When is it necessary to use standard form contracts?

Nowadays, standard form contracts are widely used in the market economy. Many industries apply these types of contracts in transactions where terms and conditions are pre-drafted. The parties involved typically only have the choice to accept or reject the provided terms, with little to no opportunity for negotiation to gain more favorable terms. So, what does the law say about standard form contracts? Are there any shortcomings in using them? Let’s explore this with NPLAW.

I. What is a standard form contract?

According to Clause 1, Article 405 of the Civil Code 2015:

A standard form contract is a contract that contains terms prepared by one party according to a standard template, to which the other party may respond within a reasonable period; if the party being offered agrees, it means acceptance of the entire content of the standard form contract proposed by the offering party.
The standard form contract must be publicly disclosed so the offeree knows or should know its content.
The procedure and form for public disclosure of a standard form contract must comply with the law.

Thus, a standard form contract is a contract proposed by one party according to a standard template, to which the other party is expected to respond within a reasonable time. If the party receiving the proposal accepts it, this constitutes acceptance of all the terms of the standard form contract as proposed by the proposing party.

Similarly, Clause 5, Article 3 of the Law on Consumer Rights Protection 2010 defines it as:

A standard form contract is a contract prepared by a business organization or individual to transact with consumers.

1. Difference between “standard form contracts” and “general transaction conditions”

Aspect	Standard Form Contract	General Transaction Conditions
Civil Code 2015 Definition	A contract that contains terms proposed by one party according to a standard template, to which the other party is expected to respond within a reasonable time. If the party receiving the proposal accepts it, such acceptance is deemed to constitute agreement to all the terms of the standard form contract as proposed by the proposing party. (Clause 1, Article 405 of the Civil Code 2015)	General transaction terms are terms established by one party and publicly announced to apply generally to the other party to whom the contract is proposed. If the party receiving the proposal accepts the contract, such acceptance is deemed to constitute acceptance of these terms. (Clause 1, Article 406 of the Civil Code 2015)
Consumer Protection Law 2010 Definition	A contract drafted by an organization or individual conducting business in goods or services for the purpose of transactions with consumers. (Clause 5, Article 3 of the Law on Consumer Protection 2010)	General transaction terms are the rules and regulations on the sale of goods and provision of services that are announced and applied by an organization or individual conducting business in goods or services to consumers. (Clause 6, Article 3 of the Law on Consumer Protection 2010)
Nature	A standard form contract consists of the agreements and understandings between the parties. A standard form contract is not a set of rules, but rather a set of contractual terms.	General transaction terms are rules that reflect the unilateral will of the proposing party.

II. Key characteristics of standard form contracts

A standard form contract is a special type of contract. The will of both parties is reflected in their mutual intention to enter into the contract and their acceptance of its conclusion. However, the will of the party receiving the proposal is limited to deciding whether or not to participate in the contract. They do not have the right to negotiate or modify the terms of the standard form contract; they can only choose to accept all the terms and conclude the contract or refuse to enter into the contract.
It has a standardized nature, manifested through the terms of the contract proposed by one party after careful and thorough consideration of the content. A standard form contract is highly professional, standardized, and intended for repeated use, allowing it to be concluded with multiple different customers.
To protect the rights of the party receiving the proposal, the party offering the standard form contract must publicly disclose the contract in accordance with the procedures and forms prescribed by law, so that the party receiving the proposal is informed of the contents of the contract.

III. General requirements for the content of standard form contracts

The general requirements for the content of a standard form contract are as follows:

A standard form contract and general transaction terms must be made in writing and meet the following conditions:

The language used must be Vietnamese, the content must be clear and easy to understand, and the font size must be at least 12 points.
The background of the paper and the ink color used to present the standard form contract and general transaction terms must contrast clearly with each other.

Legal basis: Article 7 of Decree No. 99/2011/ND-CP.

IV. Transactions requiring standard form contracts

Pursuant to the List of essential goods and services required to register standard form contracts, issued together with Decision No. 02/2012/QD-TTg and amended and supplemented by Decision No. 35/2015/QD-TTg, the goods and services required to register standard form contracts include:

Residential electricity supply
Residential water supply
Pay-TV services
Fixed-line telephone services
Postpaid mobile services
Prepaid mobile services
Internet access services
Air passenger transport
Rail passenger transport
Apartment sales and related residential services

Accordingly, the above-mentioned organizations and individuals conducting business in goods and services are required to register their standard form contracts in order to protect the rights of consumers as well as the rights of the organizations and individuals involved in transactions and sales.

V. Shortcomings in standard form contracts

Firstly, regarding the regulations on public disclosure and registration of standard form contracts, there are still many shortcomings, and there is no specific guidance on the content that must be disclosed or on the appropriate forms of disclosure that would comply with legal requirements.
Secondly, the list of essential goods and services required to register standard form contracts is still not entirely reasonable. According to Clause 3, Article 4 of the 2012 Law on Prices, Essential goods and services are those that are indispensable for production, daily life, national defense, and security, including: raw materials, fuels, materials, main services serving production and circulation; and products that meet the basic needs of humans as well as national defense and security.

Thus, when compared with the list of essential goods and services issued together with Decision No. 02/2012/QD-TTg, as amended and supplemented by Decision No. 35/2015/QD-TTg, it can be seen that certain goods and services, such as internet services, mobile services, purchasing apartments, taking out loans, and buying life insurance, are not indispensable needs; rather, they merely enhance the quality of human life.

Thirdly, the provisions regarding invalid clauses in standard form contracts have certain shortcomings. Specifically, a standard form contract is a pre-prepared contract in which the party receiving the proposal can only express their will to enter into or not enter into the contract, without the ability to modify the content or add additional terms. As a result, the parties do not establish contract annexes or other documents. Therefore, the parties cannot make other agreements, and there is no basis to determine whether the parties have reached any additional agreements. Consequently, the provisions on other agreements in this context are unnecessary and not feasible.

VI. Questions about standard form contracts

1. When is a standard form contract invalid?

A standard form contract is invalid in the following cases:

Exempts the offering party from liability;
Increases the other party’s liability;
A clause in a standard form contract that eliminates the legitimate rights of the party receiving the proposal to enter into the contract is invalid, except in cases where the parties have reached another agreement.

Legal basis: Clause 3, Article 405 of the Civil Code 2015.