NOTES WHEN OCCURRING A DISPUTE ON DEPOSIT AGREEMENT

Today, in order to ensure the performance of the contract as desired by the parties, the parties often sign a deposit agreement. The Civil Code 2015 has provisions on deposits and the Council of Judges of the Supreme People’s Court also issued Resolution 01/2003/NQ-HDTP to guide the settlement of civil contract disputes with deposits. However, the resolution of disputes in practice is not simple. This article will cover notes when occurring a dispute on deposit agreement.

Disputes on deposit agreement

 What is a dispute on deposit agreement?

In comparison with Article 328 (Deposit) and Article 385 (Definition of agreement) of the Civil Code 2015, a deposit agreement can be understood as an agreement between the parties that the depositor transfers to the recipient of a deposit a sum of money or precious metals, gemtsones or other valuable things for a period of time as a security for the entering into or performance of a contract.

A dispute on deposit agreement can be understood as disagreements, conflicts of rights and interests between the parties relating to the deposit agreement. A dispute on deposit agreement revolve around the validity of the deposit agreement, the rights and obligations of the parties relating to the deposit agreement, and a deposit fine.

Some common types of disputes on deposit agreement are encountered in reality include:

• Disputes on deposit agreement for transfer of land use rights
• The land of the deposit agreement is not eligible for transfer of land use rights;
• The recipient of a deposit (land user) does not have the rights to transfer;
• Disputes over rights and obligations between the parties;
• Disputes over deposit fines, compensation for damages.
• Disputes on deposit agreement for lease

A typical case of this type is the case when making a deposit to rent/lease a house but at the end of the lease term, the lessor does not pay the deposit for reasons such as the lessor believes that there are many expenses for renovation and repair of the rented house to deduct from the deposit, or deliberately given other reasons not to refund the deposit.

• Disputes on deposit agreement for the purchase of apartment

A common case of this type is when making a deposit to buy an apartment but the investor violates the progress of signing a land purchase contract, buying and selling apartments, or violates the fact that the project is not eligible to put into business,…

• Disputes on deposit agreement for sale and purchase of goods

This type of dispute happens a lot. Specifically, when the buyers make a deposit to buy and sell goods but they can not buy goods, the right quality of goods, and the desired quantity of goods. This dispute arises from a simple and unclear purchase, so it is difficult to find beneficial evidences when there is a dispute on the deposit agreement.

Notes when occurring a dispute on deposit agreement

On the issue of jurisdiction of the Court

Pursuant to Article 26 of the Civil Proceeding Code (“CPC”) 2015, civil disputes fall under the jurisdiction of the Court. Accordingly, disputes on deposit agreement are disputes over civil transaction and civil contract, so they will be under the jurisdiction of the Court.

The determination of the Court’s jurisdiction to settle the case is one of the important requirements of the examination of the conditions for handling civil cases. In addition to determining the jurisdiction of the Court by cases, by different levels, by choice in the absence of a provision to apply, it is also possible to determine the jurisdiction of the Court by territory.

However, in practice, resolving this type of dispute has many different points of view. For example, disputes on deposit agreement for transfer of land use rights, does the Court of the localities where the defendants reside[1] or the Court where such real estates are located[2] has jurisdiction to settle? The first point of view is said that this is a dispute over a civil contract, the subject of the dispute is a deposit and deposit penalities, so the case is under the jurisdiction of the Court of the localities where the defendants reside based on Article 39.1.a of the CPC 2015. The second point of view comes from cases arising in fact, the deposit is associated with the entering into land transactions (mainly the contract for the transfer of land use rights), the subject of this contract is the land use rights, so the Court where such real estates[3] are located will have the authority to settle the dispute on deposit agreement.

Thus, the determination of the Court’s jurisdiction to settle dispute on deposit agreement has many different points of views, the application of the law has not been unified.

On the issue of deposit fines

Regarding dispute on deposit agreement, according to trial practice, Courts usually rely on the guidance in Section I.1 of Resolution 01/2003/NQ-HDTP of the Council of Judges of the Supreme People’s Court guiding the application of law to the settlement of some types of civil, marriage and family disputes with guidelines for settling this dispute.

According to the above resolution, only cases falling under points a and c of Section I.1 and if not in cases both involved parties are at fault or force majeure events or objective obstacles emerge can apply sanctions of deposit fines as prescribed by law. Thus, deposit fines sanction can not be imposed in all cases of dispute on deposit agreement.

Therefore, the acceptance or non-acceptance of the deposit penalty must determine whether the reason for failure to conclude or perform the agreement is due to subjective or objective fault. If it is a subjective fault, it should be determined whose fault, the fault of one party (the depositor or the recipient of a deposit) or the fault of both parties. If it is an objective fault, it must be proved due to a force majeure event or an objective obstacle emerge.

Above is a related overview of Notes when occurring a dispute on deposit agreement that Phuoc and Partners share with readers. If you have any difficulties in the legal field, please contact us. Phuoc and Partners is a professional consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc and Partners is also rated as one of the leading consulting firms specializing in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Mergers and acquisition, and Litigation. We are confident in providing customers with optimal and effective service.

[1] Article 39.1.a of the Civil Code 2015

[2] Article 39.1.c of the Civil Code 2015

[3] Article 39.1.c of the Civil Code 2015