- Intermediary commercial activities
Besides dealing directly with customers, a trader (the represented) is entitled to authorize another trader (the representative) to conduct commercial activities in its name and under the instruction of the represented. Such an agreement is called a representation of business entities. A trader can also uncover transaction information through other traders who support the parties in negotiating; engaging the agreed contracts and such is known as commercial brokerage. A trader (the principal) is further eligible to authorize another trader (authorized dealer) to carry out the sale and purchase of goods under the authorized dealer’s name, subject to theagreed terms with the principal, and which is known as the sale and purchase of goods by authorized dealers. Finally a trader (theprincipal) may engage another trader (the agent) to conduct in its own name the sale or purchase of goods for the principal to customers, otherwise known as commercial agency.
- Commercial enhancements
For the purpose of promoting commercial activities, the LOC also provides trade promotion activities including: (i) promotion; (ii) commercial advertising; (iii) display and introduction of goods and services; and (iv) trade fairs and exhibitions. Traders are entitled to conduct such promotional activities and may also engage specialised promotion services which are appropriate to the culture, economy and legal framework of Vietnam. To legally implement such promotional commercial activities, the trader is required not only to comply with LOC but also satisfy the laws regarding competition, consumer protection, advertising, health etc.
In recent decades, many popular international brand names have been very active in Vietnam including the likes of KFC, Lotteria, Circle K, Pizza Hut and McDonalds. Under the LOC, a franchise is a commercial activity under the conditions and manner specified by the franchisor. Accordingly the franchisee is allowed to proceed with the selling of goods or supplying of services and have the right to the use of trademarks, trade names, know-how, business slogan etc. allowed by the franchisor.
At present there is no requirement to obtain any specific license from the Ministry of Industry and Trade of Vietnam in order to open and operate a franchised business. Although the law does not require the franchise agreement must be registered, foreign traders who wish to franchise their trading rights must register their “franchisingactivities” with the authorities. All franchisors must have operated for at least 01 year before opening a franchise in Vietnam.
- Contract for sale and purchase of goods/services
In principle, commercial contracts shall satisfy the general rules as stated in the LOC; parties are free to enter into a contract provided that it is not contrary to the law and social ethics and the parties become involved voluntarily, with equality, goodwill, cooperation, honesty and good faith. More specifically, the legality of a contract depends on the conditions as follows: (i) persons participating in the contract have capacity to engage in civil acts; (ii) the purpose and content of the contract are not contrary to law or social morals; and (iii) persons participating in the transaction act entirely voluntary. Thus the contracts entered into by the two legal entities are valid only if the contract meets all the above stated conditions.
Under the LOC, the international purchase and sale of goods shall be conducted in form of export, import, temporary import for re-export, temporary export for re- import and transfers through border-gates. In comparison with domestic transactions, international commercial contracts can use foreign currencies of payment. Parties should ensure they specifically choose the applicable laws governing the contract to avoid any potential choice of law disputes. In some cases the choice of foreign law and other international commercial practices for adjusting the transactions between parties are also legally considered or accepted in Vietnam. However, agreement regarding the law to be applied and international commercial practices are merely recognized when they are not contrary to the basic principles of Vietnamese law.
Regarding its formal expression, commercial contracts have also moved toward the accepting of both written contracts and other forms agreement demonstrating an intention to create legal relations, including text messages with data as the legal basis for the commercial trade. This is a new and progressive development in commercial law as well with other laws regarding electronic transactions, contributing to e-commerce and which is growing constantly in the context of global trade.