Some issues with deposits and problems

Some issues with deposits and problems

February 15, 2024 08:06

Deposit is a security measure to fulfill obligations in civil transactions. This is one of the common transactions in social life and the practice of dispute resolution still has many inconsistencies due to the perception and application of the law.

1. Some issues about deposit

To avoid one of the parties intentionally violating an obligation leading to failure to enter into or perform the contract, the parties agree to establish a deposit to ensure the performance of the obligation. The nature of a deposit is a security measure and a civil transaction, whereby the parties commit to bear property damage in case of breach of obligations.

Article 328 of the 2015 Civil Code stipulates:

"first. A deposit is when one party (hereinafter referred to as the depositing party) delivers to the other party (hereinafter referred to as the deposit receiving party) a sum of money or precious metals, gems or other valuable objects (hereinafter referred to as deposit) for a period of time to ensure the conclusion or performance of the contract.

2. In case the contract is concluded and performed, the deposited property will be returned to the depositor or deducted to fulfill the payment obligation; If the depositing party refuses to enter into and perform the contract, the deposited property belongs to the deposit receiving party; If the deposit receiving party refuses to enter into or perform the contract, it must return to the depositing party the deposited assets and an amount equivalent to the value of the deposited assets, unless otherwise agreed.

- Form of deposit: Article 130 of the 2005 Civil Code stipulates that the deposit must be in writing. However, the 2015 Civil Code does not specifically stipulate the form of deposit, which can be in writing or verbally or by specific conduct. The deposit agreement can be a separate transaction or a content in the contract with the obligation to deposit. The deposit contract is not required to be notarized or authenticated but depends on the agreement of the parties.

- Purpose of deposit: Is to ensure the performance of obligations, including: the obligation to enter into a contract, or the obligation to perform a contract, or the obligation to both enter into and perform contract.

- Object of deposit: Is the deposited property that one party must hand over to the other party to keep. In cases where in a deposit contract or contract with secured obligations, in addition to the deposited assets, there is also another payment that is not clearly identified as a deposit or prepayment, this amount is considered a payment. before [1] . The parties were confused, leading to the inability to deliver and receive the deposited assets, resulting in the deposit being invalid (distinguished from the case of intentional violation of not delivering the deposited assets), for example, the deposited assets are a car but under common ownership and without the consent of co-owners.

- Breach of obligations: Article 328 of the 2015 Civil Code only stipulates the responsibilities of the parties when "refuses" to enter into or perform a contract. If understood in a narrow scope, "refuse" is a party expressing its will to disagree through specific behavior (action or inaction). However, the meaning of "rejection" is not only understood in this narrow sense but is defined as a subjective error that leads to the contract not being concluded, not being fully implemented or being invalid [2] . In our opinion, in case both parties are at fault, there will be no deposit penalty. This is the difference between the legal consequences in cases where the contract is canceled or invalidated on the basis of determining the level of fault. However, in practice, there is also the view that both parties are at fault, leading to the deposit contract being invalid, but the level of fault must be determined to fine the deposit [3] .

- Liability due to violation of deposit obligations: When violating obligations, the depositing party suffers damage to the deposited property, the deposit receiving party must return the deposited property and pay the depositing party a corresponding amount of money. equivalent to the deposited assets (deposit) and is limited to the deposit term. During the deposit, the parties can further agree on penalties for violations, compensation for damages, and interest rates due to breach of obligations. However, in our opinion, the nature and scope of the deposit obligation does not include other accompanying damages, so it will not be effective, the liability for violating the deposit obligation is limited to the scope of the deposit fine.

The parties can also agree on other contents related to the rights and obligations of the parties regarding the deposited assets such as registration of ownership rights, rights to use, preservation, preservation and compensation for damages to the parties. with deposited assets, payment of costs for preserving and managing deposited assets... [4] . The parties can also agree on issues related to cancellation, unilateral termination, or invalidation of the deposit contract.

- Relationship between deposit and contract with obligation to deposit:

Point c Subsection 1 Section I Resolution No. 01/2003/NQ-HDTP dated April 16, 2003 of the Council of Judges of the Supreme People's Court guiding the application of law in resolving some types of civil disputes, marriage and The family stipulates: "In cases where the parties have an agreement or the law stipulates a condition that if the deposit is void, the contract is also void, then the contract is automatically void when that deposit is void. "sign" .

Article 29 of Decree No. 21/2021/ND-CP dated March 19, 2021 of the Government regulating the implementation of the Civil Code on ensuring the performance of obligations stipulates:

"first. A security contract is invalid or cancelled, or unilateral termination of performance does not terminate the contract with guaranteed obligations.

2. In case a contract with guaranteed obligations is invalid or canceled or unilaterally terminated, it shall be resolved as follows:

a) If the parties have not yet performed the contract with guaranteed obligations, the guaranteed contract will terminate;

b) If the parties have performed part or all of the contract with guaranteed obligations, the guaranteed contract will not terminate. The secured party has the right to dispose of the secured assets to pay the obligor's repayment obligation to it.

From the above regulations, it can be seen that a deposit and a contract with a deposit obligation are two relatively separate contracts. It is not possible to use the reason that the deposit contract is invalid, canceled, or unilaterally terminated, then the contract with obligations is also invalid, canceled, or unilaterally terminated and vice versa.

If a deposit contract is invalid, canceled, or unilaterally terminated, the contract with the deposit obligations will still be valid and must be performed, unless the parties have an agreement that the obligation will also be suspended. void, terminated.

If a contract with guaranteed obligations is invalid, canceled, or unilaterally terminated, the deposit contract will only terminate when the contract with guaranteed obligations has not been performed; does not automatically lead to the deposit contract being invalid, canceled, or unilaterally terminated (but in the case of automatic termination according to Clause 7, Article 422 of the 2015 Civil Code).

Particularly in the case of a deposit only to ensure the conclusion of a contract, if during the performance of the contract there is an obligation to deposit, there is a violation that causes the contract with the obligation to deposit to not be performed. or just discovered that the contract has an invalid obligation, the deposit will not be fined, based on that the obligation to be deposited means that the contract has been completed. In other cases, the party whose fault leads to the contract's obligations not being entered into, not being performed or being invalidated must pay a deposit [5] .

The problem is that in the case of a deposit to perform a contract or to enter into and perform a contract but there is a violation leading to the contract with the obligation to deposit not being performed or being invalid, then the legal liability The liability of the party violating the obligation is only bound by the deposit transaction (loss of deposited property or penalty deposit) or includes obligations due to breach of contract (compensation for damages, penalty for violation...). In our opinion, these are two separate transactions, so different obligations will arise depending on the agreement of the parties in the two transactions. For example: A contract with a deposit obligation has been concluded but there is a violation leading to invalidity. In addition to the obligation to pay a deposit according to the deposit contract, the parties still have an obligation to repay each other. received and compensated for damages due to the invalidity of the contract with the deposit obligation.

2. Some problems and shortcomings

2.1. Effective date of the contract

The legal issue raised in practice is that when the depositor does not deliver or incompletely delivers the deposit assets to the depositee or another person (according to the agreement), the validity of the contract is determined as follows. any.

There is a view that when the depositor has not yet handed over the deposit assets to the depositee (or another person as agreed) to hold, the rights and obligations between the two parties have not yet arisen, and they have not yet taken effect, so it is void . 6] .

The Civil Code does not stipulate the effective time of the deposit, but only stipulates that the time of adverse effect arising against a third party is at the time of registration of the security measure or from the time the secured party holds or occupies the security interest. keep collateral [7] . In our opinion, the transfer of deposited assets to the deposit recipient is the basis for determining the time to oppose a third party to protect the interests of the deposit recipient. In general principle, determining the effective time of a deposit contract is determined according to general provisions on contracts of civil law, that is at the time of notarization, authentication or according to agreement, if If there is no agreement, then at the time of contract [8] . At this effective time, the parties must perform the agreed obligations, including the agreement on the delivery of deposited assets and the time of transfer of deposited assets is not at the same time as the time of entering into the contract. deposit. In case the depositor does not hand over the deposited property, the depositee has the right to cancel the contract, unilaterally terminate the contract and request a penalty for violation if there is an agreement or request compensation for damages.

In case the depositor does not fully transfer but only transfers a part of the value of the deposited property, it will be determined to be the depositor's fault, leading to the inability to enter into and perform the contract and incur legal liability. Damage to the deposited property, this deposited property belongs to the party receiving the deposit.

2.2. The problem of determining the value of the deposit penalty of the party receiving the deposit

Civil law does not stipulate the minimum and maximum levels of deposit value and deposit penalty value. The party at fault must be responsible for property damage with a property value equivalent to the value of the deposited property, however there is a regulation "unless otherwise agreed". There are two issues that arise:

Firstly, due to the grammatical structure of the law between the phrase "if the depositor refuses to enter into and perform the contract, the deposited property belongs to the depositee" is separated by a sign (;) from the phrase from "if the deposit receiving party refuses to enter into or perform the contract, it must return to the depositing party the deposited assets and an amount equivalent to the value of the deposited assets, unless otherwise agreed" should leading to the assumption that "other agreements" only cover cases where the deposit recipient is at fault; At the same time, when the depositor is at fault, all deposited assets belong to the depositee. However, in our opinion, if the parties agree that the damage is lower than the deposited assets, it is still valid, because this is the parties' right to self-determine.

The second is an agreement to pay an amount equivalent to the deposit value: The parties can agree on a deposit penalty that can be equal to, lower or higher than the value of the deposited property. The question is whether an agreement higher than the deposit value (for example 10 times) will be effective. There are two views on this issue:

- First view: According to the law, the deposit fine must be equal to or lower than the value of the deposited property. For example: The settlement judgment only accepts a deposit penalty equivalent to the deposit value [9] . This point of view has a reasonable element because the law stipulates that the level of liability for damage of the deposit receiving party upon violation is an amount corresponding to the value of the deposited property, this must be determined as the limit. on damage liability to ensure equality in the responsibilities of the deposit recipient and the depositor when there is a breach of contract. From a comparative perspective, this is also consistent with the legislative technique in the case of "unless there is another agreement" specified in Point b, Clause 5, Article 466 of the 2015 Civil Code on "other agreements" regarding interest rates. Overdue does not exceed 150% of the maximum loan interest rate [10] . At the same time, there may arise cases of taking advantage of the depositor's ignorance of the law, leading to many fines of the deposit.

- Second view: The parties have the right to agree that the deposit recipient's obligation to pay a deposit is higher than the value of the deposited property, for example, the judgment accepts a deposit penalty twice the value of the deposit [ 11] . This viewpoint also has some reasonable elements because the law stipulates "unless otherwise agreed" , there is no regulation on the maximum level of deposit fines, so the parties have the right to agree. The parties guarantee the ability to freely agree and commit, do not violate social ethics, and do not violate legal prohibitions, so they must be responsible for implementation. This may also be to protect the weaker party, because the party receiving the deposit can be more proactive in deciding whether or not to refuse to enter into and perform the contract (For example: The value of the property deposited to buy increases, the depositor must compensate the third party because the depositee does not deliver the goods...).

In our opinion, ensuring equality of property damage obligations according to the first point of view is appropriate. However, when there is no legal document regulating the limits of deposits and fines, the application of the law must be based on the principle of the right to self-determination to resolve the second point of view. This is an issue that requires adjustment, amendment, and clear regulation to uniformly apply the law.

2.3. Some issues determining the validity of deposits in practice

2.3.1. A deposit is intended to transfer rights to a third party's property

In practice, there are many cases where the party establishing a deposit transaction is the person who does not yet have rights to the property that is the subject of the contract with the obligation to deposit. The question is whether the purpose of the deposit transaction in this case violates the prohibition of the law or not.

In our opinion, civil law relationships are very diverse, so in addition to the provisions of civil law, subjects have the right to freely negotiate even though civil law has not stipulated, but must comply with basic principles, must not violate prohibitions or violate social ethics and must take responsibility for failure to perform or improper performance of obligations. "The purpose of a civil transaction is the benefit that the subject wishes to achieve when establishing that transaction" ; "Thing Prohibitions of law are provisions of law that do not allow subjects to perform certain acts" [12] . The benefits that the subject wishes to achieve are legitimate and legal benefits; Do not allow infringement on the interests of the country, people, public interests, rights and interests of others. Therefore, in our opinion, depositing with the purpose of causing damage to the rights and interests mentioned above is considered a violation of the law's prohibition and therefore void.

For example: Making a deposit to enter into and carry out the purchase and sale of stolen property, committing acts of infringing on life and health...

Or the deposit recipient is an intermediary who both agrees to buy and sell but does not transfer rights (land broker). Although it may be agreed by a third party, this is a violation of the law, because it violates the conditions on real estate business, which only allows the transfer of house and construction purchase and lease contracts. Construction and purchase and lease contracts for future housing do not allow the transfer of land use rights without a land use right certificate, thus tax evasion [13] .

In our opinion, although when making a deposit, the party receiving the deposit has not established ownership of the property, but with the intention of not violating the prohibition of the law. For example: A deposit is made to conclude and perform a contract to buy and sell goods that the deposit recipient does not yet have. Because this transaction is only at the deposit stage to enter into a contract or to implement a contract, it is only binding between the two parties and does not affect the rights and interests of a third party. The parties ensure legal capacity, civil act capacity, freedom, and voluntary commitment and agreement, so the agreement remains valid and is responsible for performing the committed obligations. When establishing a deposit transaction, the parties clearly define this performable obligation and commit to perform it; The obligated party must create conditions to ensure performance (except in cases of deception or mistake). If the conditions cannot be guaranteed, it will lead to failure to perform the deposit contract, leading to errors. to the deposit penalty (which means that whether or not the deposit obligation is fulfilled or not does not affect the third party). Determining that the deposit is effective is also to avoid taking advantage of it to seize other people's deposited assets.

For example, a common case is that two parties deposit a deposit to transfer a plot of land and the party receiving the deposit has an agreement to receive the transfer from a third party (land use rights have not yet been established). In our opinion, this agreement is valid and does not violate the provisions of law. To ensure the conclusion and implementation of the transfer contract, the deposit recipient must ensure the conditions prescribed by law, which is to complete the transfer of rights. In case the party receiving the deposit cannot ensure the conditions for entering into and performing the contract, it is the violating party. However, there may be cases where the parties agree on a condition for entering into a contract when the deposit recipient completes the transfer of rights but does not clearly define the transfer term, leading to the inability to enter into a contract. , this is at fault on both sides.

2.3.2. Deposit to enter into and perform a contract for property held by another person

In practice, there are many cases where the parties agree to make a deposit in order to enter into and perform a contract where the object of the contract is a mortgaged asset, a deposit in another transaction or is being distrained or frozen. radiate. According to the provisions of civil law, this property is held by another person, this person has rights to the secured property and has an adverse effect on the third person, so in case you want to transfer rights, you must have consent of the holding party. The legal issue is whether the deposit agreement is valid or not.

There is a view that the deposit contract in this case will be invalid due to a violation of the law, because the deposit recipient does not have the right to sell, replace, exchange or donate the property without the consent of the depositor. holding party [14] .

There is also the view that a contract is invalid if it is considered a conditional contract and according to Clause 6, Article 402 of the 2015 Civil Code, "a conditional contract is a contract whose performance depends on the occurrence of , change or terminate a certain event” should When conditions arise, the contract becomes effective and the parties must perform the agreed obligations. Therefore, when the property does not meet the conditions to transfer rights, the contract will not be effective, meaning it will be void.

In our opinion, a deposit contract is only invalidated in the cases specified in Articles 117, 122, 123, 124, 125, 126, 127, 128, 129, 408 of the 2015 Civil Code or other cases in which the law has regulations. The purpose of a deposit is to deliver an asset to the deposit recipient to hold to ensure the performance of the obligation. Obligations must be obligations capable of being performed in reality, including entering into a contract or performing a contract. In the case of mortgaged property, the mortgagor still has the ability to enter into a contract, because the law does not prohibit the transfer while the property is mortgaged, provided the consent of the receiving party is obtained. mortgage, at the same time the party with the mortgaged property still has the ability to release the mortgage to enter into a transfer contract, this is a legal issue that both parties determine must be implemented. The fact that the property is mortgaged cannot be considered a condition that gives rise to the validity of the deposit contract, but this is the obligation of the deposit recipient to ensure the conclusion of the contract (unless the parties have agreed). Specifically, the deposit contract only takes effect when the deposit recipient releases the mortgaged property). The deposit contract was effective at the time the parties entered into it. The party whose fault led to the failure to conclude the contract must pay a deposit penalty.

2.3.3. Deposit to transfer rights to common property

Where the property is jointly owned but the subject entering into the deposit contract does not have the participation or consent of all co-owners.

- There is a view that a deposit contract established by only one of the co-owners is invalid because it violates the prohibition and has no right to transfer rights [15] . There may also be a view that this transaction was voided by mistake.

- In our opinion, the law does not prohibit one of the co-owners from carrying out transactions related to property that they own, that is, they have the right to participate in civil relations and have the obligation to develop born from that relationship. When they carry out transactions related to common property without authorization or beyond the scope of authorization, the rights and obligations of the other co-owners will not arise, unless publicly represented by the person being represented . receive or know without objecting within a reasonable time, if there is an error that results in the person establishing the transaction not knowing or not being able to know, then the person without this right of representation must still perform the obligations towards the person who made the transaction. with me [16] . In this case, they voluntarily participate in the transaction, clearly understand the rights and obligations and are responsible for the obligations they have committed to perform.

At the same time, as analyzed above on the relationship between a deposit and a contract with a deposit obligation, a contract with a deposit obligation is invalid, unilaterally terminated, or canceled. However, this leads to the deposit contract being invalidated. Therefore, although a contract with obligations (transfer of rights to common property) may be invalid due to excess or lack of representation rights, this cannot be used as a basis to determine whether a deposit contract is the same or not. disabled.

2.3.4. The problem of resolving the plaintiff's request when both requesting to cancel the invalid deposit contract and request to return the deposit and penalty assets.

In practice, in some cases the plaintiff requests the Court to cancel or invalidate the deposit contract and request payment of the deposit or deposit penalty due to the fault of the deposit recipient. Some judgments have canceled the contract, invalidated the contract, forced the deposit receiving party to return the deposit and fined the deposit [17] . In our opinion, the above solution is not appropriate.

Deposit penalties only arise when the deposit contract is effective.

Cancellation of the contract only arises when one party violates the contract (distinguished from the case of contract termination when the parties mutually agree). When canceling the contract, the contents agreed upon by the parties are no longer valid, except for the agreement on penalties for violations, compensation for damages and agreement on dispute resolution (if there is an agreement) [18] . The agreement on penalties for violations in case of contract cancellation is not the same as the deposit penalty.

A void contract will not give rise to rights and obligations between the parties since the contract was established, and the party at fault causing damage will compensate [19] . This means that when a deposit transaction is invalidated, the parties are no longer bound by the deposit penalty but only resolve the issue of returning the deposited assets and compensating for damages due to errors that led to the transaction. void.

Above are some legal awareness issues and problems regarding deposits that require specific guidance and exchange of opinions to uniformly apply the law.

NGUYEN VAN HUY (People's Court of Ia Grai district, Gia Lai province)

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