On October 14, 2022, the Chief Justice of the Supreme People’s Court issued Decision No. 323/QD-CA on the publication of 04 case laws governing different issues. In this Legal Updates, ATA Legal Services shall analyze and clarify the content of Case Law No. 55/2022/AL on the validity recognition of the contract violating the condition of formality.
According to current regulations, a civil contract is “an agreement between the parties on the establishment, amendment or termination of civil rights and obligations”. In essence, like other civil transactions, contracts can also be established, amended or terminated in various forms such as verbal, written or specific acts. However, in some cases, the law requires such contracts to be made in notarized/authenticated writing, such as transactions related to real estate, secured assets, etc. Violation of these provisions might render the contract void, unless otherwise provided by law.
In this account, is there any case where a contract infringing the formality requirement still be valid? There are cases specified in Article 129 of the 2015 Civil Code, specifically contracts not complying with the statutory form (not made in writing or notarized or authenticated) but one party or the parties have performed at least two-thirds of the obligations in the transaction;
Applying Article 129 of the 2015 Civil Code, Case Law No. 55 /2022/AL (Civil Appellate Judgment No. 16/2019 /DS-PT dated March 19, 2019 of the People's Court of Quang Ngai province) also recognized the validity of the contract for the transfer of land use rights, which was only made in handwriting without notarization/certification and was amended and supplemented orally but has been recognized by the parties and fulfilled two-thirds of the obligations incurred. Case Law No. 55/2022/AL simultaneously resolved issues that are absent from the current law, specifically:
- Article 129 of the 2015 Civil Code is still applicable to cases of transactions established in advance of the effective date of the 2015 Civil Code (according to the Judgment, transactions between the parties to the case had arisen since 2009);
- Civil contracts/transactions infringing the formality requirements prescribed by law are understood as simultaneously violating both conditions specified in Clauses 1 and 2 Article 129 of the 2015 Civil Code (specifically, the contract was subject to notarization, but in fact, was initially made in only handwriting and then amended orally);
- After obtaining the judgment recognizing the validity of the contracts, the parties could use such judgment to request the competent State agency to issue a land use right certificate. Thus, the contract between the parties, regardless of the form, shall not need to be re-signed in the statutory form.
Case Law No. 55/2022/AL shall be applicable from 15/11/2022.
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