What legal regulations must contract drafting services comply with to minimize the risk of disputes?

In the context of increasingly complex civil and commercial transactions, contract drafting services play an important role in safeguarding the lawful rights and interests of the parties involved. The article below clarifies the legal regulations that must be complied with, common legal risks, and the issues that enterprises and individuals should pay attention to when using professional contract drafting services.

I. What legal regulations must be complied with when establishing contract drafting services?

When establishing and providing contract drafting services, the service provider must comply with several main legal regulations to ensure lawful, professional, and effective operations:

• Compliance with laws governing contract formation and validity: Contract drafting services must be developed based on the principles and provisions of Article 117 of the Civil Code 2015 regarding conditions for contract validity (such as the legal capacity and authority of the parties, lawful content, and formal requirements where required by law). A proper understanding of these rules helps ensure that drafted contracts are not rendered invalid due to formal defects or unlawful content.
• Compliance with consumer protection regulations when the contract is intended for consumers: If contract drafting services are provided for consumers or involve standard form contracts and general transaction terms, compliance with Article 25 of the Law on Protection of Consumers’ Rights 2023 is required. This law prohibits certain unfair terms in contracts with consumers, thereby ensuring that agreements do not infringe upon their lawful rights and interests.
• Compliance with regulations on legal service provision where the service is performed by lawyers: If contract drafting services are provided by lawyers or law-practicing organizations, they must comply with Article 4 of the Law on Lawyers 2006 (as amended in 2012) and relevant guiding documents concerning the provision of legal services, execution of legal service contracts, and issuance of invoices in accordance with applicable regulations.

II. What legal risks must contract drafting services pay attention to in order to avoid disputes?

During the provision of contract drafting services, if the process is not implemented carefully and in compliance with the law, legal risks can easily arise, leading to disputes or rendering the contract invalid. Some common legal risks that contract drafting services must pay particular attention to include:

• First, risks relating to contracting parties. Failure to properly verify legal capacity, civil act capacity, or representative authority of the parties may result in the contract being wholly or partially invalid.
• Second, risks relating to contract content. Clauses that are unclear, contradictory, contrary to legal provisions, or do not accurately reflect the parties’ intentions are common causes of disputes during contract performance.
• Third, risks relating to contract form. Certain types of contracts are required by law to be made in writing, notarized, certified, or registered. Failure to satisfy these formal requirements may result in the contract lacking legal validity.
• Fourth, risks relating to sanction clauses and compensation for damages. Drafting penalty provisions that exceed legal limits or fail to clearly specify the basis for application may cause such clauses to be unenforceable in the case of a dispute.

III. What regulations relating to contract conclusion and performance must contract drafting services comply with?

When preparing and drafting contracts, legal service providers must thoroughly understand the following main legal provisions to ensure that contracts are lawfully concluded and performed:

• Conditions for contract validity under the Civil Code: A contract is only valid when it is lawfully entered into and satisfies all conditions prescribed under Article 117 of the Civil Code 2015, including legal capacity and civil act capacity of the parties, voluntary intent of the parties, lawful content not contrary to law or social ethics, and compliance with the legally required form for specific types of contracts.
• Regulations on contract validity and effective date: Under Article 401 of the Civil Code 2015, a contract takes effect from the time of conclusion unless otherwise agreed by the parties or otherwise provided by law. From the effective date, the parties must perform their rights and obligations in accordance with the agreed terms.
• Formal requirements under specialized laws: Certain contracts under specialized laws must comply with specific formal requirements.
• Regulations on performance and completion of contractual obligations: Under the Civil Code 2015, provisions on contract performance, amendment, termination, cancellation, and compensation for damages upon breach (such as Articles 421–423) serve as the basis for drafting specific clauses in contracts, helping ensure the rights and responsibilities of the parties.

IV. Questions relating to contract drafting services

1. How can the validity of contracts drafted through contract drafting services be determined?

To determine whether a contract drafted through contract drafting services has legal validity, it must be assessed against the following conditions under Article 117 of the Civil Code 2015:

• First, regarding the contracting parties: The parties must have legal capacity and civil act capacity appropriate to the transaction established. The person signing the contract must have proper authority (for legal entities and enterprises).
• Second, regarding the parties’ intention: The contract must be entered into completely voluntarily, without fraud, coercion, threats, or duress. If consent is defective, the contract may be declared invalid.
• Third, regarding the purpose and content: The purpose and content of the contract must not violate prohibitions of law or social ethics. This is the core factor determining the legality of the contract.
• Fourth, regarding contract form: The contract must be made in the form required by law (written form, notarization, certification, registration, etc.) where such requirements apply. A contract with proper content but improper form may still be invalid.
• Fifth, regarding the effective date: A contract takes effect from the time of conclusion unless otherwise agreed by the parties or otherwise provided by law.

2. Is it necessary to have a lawyer participate in the contract drafting process?

Current law does not require every contract to be drafted with lawyer participation. However, in practice, the involvement of a lawyer is highly necessary, especially for contracts of high value, complex content, or significant legal risks.

Lawyers not only assist in drafting clauses in compliance with legal regulations, but also analyze and anticipate potential disputes that may arise, thereby adjusting the contract content to maximize the protection of the client’s lawful rights and interests. In addition, lawyers help verify the legal status of the parties, signing authority, and appropriateness of the contract form.

Therefore, although not mandatory, involving a lawyer in the contract drafting process is considered a safe solution that helps minimize disputes and legal risks during contract performance.

3. What types of contracts are most common and should be included in contract drafting services?

In legal consulting practice, contract drafting services should cover common contract types under the Civil Code 2015 to meet the diverse needs of individuals and enterprises. Specifically:

• Sale and purchase contract: An agreement whereby the seller transfers ownership of property to the buyer and the buyer pays the purchase price. (Clause 1, Article 430)
• Exchange contract: The parties exchange property and transfer ownership of property to each other as agreed. (Clause 1, Article 455)
• Donation contract: The donor transfers ownership of property to the donee without requiring compensation, and the donee agrees to accept it. (Article 457)
• Loan agreement: The lender delivers property to the borrower; upon maturity, the borrower must return property of the same type, quantity, quality, and interest (if agreed or required by law). (Article 463)
• Lease contract / farm-out lease contract: Lease contract: The lessee pays rent to use property for a certain period (Clause 1, Article 472). Farm-out lease contract: The lessee exploits the utility and enjoys fruits and profits from the leased property (Article 483)
• Loan for use: The borrower uses property without payment and returns it upon expiration of the term or achievement of the borrowing purpose. (Article 494)
• Contracts relating to land use rights: Applicable to transactions such as transfer, lease, mortgage, gift, and capital contribution using land use rights under land law. (Article 500)
• Cooperation contract: Parties contribute assets and efforts to perform work, share benefits, and jointly take responsibility. (Article 504)
• Service contract: The service provider performs work for the service user and receives service fees. (Article 513)
• Transportation contract: Passenger transportation: The carrier transports passengers and luggage to the agreed location and receives freight charges (Article 522). Property transportation: The carrier delivers property to the correct location and recipient and receives freight charges (Article 530)
• Processing contract: The processor creates products according to the ordering party’s requirements and receives remuneration. (Article 542)
• Property custody contract: The custodian preserves property and returns the same property upon expiration; the depositor pays remuneration if agreed. (Article 554)
• Authorization contract: The authorized person performs work in the name of the authorizing party; remuneration only arises if agreed or provided by law. (Article 562)

Detailed provisions on common contract types are stipulated from Article 430 to Article 569 of the Civil Code 2015, serving as an important legal basis for contract drafting services to set up strong content, reduce risks, and prevent disputes.

4. What should be noted when drafting contract breach penalty clauses in contract drafting services?

When applying legal regulations to draft breach clauses in commercial contracts, contract drafting services must strictly comply with Article 301 of the Commercial Law 2005. Accordingly, the fine amount agreed by the parties must not exceed 8% of the value of the breached contractual obligation, even where multiple breaches arise under the same contract, except for special cases provided under Article 266 of this Law.

In practice, if a fine clause exceeds the 8% limit, the excess portion may not be recognized by the Court or Arbitration when resolving disputes, thereby reducing the protective effect of the clause for the aggrieved party.

Therefore, when drafting fine clauses, it is necessary to clearly identify the breached obligation, the method for calculating the value of that obligation, and a specific penalty amount within the legal limit to ensure legality and enforceability of the contract.

5. How can the validity of documents provided by clients to contract drafting services be determined?

To ensure that a drafted contract has legal validity, contract drafting services must carefully verify the validity of documents provided by clients from the very beginning. First, basic legal documents such as identification papers, enterprise registration certificates, company charters, appointment decisions of legal representatives, etc., must be reviewed to determine the legal status and signing authority of the parties.

In addition, the documents must be checked for validity period, signs of alteration, inconsistencies in information, and suitability with the intended transaction. For important documents, contract drafting services should request certified copies or originals for comparison, and clarify any doubtful information before incorporating it into the contract.

6. Must contract drafting services publicly disclose information about fees and services?

Full and clear disclosure of fees and service scope is an important requirement reflecting the professionalism and transparency of contract drafting services. Before providing services, the drafting unit must clearly inform clients of the scope of work, responsibility boundaries, applicable fees, payment methods, and any additional costs that may arise.

Such transparency not only helps clients understand the value of the service they are using but also serves as a legal basis for establishing service agreements and minimizing disputes relating to costs during performance. At the same time, clearly disclosing fee and service information helps build trust, enhance reputation, and uphold professional standards of the contract drafting service provider.

V. Are you looking for a skilled and reputable lawyer to support issues relating to contract drafting services?

When legal support is needed for contract drafting, from building clear contractual clauses to ensuring compliance with the law and minimizing dispute risks, choosing an experienced and reputable lawyer is extremely important.

NPLaw is one of the trusted addresses chosen by many individuals and enterprises for legal advice and support in contract-related matters. The team of lawyers at NPLaw not only possesses deep expertise in civil and commercial law but also practical experience in risk analysis, handling complex situations, and protecting clients’ interests across all contractual fields.

For detailed advice regarding your specific case, please contact NPLaw Firm for immediate consultation.