Lecture 2.

2
Classification of terms of
a contract
 Objectives

1. Express and Implied terms

2. Condition, Warranties and Innominate terms
3. Exemption clause
4. Case study of Tan Hoang Minh: Impact of violation of contract
law on business
5. Link to the requirements of P3(1)
6. Link to Requirements of M4(1)
7. Notes for upcoming class: In-class activities (2) for P3(1), M4(1)
 Terms of Contract

1. Express and Implied terms

(Điều khoản được thể hiện trong Hợp đồng và Điều khoản ngụ ý)
 Express and Implied terms

Express term?
(Điều khoản thể hiện trong Hợp đồng)
 Express terms

Contractual terms that are included in the

contract by parties of the contract

5
Examples of Express terms
Examples of Express terms
 Express and Implied terms

Implied term?
(Điều khoản ngụ ý)
 Implied terms

VIETNAMESE LAW
UK LAW

• Each commitment or agreement that

Terms which was not specified
does not violate prohibitions of law..
by the parties to the contract,
• If no agreement, no law, practice may
but may be implied into it by
be applied with conditions
Law (statute or common law).
• Civil Code 2015 takes precedence in
some cases

(Article 3, 5 Civil Code 2015 of Vietnam)

9
 Terms of Contract

2. Condition, Warranties and

Innominate terms
(Điều khoản cốt lõi, Điều khoản mà sự vi phạm không ảnh hưởng tới lý do hai bên ký hợp đồng và điều
khoản Điều khoản mà nếu bị vi phạm thì xử lý tùy thuộc vào mức độ thiệt hại của sự vi phạm)
 Condition, Warranty and Innominate

2.1 Condition term?

(Điều khoản cốt lõi)
 Condition term

According to the UK Law

 Condition terms according to the UK law

• A major contractual term crucial to its existence.

• If this term is broken (breached), the innocent party may

discharge (hủy bỏ) the contract + claim for compensation for
damages

13
 Case study : Condition term
Poussard v Spiers & Pond (1876)

An actress was
employed for a Later she delayed taking up her role
season
by illness a week after the opening
night

Will her employers were entitled to terminate

the contract?
 Case study : Condition term
Poussard v Spiers & Pond (1876)

Will her employers were entitled to terminate the contract because of such delay?

YES
Reasonings

• The actress’s presence on the opening night was crucial to the contract.

• This term is a condition term

• The employer was NOT entitled to repudiate.

 Condition term

According to Vietnamese Law

 Condition terms according to Vietnamese law

VIETNAMESE LAW

1. A party has the right to cancel a contract and shall not be liable to
compensate for damage in any of the following cases:

b) The other party seriously violates the obligations in the contract;

(Point b, Account 1, Article 423 Civil Code 2015 of Vietnam)

17
 Condition, Warranty and Innominate

2.2. Warranty term?

(Điều khoản mà sự vi phạm không ảnh hưởng tới lý do hai bên ký hợp đồng)
 Warranty term

According to the UK Law

 Warranty terms according to the UK law

• A minor contractual term,

• If the term is breached, innocent party may claims

compensation for damages and cannot discharge the
contract

20
 Case study : Warranty term
Bettini v Gye (1876)

A singer was
employed for a Later she did not join the first
season
three of the six before the rehearsal days

Will her employers were entitled to terminate

the contract?
 Case study : Warranty term
Bettini v Gye (1876)

Will her employers were entitled to terminate the contract because of such delay?

NO
Reasonings

• No official performances were missed during the length of the contract.

• This absent of rehearsal is a minor breach, a warranty term
• The employer was NOT entitled to repudiate.
 Warranty term

According to Vietnamese Law

 Compensation for breach
(Bồi thường thiệt hại do vi phạm hợp đồng)

VIETNAMESE LAW

Article 419. The damage to be compensated for breach of contract

1. The damage to be compensated for breach of contractual obligations

is determined in accordance with Clause 2 of this Article, Article 13 and
Article 360 of this Code.

(Account 1, Article 419 Civil Code 2015 of Vietnam)

24
 Conditions to be compensated

1. Real damages in fact. No need to be stated in the contract

(difference from FINE (phạt hợp đồng))

2. Breach of terms of contract

3. Relation between Breach of terms and Damages

 Condition, Warranty and Innominate

2.3 Innominate term?

(Điều khoản mà nếu bị vi phạm thì xử lý tùy thuộc vào mức độ thiệt hại của sự vi phạm)
 Innominate terms

• Breaches of different degrees of seriousness

• The remedy will not be determined until the actual breach

occurs and the consequences are known.

27
 Innominate terms

• If the breach causes the innocent part lost whole benefits, the innocent part
can discharge the contract

• If the breach causes the innocent part does NOT loose the whole benefits,
the innocent part cannot discharge the contract and may claim for damages
 Case study : Innominate term
Cehave NV v Bremer Handelsgesellschaft (The Hansa Nord) (1975, CA)

a cargo of citrus pellets

(loại thức ăn cho động vật) for
On arrival some of the cargo
animal feed would be
was damaged.
shipped ‘in good
condition’.

Will the buyer can terminate the contract (hủy bỏ)

because of this damage ?
 Case study : Innominate term
Cehave NV v Bremer Handelsgesellschaft (The Hansa Nord) (1975, CA)

Will the buyer can terminate the contract (hủy bỏ) because of this damage ?

NO
Reasonings

• The damages did not destroy the main purpose of the contract

• The term “in good condition” is a INNOMINATE TERM

• The buyers had NO right to terminate the contract

 Condition, Warranty and Innominate

2.4 Difference between

Condition, Warranty and
Innominate term?
 Difference

Criteria Condition term Warranty term Innominate term

Role of the term to the Depends by
Very important Minor
existence of contract cases
Terminate or NOT
depends by
Terminate the contract CANNOT terminate
Remedies in case of being cases
violated
(chế tài khi có vi phạm) Compensation for Compensation for
Compensation for
damages damages
damages
 Terms of Contract

3. Exemption clause
(Điều khoản loại trừ hoặc giảm trừ trách nhiệm)
 Exemption clause

• A contractual term which attempts to limit or

exclude party’s contract/tort liability against
another.
 Exemption clause

• Limitation clause (điều khoản giới hạn khoản bồi thường hoặc giới hạn khoản phạt hoặc giới hạn thời gian đòi bồi
thường): a contractual term which seeks to restrict the amount of
damages payable
• Exclusion clause (điều khoản miễn trừ trách nhiệm): seeks to prevent any legal
liability for breach of contract negligence.
 Example of
Exclusion term
 Practice for P3(1)

5. Case study of Tan Hoang Minh

Impact of violation of contract law on business
 Back ground
Tan Hoang Minh’s subsidiaries:
Ngoi sao Viet, Soleil, Cung điện
mùa đông

Corporate bonds:
More than 10,000 billions VND to Tan Hoang Minh
group and others professional investors

Contracts to sell to other non-

professional investors
9 bond issuances canceled
Legal trouble of
Contract for Corporate Bonds

Corporate bonds of The

9 bond issuances are canceled
Subsidiaries company of
Tan Hoang Minh group by Government

Contract of Tan Hoang All non-professional

Minh with non- contracts are canceled
professional investors too

Security Law 2019 Fault of Tan Hoang Minh’s subsidiaries:

Decree 128/2021/NĐ-CP illegal bond issuance
 Real purposes of Bond issuance

All companies
are Tan Hoang
Minh’s
subsidiaries

Source: https://vnexpress.net/nhung-bat-thuong-o-lo-trai-phieu-10-000-ty-cua-tan-hoang-minh-4448982.html
 Discussion: Risk to Non-professional investors

• Nature of contract with Tan Hoang Minh:

✓ Contract for business corporation with Tan Hoang Minh?

✓ Loan contract with Tan Hoang Minh, NOT Tan Hoang Minh’s subsidiaries (Tan
Hoang Minh: borrower) ?

• If the bond is failed, the only party is responsible for damages: Tan Hoang Minh
group, not the companies issuing bond, which are Tan Hoang Minh’s subsidiaries?
 Discussion: Impact on business of Tan Hoang Minh

Relationship with Customers

And Partners for upcoming
Reputation projects

Price of other
If Tan Hoang Minh Non- Domino effect real estate stocks
goes bankrupt, non- professional to other go down…
professional investors business

• Bank charges higher

If Tan Hoang Minh interest for loan
goes bankrupt, capital • Issuing corporate
employees salaries will Employees
expenditures bond will be more
pay first before Debtors difficult
 Assignment 2

5. Link to Requirements of
P3(1)
 Requirements of P3

P3

Explain
Choose Explain

A Real CONTRACT Scandal of company Scandal of a

with legal trouble relating to company relating to
EMPLOYMENT law COMPANY LAW
 Requirements of P3(1)
P3(1)

1 Choose

A Real CONTRACT with

legal trouble
Requirement 1 Requirement 2

Impact of Legal trouble on Business

Describe the legal trouble of company

Real Violation/ Assumption of Economic damages: Relationship Etc.

Breach of contract Breach of contract compensation damage, between two
price of stock parties in the Reputation
dispute
 Support to P3(1)
P3(1)

Choose
Support 2
A Real CONTRACT with legal trouble

Describe the violation

Real Violation/ Assumption of

Breach of contract Breach of contract

When assuming the violation, the term which is supposed to be

violated, should be acknowledged to be important/ crucial or not
important to the contract, so later the legal solution in M4(1) would
be easier to point out
 Assignment 2

6. Link to Requirements of
M4(1)
 Requirements of M4
M4

Recommend Recommend

The legal The way to resolve the

solution dispute
for

Contract dispute
 Requirements of M4(1)
M4(1)

1 Recommend
for Contract
The legal solution
dispute

** The Tutor decides the dispute for

recommendation

Point out the violated Terminate + compensation if damages

term is whether Legal solutions are
important or crucial to recommended: Compensation if damages
the contract
Fine if stated in the contract
 Notes for upcoming class

7. In-class activities (2)

for P3(1), M4(1)
 In-class activity of P3(1), M4(1)

Each Group continues with the contractual legal trouble (an assumption of
legal trouble or a real legal trouble)

1. Explain the impact on the company’s business de to the legal trouble with
respect to reputation, economic aspect, relationship…P3(1)

2. Recommend legal solution to resolve this contract dispute: terminate the

contract + compensation + fine if any, or continue the contract +
compensation + fine if any…M4(1)
THE END