In a modern market economy, valuation activities play a crucial role in various sectors such as mergers and acquisitions, investment, asset mortgage, insurance, and dispute resolution. To ensure the lawful rights and interests of involved parties, establishing a clear and legally compliant valuation contract is essential. The growing demand for legal consultation on valuation contracts necessitates a deep understanding of current legal regulations.
In a modern market economy, valuation activities play a crucial role in various sectors such as mergers and acquisitions, investment, asset mortgage, insurance, and dispute resolution. To ensure the lawful rights and interests of involved parties, establishing a clear and legally compliant valuation contract is essential. The growing demand for legal consultation on valuation contracts necessitates a deep understanding of current legal regulations.
I. Demand for legal consultation on valuation contracts
Valuation is a critical activity in major transactions such as the purchase, sale, and transfer of real estate, capital contribution, handling of mortgaged assets, or enterprise valuation.
Signing a valuation contract serves as a legal basis for forming the relationship between the requesting party and the valuation company. However, due to its high level of specialization and numerous legal constraints, many clients and enterprises face difficulties in drafting, executing, and resolving issues related to valuation contracts.
II. Legal provisions on valuation contracts
1. Definition of a Valuation Contract
A valuation contract may be defined as an agreement between a valuation company and a client (individual or organization) under which the valuation company performs a valuation of a specific asset upon the client's request, and the client is obligated to pay the service fee for the valuation.
2. Rights and obligations of the parties in the valuation contract
According to Article 56 of the Law on Prices 2023, the rights and obligations of the client and relevant organizations or individuals in the valuation contract include:
Client's rights:
- To request the valuation company to provide information from its valuation practice registration documents and information on valuers;
- To refuse to provide documents and information irrelevant to the valuation activity or the asset being appraised;
- To request the replacement of any valuer if there are grounds to believe the valuer has violated Vietnamese Valuation Standards or breached principles of honesty, independence, or objectivity during the valuation;
- To request the valuation company to provide the valuation certificate and valuation report; and to seek compensation in case of violations causing damage;
- To consider and decide whether to use the valuation certificate and valuation report;
- To obtain other rights as prescribed by law.
Rights of related organizations and individuals:
- To select a valuation company that is legally eligible to enter into a valuation contract.
Obligations of the valuation client and relevant parties:
- To provide complete, accurate, honest, timely, and objective information and documents related to the asset to be valued, as requested by the valuation company, and to take legal responsibility for such information;
- To coordinate with and facilitate the work of the valuer;
- To promptly and accurately report any legal violations or breaches of the valuation contract by the valuer or the valuation company to the competent State authority;
- To pay the valuation service fee in accordance with the contract;
- To take responsibility for the use of the valuation certificate and report in decision-making or approval of asset prices. The use of such documents must be within their validity period, for the intended valuation purpose, and correspond to the asset and asset quantity stipulated in the contract;
- To fulfill other obligations in accordance with the law.
3. Methods of dispute resolution in valuation contracts
Article 58 of the Law on Prices 2023 provides the following methods for resolving disputes concerning valuation contracts:
- Negotiation and mediation based on commitments stipulated in the valuation contract;
- Commercial arbitration;
- Litigation at court in accordance with the laws on civil procedure.
Accordingly, in the event of a dispute, the parties may resolve it using any form of the above-mentioned legal methods.
4. Essential clauses in the valuation contract
Based on practical considerations and core valuation principles, a valuation contract should include the following main clauses:
- Information of the parties;
- Object to be valued;
- Purpose of the valuation;
- Scope of work;
- Valuation methodology;
- Timeline for execution;
- Service fees, payment terms, and methods;
- Rights and obligations of the parties;
- Confidentiality;
- Liability for breach of contract;
- Dispute resolution mechanism;
- General provisions.
III. Questions regarding valuation contracts
1. What are the fundamental contents of the valuation contract?
Currently, there are no statutory requirements mandating the content of a valuation contract.
However, in practice, a valuation contract typically includes: party information, asset description, valuation purpose, scope of work, valuation methodology, duration, service fees and payment terms, rights and obligations of the parties, confidentiality, breach liability, and dispute resolution.
2. Can a valuation company’s branch sign a valuation contract?
Clause 3, Article 50 of the Law on Prices 2023 stipulates:
- A branch of a valuation enterprise may conduct valuation activities as authorized in writing by the valuation enterprise, and may issue valuation certificates and reports for valuation contracts signed between the branch and the valuation clients.
Thus, under this provision, branches of valuation companies are authorized to sign valuation contracts with clients.
3. Is it mandatory for valuation contracts to be in writing?
There is no legal requirement mandating valuation contracts to be in writing. However, for legal certainty and to avoid potential disputes, it is highly recommended that the contract be in written form and duly signed and sealed (if applicable) by the parties. Written contracts are a prudent and preferred option.
4. How are disputes arising from valuation contracts resolved?
As provided in Article 58 of the Law on Prices 2023, disputes related to valuation contracts may be resolved through negotiation, mediation, commercial arbitration, or litigation in a competent People’s Court.
5. Is it possible to amend the contents of a valuation contract?
According to Clause 1, Article 421 of the 2015 Civil Code: The parties may agree to amend a contract.
Therefore, the parties may agree to change the terms of the valuation contract after it has been signed. However, any modifications should be documented in writing and agreed upon by all parties concerned.
IV. Legal advisory services related to valuation contracts
The above article has been prepared by NPLaw regarding current legal regulations on valuation contracts. With a team of experienced lawyers and legal experts, NPLaw offers reliable and professional legal services, ensuring the best protection of our clients’ lawful interests. Should you need legal assistance, feel free to contact NPLaw for consultation and support.
