4.2.4.1. Determining a housing purchase contract as invalid
The Judge must determine which circumstance the invalid contract falls under, which condition the contract violates of all the conditions for recognizing validity of the contract.
Main tasks and practical skills:
- A contract which breaks one of the conditions specified in Article 131 of the Civil Code 1995 (Article 122 of the Civil Code 2005) shall be an invalid contract.
- Item 1 of Article 131 of the Civil Code 1995 provides for a condition that is “persons participating in the transaction must have capacity for civil acts”. Breaches of such condition are specified in the following articles:
- Article 140 of the Civil Code 1995 (Article 130 of the Civil Code 2005): The invalidity of a civil transaction is established if implemented by a juvenile or person who has lost their capacity for civil acts or who has a restricted capacity for civil acts.
- Item 2 of Article 131 of the Civil Code 1995 states that the contract must not contradict laws and social morals. Actually, in order to correctly apply the Civil Code, the above provision need to be interpreted that the contract must both comply with the law and be not contrary to the law and morality.
- Item 4 of Article 131 of the Civil Code 1995 relates to forms of contract. The form of a housing purchase contract is specified in Article 443 of the Civil Code 1995 (Article 450 of the Civil Code 2005). Accordingly, it must be made in writing, certified by a State notary or authenticated by a competent People’s Committee (pursuant to legal provisions on notarization and authentication at the time of contract signing – Point d of Sub-Section 2.1. of Section 2 of Part I of Resolution No. 01/2003/NQ-HDTP (According to Article 450 of the Civil Code 2005 it would be unnecessary for the contract to be notarized or authenticated where otherwise provided by law).
4.2.4.2. Resolving consequences of an invalid housing purchase contract
The Judge should understand well about general provisions on resolution of an invalid contract as well as provisions on resolution of each specific type of invalid contract.
Main tasks and practical skills:
- Article 146 of the Civil Code 1995 states the legal consequences of an invalid civil transaction in general. This article is a general principle for resolving consequences of different types of invalid contract. However, the Judge must determine what type of breach of contract has occurred and then apply specific legal provisions to such case. For example:
- Invalidity due to contradiction of mandatory rules shall apply Article 137 of the Civil Code 1995. According to Article 137 of the Civil Code, compensation for damage shall be required if one party causes the damage; if both parties jointly cause the damage, each party shall have to bear their respective part of the damage.
- Article 139 of the Civil Code 1995 refers to contracts where the form of the contract has not been adhered to (which is specifically provided in Point b of Sub-Section 2.2 of Section 2 of Part I of Resolution No. 01/2003/NQ-HDTP dated 16 April 2003). The Court shall issue a decision to force the parties to come to a competent agency for completing the form of the contract within a time limit of one month. When the time limit expires, a party who has not completed the form of the contract shall have to pay compensation for damage caused by the contract being declared invalid.
- Provisions on determination of faults and responsibility to pay compensation for damage when a housing purchase contract is declared as invalid (Point a and Point b of Sub-Section 2.4 of Section 2 of Part I of Resolution No. 01/2003/NQ-HDTP).
- Provisions on determination of damage, including the pricing of the house and land use rights according to the price of the transfer market at the locality at the time of hearing at first instance (Point c of Sub-Section 2.4 of Section 2…)
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