The institution of deposit in civil law
Mr. A and Ms. B have entered into a deposit contract. In particular, on June 20, 2020, Mr. A deposited VND 800 million for Ms. B to buy Ms. B’s house worth VND 1.5 billion. The deposit contract stipulates that until August 25, 2020, the parties must carry out notarization procedures to transfer the ownership of the house to Mr. A, if Ms. B fails to comply with the above commitment, she will compensate for Mr. A double the deposit.
However, on August 25, 2020, Ms. B did not comply with the above commitments, Parties had a dispute over the amount of money that Mrs. B had to pay Mr. A.
Regarding the above case, the lawyer would like to answer as follows:
Article 328 Civil Code 2015 has provisions on deposit:
1. Deposit is an act whereby one party (hereinafter referred to as the depositor) transfers to another party (hereinafter referred to as the depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract.
2. Upon a contract being entered into or performed, any deposited property shall be returned to the depositor, or deducted from the amount of an obligation to pay money. If the depositor refuses to enter into or perform the contract, the deposited property shall belong to the depositary. If the depositary refuses to enter into or perform the contract, it must return the deposited property and pay an amount equivalent to the value of the deposited property to the depositor, unless otherwise agreed.
Ms. B said that she only returned to Mr. A the amount of 1.6 billion (is 800 million X2). However, Mr. A said that she would have to return to him the initial deposit amount of 800 million and a deposit of 1.6 billion, which means that in total, Mrs. B must pay Mr. A the amount of 2.4 Billion. The two sides have a dispute, and this is also a fairly common dispute in the deposit contract.
The law states that, if the receiving party refuses to enter into or perform the contract, it must pay the depositor of the security deposit and an amount equal to the value of the deposited property, unless otherwise agreed.
In this case, the parties agree not to violate the provisions of the law, so applying the agreement, Ms. A will “compensate Mr. A double the deposit”. Disputes arising in the wire are analyzed based on the following two factors:
“Compensation”: The parties may not fully understand the nature of the compensation institution and seem to have misused wording in this case. Compensation arises based on actual damage, and in order to claim damages, the aggrieved party must demonstrate sufficient evidence of the behavioral factors, the damages, and the causal relation.
In this case, it is possible that parties agrees on a breach of the contract, not the compensation institution.
“double the deposit”: is included with returning the original deposit or not, parties still do not have obvious agreement.
Such above factors result in the dispute.
The lawyer hopes that with the above analysis, clients will have a better understanding of the deposit institution in the contract to have suitable agreements when entering into a deposit contract, to avoid legal risks and unnecessary disputes.
For more information, please contact LSR for detailed advice and support:
LUAT SU RIENG (LSR) LAW FIRM
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