops and for Aquacultural Purposes

A person stipulated in paragraph 1 of articles 679 and 680 of this Code who satisfies all conditions stipulated in article 740 of this Code shall be entitled to inherit under a will the land use rights in respect of agricultural land for the cultivation of annual crops or for aquacultural purposes.

Article 742 Inheritance at Law of Land Use Rights In Respect of Agricultural Land for Cultivation of Annual Crops and for Aquacultural Purposes

1. A person stipulated in paragraph 1 of articles 679 and 680 of this Code who satisfies all conditions stipulated in article 740 of this Code shall be entitled to inherit at law land use rights in respect of agricultural land for the cultivation of annual crops or for aquacultural purposes.

2. Where there are no heirs who satisfy all conditions stipulated in article 740 of this Code, or where there are heirs but they are not entitled to inherit or have disclaimed the inheritance, the State shall repossess the land.

Article 743 Inheritance of Land Use Rights In Respect of Agricultural Land for Cultivation of Perennial Crops, Forestry Land for Afforestation and Residential Land

An individual or a member of a family household to whom agricultural land for the cultivation of perennial crops, forestry land for afforestation or residential land is allocated, may bequeath such land use right after his or her death to other persons under a will or by inheritance at law.

Article 744 Rights of Members of Family Households to Continue Use of Land

Where a member of a family household to whom the State has allocated land for the cultivation of annual crops or for aquacultural purposes dies, the other members may continue to use the land allocated to the household by the State. If there are no surviving members in the family household, the State shall repossess the land.

PART 6

INTELLECTUAL PROPERTY RIGHTS
AND TECHNOLOGY TRANSFER


Chapter III

TECHNOLOGY TRANSFER

Section 1

GENERAL PROVISIONS

Article 806 Objects of Technology Transfer

1. Objects of technology transfer comprise:

(a) Objects of industrial property which are accompanied, or unaccompanied, by machinery or equipment and which are permitted by law to be transferred;

(b) Technical secrets and know-how in the form of technological plans, technical solutions, technological processes, computer software, design documents, formulae, technical specifications, and technical diagrams and drawings which are accompanied, or unaccompanied, by machinery or equipment;

PART 7

CIVIL RELATIONS INVOLVING FOREIGN ELEMENTS

Article 826 Civil Relations Involving Foreign Elements

In this Code, a civil relation involving a foreign element shall be interpreted to mean a civil relation in which a foreign individual or legal entity participates, or a civil relation the basis for which is established, altered or terminated in a foreign country, or which relates to assets located in a foreign country.

Article 827 Application of Civil Law of the Socialist Republic of Vietnam, International Treaties, International Customary Practices and Foreign Laws

1. The civil law of the Socialist Republic of Vietnam shall apply to civil relations involving foreign elements, unless this Code otherwise provides.

2. Where an international treaty which the Socialist Republic of Vietnam has signed or acceded to contains provisions which conflict with this Code, the international treaty shall prevail .

3. Where the application of a foreign law is required by this Code or by another legal instrument of the Socialist Republic of Vietnam, or is referred to by an international treaty which is signed or acceded to by the Socialist Republic of Vietnam, such foreign law shall apply to the civil relations involving foreign elements. If such foreign law refers back to the law of the Socialist Republic of Vietnam, then the law of the Socialist Republic of Vietnam shall apply.

A foreign law may also apply where the parties so agree in a contract provided that such agreement does not conflict with this Code or any other legal instruments of the Socialist Republic of Vietnam.

4. Where civil relations involving foreign elements are not governed by this Code, by any other legal instrument of the Socialist Republic of Vietnam, by any international treaty which is signed or acceded to by the Socialist Republic of Vietnam, or by any civil contract signed between the parties, then international customary practices shall be applied provided that such application, or the consequence thereof, is not contrary to the basic principles of the laws of the Socialist Republic of Vietnam.

Article 828 Principle for Application of Foreign Laws and International Customary Practices

In the cases set out in paragraph 3 of article 827 of this Code, foreign laws or international customary practices may only be applied if such application, or the consequence thereof, is not contrary to the basic principles of the laws of the Socialist Republic of Vietnam.

Article 829 Bases for Choosing Governing Law to be Applied to Persons Without Nationality and to Foreigners With Multiple Foreign Nationalities

1. Where this Code stipulates that the law of a country of which a foreigner is a citizen is to apply, the law applicable to a person without nationality shall be the law of the country of residence of such person or, if such person has no place of residence, the laws of the Socialist Republic of Vietnam.

2. Where this Code stipulates that the law of a country of which a foreigner is a citizen is to apply, the law applicable to a foreigner with multiple foreign nationalities shall be the law of the country of which he or she holds nationality and where he or she resided at the time when civil relations were established. If such foreigner is not resident in any of the countries of which he or she holds nationality, then the applicable law shall be the law of the country of which he or she holds nationality and with which he or she maintains the closest ties.

Article 830 Civil Legal Capacity of Foreigners

In Vietnam, foreigners shall have the same civil legal capacity as Vietnamese citizens, unless this Code or other legal instruments of the Socialist Republic of Vietnam otherwise provide.

Article 831 Capacity for Civil Acts of Foreigners

1. The capacity for civil acts of a foreigner shall be determined in accordance with the law of the country of which the foreigner is a citizen, unless the laws of the Socialist Republic of Vietnam otherwise provide.

2. Where a foreigner establishes or performs civil transactions in Vietnam, the capacity for civil acts of the foreigner shall be determined in accordance with the laws of the Socialist Republic of Vietnam.

Article 832 Civil Legal Capacity of Foreign Legal Entities

1. The civil legal capacity of a foreign legal entity shall be determined in accordance with the law of the country in which such legal entity was established, unless the laws of the Socialist Republic of Vietnam otherwise provide.

2. Where a foreign legal entity establishes or performs civil transactions in Vietnam, the civil legal capacity of such foreign legal entity shall be determined in accordance with the laws of the Socialist Republic of Vietnam.

Article 833 Right to Own Property

1. The establishment and termination of ownership rights, and the contents of such rights, with respect to property shall be determined in accordance with the laws of the country in which the property is [located], unless the laws of the Socialist Republic of Vietnam otherwise provide.

2. The ownership rights with respect to moveable property in transit shall be determined in accordance with the law of the country of destination, unless there is an agreement to the contrary.

3. The distinction between moveable and immoveable property shall be made in accordance with the laws of the country in which such property is located.

Article 834 Civil Contracts

1. The formalities for a civil contract must comply with the law of the country in which the contract is entered into. Where a civil contract which is entered into in a foreign country breaches the formal requirements for civil contracts [of that country], it may still be effective in Vietnam with respect to its form provided that such form is not contrary to the laws of the Socialist Republic of Vietnam.

2. The rights and obligations of parties to a civil contract shall be determined in accordance with the laws of the country in which the contract is performed, unless there is an agreement to the contrary.

A civil contract which is entered into and performed entirely in Vietnam must comply with the laws of the Socialist Republic of Vietnam.

Where a civil contract does not state the place of performance, the place of performance shall be determined in accordance with the laws of the Socialist Republic of Vietnam.

3. Civil contracts relating to immoveable property located in Vietnam must comply with the laws of the Socialist Republic of Vietnam.

Article 835 Compensation for Non-Contractual Damages

1. Compensation for non-contractual damages shall be determined in accordance with the law of the country in which the act causing damage occurred or in which the actual consequences of such act arise.

2. Compensation for any damage caused by an aircraft flying in international airspace or by a ship sailing at sea shall be determined in accordance with the law of the country of nationality of the aircraft or ship, except where the aviation and maritime laws of the Socialist Republic of Vietnam otherwise provide.

3. Where the act causing damage occurs outside the territory of the Socialist Republic of Vietnam and both the victims of such damage and the person causing such damage are Vietnamese citizens or legal entities, the laws of the Socialist Republic of Vietnam shall apply.

Article 836 Copyright

The copyright of a foreign individual or legal entity with respect to a work which is first published or disseminated in Vietnam, or which is created and takes a definite form in Vietnam, shall be protected in accordance with the laws of the Socialist Republic of Vietnam and with international treaties which Vietnam has signed or acceded to.

Article 837 Industrial Property Rights

The industrial property rights of a foreign individual or legal entity with respect to an object of industrial property rights, in respect of which the State of the Socialist Republic of Vietnam has issued a certificate of protection, shall be protected in accordance with the laws of the Socialist Republic of Vietnam and with international treaties which the Socialist Republic of Vietnam has signed or acceded to.

Article 838 Technology Transfer

A transfer of technology between a Vietnamese individual or legal entity and a foreign individual or legal entity, and any transfer of technology from a foreign country into Vietnam or from Vietnam to a foreign country, must comply with this Code and with any other legal instruments of the Socialist Republic of Vietnam on technology transfer and with international treaties which the Socialist Republic of Vietnam has signed or acceded to.


This Code has been adopted by Legislature IX of the National Assembly of the Socialist Republic of Vietnam at its 8th session, on 28 October 1995.


Chairman of the National Assembly


NONG DUC MANH