International trade is one of the inevitable development trends that each country needs to embrace in the current new economic context. Therefore, international trade representative contracts are increasingly being used among business entities in business trade.
International trade is one of the inevitable development trends that each country needs to embrace in the current new economic context. Therefore, international trade representative contracts are increasingly being used among business entities in business trade.
I. The role of international trade representative contracts
An international trade representative contract is a type of contract commonly used in international trade, serving as a legal tool for entities to conduct cross-border trade activities. Moreover, the representative contract plays an important role in determining the rights and obligations of the parties and serves as a legal basis for resolving any disputes that may arise during the execution of the contract.
II. Legal regulations on international trade representative contracts.
1. What is an international trade representative contract?
Pursuant to Clause 1, Article 141 of the Commercial Law 2005 regulates that a representation for a business entity is when one business entity receives a delegation (referred to as the representative) from another business entity (referred to as the represented) to conduct trade activities on behalf of and according to the instructions of such an entity, and receive remuneration for the representation.
An international trade representative contract is an agreement signed between the parties, whereby the representative receives a delegation to perform international trade activities in the name of and according to the instructions of such a delegating entity, and obtains remuneration for the representative.
2. The form of the international trade representative contract
The trade contract takes effect when it is signed by the parties in accordance with the regulated legal form. Commonly, it is a cross-border trade activity, and trade headquarters of the parties in the contract are located in different countries and the parties belong to different legal systems. Thus, no national law has mandatory applicability to the parties in the contract, but rather it is based on the parties' choice. However, in all cases, the contract must be signed in writing to ensure its validity. For international trade representative contracts, Vietnamese law regulates that the mandatory form is in writing or in other forms with equivalent value such as:
- Fax;
- Telegraph, computer;
- Soft documents (such as emails...).
Thus, the form of the contract must be signed by the parties in writing.
3. Contents of the international trade representative contract
Contents of the contract is an indispensable part of the negotiation and conclusion process between the parties. When concluding the contract, the parties need to ensure that the agreed-upon contents are included as follows:
- Information of the parties, including the representing party and represented party: Company name; Legal form of the company; Nationality and business registration (if any); Address (business location, phone number, fax number, email); and Representative information (full name, position, address, authority to represent).
- Rights and obligations of the parties;
- Subjects;
- Clauses on area restrictions;
- Clauses on brands, ownership rights, and exclusive rights;
- Prices and payment methods;
- Commission of the Representative, commission rights, and commission calculation methods
- Contract duration and termination, and consequences after the contract is terminated;
- Compensation or fine clauses for breach of contract;
- Force majeure, exemption from liability for breach of contract;
- Applicable law clause; Change of circumstances;
- Clauses on dispute resolution procedures;
- Contract appendix(es).
Above are the basic contents that need to be included in a contract. Since the contract is an agreement between the parties, they have the right to include provisions that align with the purpose of the agreement, but they must ensure that these provisions do not violate legal regulations.
III. Some questions about international trade representative contracts
1. What should be noted when drafting the international trade representative contract in English?
Based on the agreement principle, the parties can choose English as the language to draft the contract. However, it is important to draft an additional contract in Vietnamese, as per the Notary Law 2014, when the contract is notarized, the language and writing used in the notarization must be in Vietnamese.
2. The parties in the international trade representative contract
The parties involved in the contract are business entities, pursuant to Article 6 of the Commercial Law 2005, which regulates that business entities include legally established economic organizations, individuals who independently and regularly engage in trade activities, and must have the business registration.
For international trade representative contracts, it will include: the representing party and the Representative.
3. When is the international trade representative contract invalid?
In the Vietnamese Commercial Law, there are no specific regulations regarding void trade contracts, so when considering the validity of trade contracts, it is requested to refer to regulations of the Civil Code.
Pursuant to Articles 123 to 129 and Article 408 of the Civil Code 2015, contracts are invalid in the following cases:
- Violation of the law's prohibitions, and contrary to social ethics;
- The contract is void due to being artificial;
- The contract is void if one of the parties is under-age, lost capability for civil act, or has difficulty in recognizing and controlling their behavior;
- Invalid due to any mistake;
- In cases of deceit, threat, and coercion;
- The contract will also be void if one of the parties is not aware of and cannot control their actions at the time of conclusion;
- Invalid due to non-compliance with formal compliances;
- The contract will lose its value if it contains an impossible subject.
Thus, the contract will be considered void when it falls into the above cases.
4. Can the international trade representative contract be amended after it has been signed? How to amend it?
In the global trade era, a contract amendment is referred to as the "a contract amendment clause due to changìng circumstances" called Hardship clause, which occurs in cases previously agreed upon by the parties in the contract.
Based on Vietnamese law, this clause is stated in Article 420 of the Civil Code 2015, whereby the party whose interests are affected by a fundamental change in circumstances (hardship) is permitted to request the other party to renegotiate the contract when the following conditions are met:
- The change in circumstances due to objective reasons occurring after the contract is concluded;
- At the time of contract conclusion, the parties could not foresee the change in circumstances (hardship);
- The circumstances are changed so significantly that if the parties had known in advance, the contract would not have been concluded or would have been concluded with completely different terms;
- Continuing to execute the contract without any changes to its content will cause serious damage to one party.
- The party, whose interests are affected, has taken all necessary measures within permissible limits, in accordance with the nature of the contract, but is unable to prevent or minimize the impact on their interests.
So the parties have the right to amend the signed contract when fundamental conditions of the change in circumstances as regulated by law are met.
IV. Legal consulting services for international trade representative contracts
The above information addresses concerns regarding international trade representative contracts that NPLaw has sent to our esteemed readers. If you have any related questions that need further clarification, please contact NPLaw at the following contact information:
