Court case commentary: lodging complaints and dismissal of actions

Court case commentary: fail to lodge complaints within time limit, the action may be dismissed on basis of Article 318 of the Commercial Law 2005 of Vietnam

Post date: 26-06-2014

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 Now we look at a court case commentary on a decision of the Hanoi People”s Court, in which the plaintiff failed to lodge a complaint within 9 months, the Court dismissed the actions on basis of Article 318.3 of the Commercial Law 2005 of Vietnam. The judgment indicates that aggrieved contractual parties will need to act quickly to ensure that their right to take action for contractual breach is not lost.

fail to lodge complaints within time limit, the action may be dismissed

fail to lodge complaints within time limit, the action may be dismissed

 Court case commentary: Judgment No.64/2006/KDTM-ST dated 17 August 2006: A&B BEVERAGE LTD (A&B) versus TRAN THI HUONG (Mrs. Huong).

 The Facts  (Court case commentary)

 On 1 February 2005, A&B entered into a commercial contract with Ms Huong under which Ms Huong agreed to act as a sales agent for A&B with a commitment to sell a specific quantity of A&B”s beverages each month in the period from 1 February 2005 to 31 January 2006.

 Ms Huong performed her obligations under the contract for the first 4 months and in May 2005, Ms Huong wrote to A&B requesting a temporary suspension of the contract as she had had a baby. On 1 June 2005 A&B replied informing Ms Huong that she was required to perform her sales commitments for both May and June in accordance with the agreed contract.

 By the end of June 2005, Ms Huong had met the required sales volume for June but not for May. On 27 June 2005 Ms Huong attempted to contact A&B concerning the matter, but did not receive a response. The Court understood that both parties ceased preforming their obligations under the contract at the end of June 2005.

 On 27 April 2006, 11 months after Ms Huong had failed to reach the sales target, A&B commenced proceedings against Ms Huong in the Hanoi City People”s Court, claiming VND 212,520,000 in compensation for breach of contract.

 The Decision (Court case commentary)

 The Court dismissed A&B”s action on the basis of Article 318.3 of the Commercial Law, which prescribes a 9 month time limit for ”lodging complaints”. According to the Court, because A&B did not ”lodge a complaint” within 9 months of May 2005 (when Ms Huong allegedly failed to perform her contractual obligations) A&B”s action should be dismissed.

 Court case commentary
 The legal reasoning of the Court in reaching its decision raises considerable questions concerning the nature and purpose of the 9 month time limit prescribed by Article 318.3 of the Commercial Law for ”lodging complaints”. The Court dismissed A&B’s action because A&B failed to lodge complaint within 9 months time limit, that means A&B accepted such violations and lose the rights to rely on the violation of Ms Huong.   

 The practical lesson from this decision, at least, is clear. An aggrieved contractual party should not delay in ”lodging a complaint” where it believes there has been a breach of contract.

 Similarly, on 21 August 2012 Hanoi People”s Court opened appellate trial between PVTech (Buyer) versus SSG (Supplier). The Buyer lost the case because it did not give notice to the Supplier specifying the nature of the lack of conformity within a 3 months after he has discovered.

 In the case “Disputes on agreement of sale of goods” was judged by Trial Judgment No. 245/2005/KDTM-ST dated 29 August 2005 of  Ho Chi Minh City People”s Court and Appellate Judgment No.91/2005/KDTM-PT dated 29 November 2005 of  Ho Chi Minh City  Supreme People”s Court; was reviewed by Cassation Decision No.07/2007/KDTM-GDT dated 07/8/2007 of Supreme People”s Court of  Ho Chi Minh City, duration of complaints issues also have a significant role in the decision to cancel the appeals and the first Instance Judgment.

 In case "a contract dispute over the sale of goods" rulings by the First Instance Judgment No.94/KTST dated 10/5/2005 of  Ho Chi Minh City Courts and Appellate Judgment No.86/2005/KTPT dated 14/11/2005 of the Appellate Court of  Supreme People”s Court of  Ho Chi Minh City and is reviewed by Cassation Decision 07/2006/KDTM-GDT dated 06/7/2006, the complaint also plays a key role for all three courts.

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