Exercise 5

Hai is the general director of a company that manages bookings for a traditional
dancing act that performs throughout Vietnam. He manages contracts with
customers, as well as the administration arrangements for the act’s appearances,
including hotels and travel.

Hai concluded a contract with a concert organiser in Ho Chi Minh City. The
contract specified the fee to be paid for the dancing act to appear, and a fixed
sum to cover accommodation and travel from Hanoi. Three weeks before the
concert in Ho Chi Minh City, Hai decided to organise flights for the performers
but discovered that due to a fuel crisis the fares for the flights would be 60%
more expensive than originally estimated. Hai decided to withdraw from the
contract as he did not wish to incur a loss.

Hai concluded a similar contract with a concert organiser in Da Nang. On the

morning of the day on which the concert was planned to take place, the theatre
was seriously damaged by fire, causing the cancellation of the concert by the
organiser. The dancing act had already travelled to Da Nang and had paid for all
travel and accommodation necessary for its appearance. Hai decided to invoice
the organiser for the full fee and expenses incurred.

Required:
(a) Discuss the potential liability of Hai’s company in respect of its
withdrawal of the dancing act from the appearance in Ho Chi Minh City.
(b) Discuss the potential liability of the concert organiser in Da Nang for
the fees and expenses invoiced by Hai’s company.

Answer:

a.

-In this case, Hai signed a contract with a concert organizer in Ho Chi Minh
City. But then, Hai decided to withdraw from the contract because he did not
want to lose. So, Hai must compensate for concert organiser in Ho Chi Minh
City. According to article 427 -Consequences of contract cancellation, Civil
Code 2015, we have:

3. The party suffering damage due to the other party's breach of obligations
shall be compensated.

5. In case the contract cancellation has no grounds prescribed in Articles 423,

424, 425 and 426 of this Code, the party cancelling the contract is determined
to be the party in breach of the obligations and must perform the responsibility
due to failure to properly perform obligations as prescribed in this Code and
other relevant laws.

-According to Article 418, 419 - Civil Code 2015, Hai has the potential liability:

Article 418. Agreement on penalties for violations

1. Penalty for breach is an agreement between the parties in a contract

whereby the breaching party must pay a sum of money to the aggrieved party.

2. Penalties for violations shall be agreed upon by the parties, unless otherwise
provided for by relevant laws.

3. The parties may agree that the breaching party only has to pay a fine for the
breach without having to pay compensation or both to pay a fine for the
violation and to pay compensation for damage. In case the parties have an
agreement on fines for violations but do not agree on both being fined for
violations and compensating for damage, the breaching party will only have to
pay the penalty for the violation.

Article 419. Compensation for damage caused by breach of contract

2. The obligee may claim compensation for benefits he or she would otherwise
be entitled to under the contract. The obligee may also require the obligor to
pay expenses incurred due to the non- fulfillment of contractual obligations that
do not overlap with the level of compensation for damages for benefits brought
by the contract.

b.

-In this case, Hai concluded a contract with a concert organiser in Da Nang, but
the theatre was seriously damaged by fire, causing the cancellation of the
concert by the organiser. Since the theatre was destroyed by fire, this was an
unexpected turn of events. According to article 420- Performance of a contract
when circumstances change substantially, Civil Code 2015:

1. Circumstances change fundamentally when the following conditions are fully

satisfied:

a) The change of circumstances due to objective causes occurs after the

conclusion of the contract
 b) At the time of entering into the contract, the parties cannot foresee the
change of circumstances

- After this incident, the organizer cancelled the concert, so he violated the
contract, affecting Hai's rights => the concert organizer had to compensate Hai.

-According to Article 419 of the Civil Code 2015 - Compensation for breach of
contract, we have the potential liability of the concert organiser in Da Nang:

2. The obligee may claim damages for benefits he or she would otherwise be
entitled to from the contract. The obligee may also require the obligor to pay
expenses incurred due to the non-fulfillment of contractual obligations that do
not overlap with the level of compensation for the benefits brought by the
contract.

-> Hai has the right to ask the concert organizer to pay the incurred costs.

-Responsibilities for out- contract damage of the concert organizer in Danang

for fees and expenses which are complied with clause 585- Principles of
compensation for damage, Civil Code 2015:

1. Actual damage must be fully and promptly compensated. The parties may
agree on the level of compensation, the form of compensation in cash, in kind or
performance of a job, the mode of compensation once or many times, unless
otherwise provided for by law.
2. The person responsible for compensation for damage may be entitled to a
reduction in compensation if there is no fault or unintentional fault and the
damage is too great compared to his or her economic ability.
3. When the compensation level is no longer consistent with reality, the
aggrieved party or the damage-causing party may request the Court or other
competent state agency to change the compensation level.