JOINT VENTURE CONTRACT.
Based on: '
- The Law on Foreign Investment in Vietnam approved by the National "Assembly of the Socialist Republic of Vietnam" on December 29th, 1987
- The Decree 29/HDBT on February 6th, 1991 of the Council of Ministers regulating in detail tliQ implementation of the Law on Foreign Investment in Vietnam
Today, 1st December, 19 ... the Parties have agreed to sign this contract to establish a Joint Venture Company ("JVC") on the terms and conditions as follows:
Article 1: NAMES OF THE PARTIES TO THE JOINT VENTURE'
VIETNAMESE PARTNER (PARTY A):
DEPARTMENT OF HOME TRADE HANOI
Head office at 10 Le Lai Street, Hanoi
Socialist Republic of Vietnam
Tel: 252578 Fax: (84) 2 -54592
Represented by: MR. DUONG DINH - Director
FOREIGN PARTNER (PARTY B):
IMEX PAN - PACIFIC INC
A Company registered and incorporated in the Republic of the
Philippines with head office: Ground floor, Corinthian Plaza, Pasea
de Roxas, Legaspi Village, Makati, Manila, Philippines
Tel: 8104391-94, Tlx: 65714 PHLMPXPN, Fax: 632-810-10-10'
Represented by: Mr. JOHNATHAN H. NGUYEN - President
Article 2: NAME, HEAD OFFICE, OBJECTIVE OF JVC .
The JOINT VENTURE COMPANY shall be named as:
- International Name: Hanoi General Commercial Centre
- Head Office: Hang Bai Street corner Trang Tien Street
Hanoi, Socialist Republic of Vietnam
The JOINT VENTURE COMPANY shall be a limited company
granted the status of a juridical person subject to Vietnam laws, stipulated
m the Joint Venture Contract and Charter of the Joint Venture . ^
- Main objectives of the Joint Venture Company
Building and operating 4 Star Hotel, and Business Centre of
international standards to be located at Hang Bai Street on the
corner of Trang Tien Street, Hanoi, Socialist Republic of Vietnam:
- The Joint Venture Commercial Centre after completion will
have the following facilities:
1) 4 Star Hotel
2) Business Centre with office space for rental in accordance with International Standards
3) Restaurants, Bars, Discos, Function Rooms, food and beverage facilities and other Hotel related facilities for tourist services
Article'3: INVESTED AND LEGAL CAPITAL – CAPITAL CONTRIBUTION INCREASE AND TRANSFER
- Project cost: USDxx,000,000.00 (xx million US Dollars)
- Legal capital: USDxx,000,000.00 and contributed by the two Parties as follows:
USD xx,000,000.00 by party A (30%)
USD xx,000,000.00 by party B (70%)
-Loan: USD xx,QOQ,000.00 to be borrowed from any financial institution and arranged by Party B for the Joint Venture; terms and conditions of the loan will be mutually agreed on by both parties
The juridical responsibilities of each party for the third party is within its contributed capital. All legal capital will be contributed in a lump sum or installments at appropriate periods agreed on by both parties and the State Committee for Co-operation and Investment.
If either of the two parties does not follow the Schedule of Capital Contribution, that party shall have to inform the other party within 90 days before and shall be responsible for-any losses caused by the such failure
The capital contributed by Party "A" shall be USD xx,000,000.00 comprising of:
- Land rental for xx years
- Fees for the retirement and relocation of present employees
- Fees for clearing the construction area
The capital contributed by party B shall be USD xx,500,000.00 comprising of architectural design, materials, equipment, working capital and other expenses
On the basis of the needs of development during the operation, the Joint Venture Capital can increase its legal capital in the following forms:
- Reinvesting the profit share of each party.
- Contributing new capital
The increase of the legal shall be agreed by both parties and be approved by the State Committee for Co-operation and Investment
During operation, either party can transfer its capital contribution to the other party or the third party approved by the State Committee for Co-operation and Investment
• Article 4: DURATION OF THE CONTRACT
The stipulated duration of this contract is xx years from the official date of establishment of the Joint Venture and can be extended by the agreement of the Parties hereto together with and subject to the approval of the State Committee for Co-operation and Investment
• Article 5: RESPONSIBILITIES OF EACH PARTY .
PARTY A'S RESPONSIBILITIES
1.. To contribute its capital (as stipulated in Article 3 of this contract)
2. To complete the application formalities to obtain the investment license and other necessary permits for the establishment of the Joint Venture Company
3. To obtain all necessary permits for Party B's personnel to stay and work in Vietnam
4. To take part in controlling in the Joint Venture
5. To do all necessary tasks to facilitate the operation of the Joint Venture
PARTY B'S RESPONSIBILITIES
1. To contribute its capital (as stipulated in Article 3 of this contract)
2. To take part in controlling the Joint Venture
3. To provide its know-how and management experience to the Joint Venture :
4. To advise on and supply the technical data for 'machinery necessary equipment and materials for the Joint venture so that party A can study their use and supply for an import quota when necessary.
5. To study markets and imported commodities such as machinery, equipment, materials, accessories, etc., through its Head Office and/or Branches
6. To provide Party A with lists and prices of commodities which are not available in Vietnam
7. To ensure capital for building, the foundation of the Hotel and Business Centre
8. To ensure the availabilities of the working capital to make the business profitable
9. To market the Hotel and Business Centre and use its best endeavours to attract and bring in foreign tourists to patronise the Hotel Business Centre
1. On the basis of labour contracts, the Joint Venture Company shall employ, appoint, terminate and supervise the Board of Directors in their employing, appointing, terminating, and supervising other personnel of the Joint Venture
2. Salaries and subsidies of all personnel of the Joint Venture shall be paid by the Joint Venture Company
3. Salaries and subsidies for foreign personnel shall be paid in foreign currency
4. To further the best interests of the Joint Venture, both parties can request the Board of Management to change or replace personnel; any change or replacement shall not be implemented without proper reasons
5. Citizens of Vietnam have priority to be recruited to work for the Joint Venture; the Joint Venture can employ foreign experts for work requiring highly technical skills which cannot be done by the Vietnamese citizens
6. Any interest and obligation of Vietnamese personnel working for the Joint Venture shall be ensured by their labour contracts in accordance with Vietnam labour Regulations for enterprises with Foreign Capital
7. Salaries and other subsidies for Vietnamese personnel shall be paid in Vietnamese Dong currency
8. During operation of the Joint Venture the Board of Directors shall organize regular training programs for Vietnamese personnel of the Joint Venture
9. The Board of Directors, during, the operation of the Joint Venture shall arrange the schedule of training and visits for Vietnamese managers working for the Joint Venture
10. Both parties shall inform each other of all their major policies which affect the Joint Venture
• Article 6: CONTROL AND MANAGEMENT
The Head of the. Company shall be its Board of Management consisting of 9 (nine) members appointed as follows:
- Party "A" shall appoint 3 (three) members
- Party "B" shall appoint 6 (six) members
• The powers, duties, activities, and- terms of this: Board of Management shall be stipulated in the Charter of the Joint Venture
BOARD OF DIRECTORS
The Board of Directors of the Joint Venture Company shall be appointed by the Board of Management on the basis of the agreement between the two parties .
- The first Board of Directors for the initial period lasting 5 years of the Joint Venture shall be appointed as follows:
- General Director and Vice General
Director of Finance: By Party B
- Managing Director and Chief Accountant: By Party A -
• Article 7: FISCAL YEAR
The fiscal year of the Joint Venture shall commence on January 1st and terminate on December 31st of the same year
The first fiscal year shall commence from the official date of establishment to the December 31st of the same year
• Article 8: PRINCIPLES OF ACCOUNTING
The Joint Venture Company shall implement' its accounting system on the basis of Vietnamese Accounting principles and standards and be checked by Vietnamese Financial Organization (as stated in Article 18 of Law on Foreign Investment in Vietnam as aforesaid)
• Article 9: YEARLY ACCOUNTING REVIEW '
Every year, the Joint Venture shall be responsible for its accounting review in conformity with regulations of the Vietnam Government; documents of the yearly accounting review 'must be submitted to the relevant authorized organization after approval by the Board of Management
• Article 10: INSURANCE
Both parties agree to choose a Vietnamese insurance company to insure the assets of the Joint Venture
• Article 11: PROFIT-PROFIT SHARING- ESTABLISHMENT FUNDS
The Joint Venture and its foreign partner shall be liable to fulfill their financial obligations to the Vietnam Government as stipulated in the Investment License issued by the State Committee for Cooperation and Investment
After fulfilling all its financial obligations to the Vietnamese Government, the Joint Venture shall use 5% of its profit to set up a reserve fund; Other funds shall be established in conformity with Vietnamese Laws
The reserve fund shall be limited to not more than 25% of the legal capital in accordance with Article 30 of the Law on Foreign Investment; the Board of Directors shall decide the profit share of both parties as follows:
Profit sharing for the initial xx years of the Joint - Venture
- Party A: 30%
- Party B: 70%
The profit sharing of both parties shall be as follows:
After xx years after xx years after xx years
Party A: 35% 40% 50%
Party B: 65% 60% 50%
Party B can remit the following abroad:
- Profit from the business . . ,
- Receipts from supplying services and technology transfers
. - Money from loans and interest of the said loans
- Money and other assets officially belonging to Party B
Foreign personnel working for the Joint Venture can remit their legal income after returning their income tax in conformity with regulations on foreign exchange • control of Vietnam; During operation of the Joint Venture losses of the Joint Venture in any fiscal year shall be compensated by profits in following years but this shall no longer, be valid after five years as stipulated in Article 27 of the law on Foreign, Investment
Article 12: EXPENSE FOR ESTABLISHMENT OF THE JOINT VENTURE
All expense concerned with the establishment of each partner shall be included in the investment cost of the Joint Venture Company
Article 13: OFFICIAL OPERATING DATE :
The Joint Venture shall be officially established when the State Committee for Cooperation and Investment approves and issues the Investment license
Article 14: DISSOLUTION - BANKRUPCY - FORCE MAJEURE
The Joint Venture can be dissolved before the termination of the contract in the following cases:
- Both parties agree and suggest the dissolution to be passed by the Board of Management
- The Joint Venture is juridically appraised as a bankrupt company
- One of the two parties does not want to continue as a Party in the Joint Venture and wants to transfer its contributed capital without agreement of the other party but the State Committee for Co-operation and Investment permits the dissolution
Formalities of bankruptcy declaration shall be carried out in conformity with appropriate international regulations agreed to by the two parties
In case of observance of Vietnamese- laws and regulations on bankruptcy declaration, both parties agree to refer this to Vietnam Economic Arbitration or other juridical organization in accordance with the Law on Foreign Investment
In case of Force Majeure such as earthquake, storm, flood, fire, war, or any other unforeseen disaster which has occurred beyond the control of any party, that party shall be discharged of its related commitments in this contract provided:
- The Force Majeure is the proximate cause which obstructs or delays the execution of the contract
- That each party has tried all possible measures to overcome such occurrences
- That each party shall immediately, after such occurrence, inform the other party of the same and within 20 days, send the other party a written notice indicating the measures undertaken and the cause which prevents the execution of the Contract duly confirmed by the relevant authorities at the place where the disaster occurs
Article 15: LIQUIDATION
In case of liquidation as stated in Article 14 of this contract, the Board of Management shall appoint a committee to execute the liquidation
During liquidation, the assets of the company shall first be used to pay for worker's salaries, unpaid taxes, due debts, and liquidation expenses, the other. assets . shall be shared by the two parties according to their rate of capital contribution (both for profits and losses)
The Name of activities of the Liquidation Commission shall be stated in details in the Charter of the Joint Venture Company
In case of bankruptcy as stated in Article 14 of this contract, the liquidation shall be executed in conformity with Article 19 of Law on Foreign Investment
• Article 16: DISPUTE
Upon the approval of. the State Committee for Cooperation and Investment, the Joint Venture Contract shall become a juridical document which shall bn respected by both parties
Any one-sided contractual termination is not valid.
Any dispute between the two parties arising from the execution of this Joint Venture Contract shall first be resolved through mutual consultations and amicable settlement proceedings; if, however, the two parties fail to reach an agreement, 'the dispute shall be referred to the Singapore Economic Arbitration
All matters that are not provided for in this Contract but are necessary for the carrying out of the objectives of the Joint Venture ,
Company will be carried out by each party in accordance with the Charter of the Joint-Venture Company or-the applicable-Investment
Law and Implementing Decree
This contract is made in 10 copies in English and Vietnamese and comes into effects on the date of issuance of the Investment License, Signed on ...... ...... ...... ......19 ......
FOR THE VIETNAMESE PARTY: FOR FOREIGN PARTY
DEPARTMENT OF HOME TRADE HANOI IMEXPAN-PACIFIC INCORPORATED
DUONG DINH JOHNATHAN H. NGUYEN
(page 158) CONTRACT OR NO CONTRACT
If a dispute arises about a contract, the lawyers for each side study the text to see if the contract is a binding and enforceable agreement or if there are loopholes: can one side say the "contract" is not worth the paper it is written on? Each applicable law looks at this problem differently. What reasons are common in international cases for deciding that the parties have "no contract"?
Under most legal systems, a contract is enforceable only if (a) the parties achieve a "meeting of minds" through a process of offer and acceptance, if (b) both sides are capable of entering a contract, and if (c) the purpose of the contract is legal. Theo hầu hết các hệ thống pháp lý, hợp đồng có tính chất ràng buộc chỉ khi nào (a) các bên đạt được sự “thống nhất ý chí” thông qua quy trình đề nghị và chấp nhận, (b) cả hai bên có năng lực ký kết hợp đồng, và (c) mục đích của hợp đồng hợp pháp. An odd twist of Anglo-American law is that the contract must give both sides rights and duties—one-sided contracts are "no contract." Luật pháp Anh- Mỹ vốn rất phức tạp cho rằng hợp đồng phải quy định trách nhiệm và quyền lợi cho các bên – hợp đồng chỉ có một phía đưa ra bị xem là “không phải hợp đồng”.
IN MORE DEPTH
ADVERBIAL CLAUSES OF CONCESSION
Though/ Although he is sick, he goes to work.
No matter how sick he is, he goes to work.
However sick he is, he goes to work.
However sick, he goes to work.
Sick as he is, he goes to work.
Despite/ In spite of/ Notwithstanding sickness, he goes to work.
Though/ Although sick, he goes to work.
Though/ Although their lines of reasoning are different, Continental laws and Anglo-American laws are both geared to …
No matter how different their lines of reasoning are, Continental laws and Anglo-American laws are both geared to
However different their lines of reasoning are, Continental laws and Anglo-American laws are both geared to
However different their lines of reasoning, Continental laws and Anglo-American laws are both geared to
Different as their lines of reasoning are, Continental laws and Anglo-American laws are both geared to
Despite different lines of reasoning, Continental laws and Anglo-American laws are both geared to
Their lines of reasoning being different, Continental laws and Anglo-American laws are both geared to …
(II) Though he goes everywhere, he always remembers his home.
No matter where he goes, he always remembers his home.
Wherever he goes, he always remembers his home.
Despite any place he goes to, he always remembers his home.
(III)Though he says anything, he is a bad manager.
However different their lines of reasoning, Continental laws and Anglo-American laws are both geared to the needs of the international business community: different procedures, different drafting styles, different agreements—but a common purpose and, in many cases, a common result. Dù tư duy có khác nhau, nhưng luật pháp của châu Âu Lục địa và Anh-Mỹ đều nhắm tới đáp ứng nhu cầu của cộng đồng doanh nghiệp quốc tế: quy trình xét xử, cách dự thảo, cách thỏa thuận tuy khác nhau nhưng mục đích vẫn như nhau và trong nhiều trường hợp, kết quả cũng như nhau.
This is particularly true in deciding the issue of contract or no contract. The Anglo-American argues that a contract is an enforceable agreement, and that an "invalid contract" is therefore a contradiction in terms; the Continental lawyer has no trouble with the idea of an invalid contract. For the exporter, it makes no difference if the lawyer tells him he has "no contract" or an "invalid contract"—either way he is in trouble. What are the most likely causes of such an uncomfortable situation? -
The Meeting of Minds
A contract comes about when there is a meeting of minds, when one side says "I make you this offer" and the other side says "I accept." But sometimes there is a written agreement and no "meeting of minds." How can that happen?
If I hold a pistol to your head and force you to sign a contract, this is duress—undue pressure. A contract never came into existence because there was no meeting of minds. Similarly, if one party has an excessively strong position (a monopoly on the supply of a vital raw material, for example), and if this party uses this position to dictate grossly unfair terms, the agreement is likely to be ruled "unconscionable." An unconscionable agreement is no contract.
Mistake and Fraud
A mistake about the goods or a deliberate fraud can mean that there was no meeting of minds. For example, I could have a contract with you to buy the cargo of the Empress of Verbena for $900. Unfortunately there are two ships of this name: I was selling the cargo of one, and you believed you were buying the cargo of the other. Or if I try to cheat you by saying that the cargo consists of new leather jackets when the jackets are unused but thirty years old—in each case there was no meeting of minds and no contract.
Failure to Follow the Rules of Offer and Acceptance
A contract comes into force when an offer is made by one side and accepted by the other. Complex rules govern this process and they are often broken. What are these rules?
Offer and Acceptance
A contract comes into existence when one party (the offerer) makes an offer, and another party (the offeree) accepts it.
An offer is not always, in international practice, the first move in forming a contract. Often the buyer first makes an inquiry or, more formally, issues a Request for Tender. In line with this inquiry, the exporter makes a tender or an offer, usually the offer is open for a stated period of time. If the buyer rejects the offer, it is clearly dead; as soon as the buyer says "No," the exnorter is no longer bound by the offer.
Normally, of course, buyers do not say “No”- they make a counteroffer: “You want 900. I’ll offer you 600.” In other words, “Yes, if …” What is on the negotiating table now? The counteroffer is a rejection; in effect it kills the original offer. On the table now is not an offer to sell for 900 but an offer to buy for 600. The exporter must now make a choice: accept, reject, or make another counteroffer, for example: “Let’s say 800.” The cycle of offer and counteroffer continues until one side says “I accept” or until negotiations are broken off.
When a dispute arises- especially if there is no written contract- lawyers scrutinize the process of offer and acceptance, trying to discover the exact point, if any, at which a contract came into existence. Since most negotiations deal with many issues at the same time- price, payment, delivery, warranty- deciding if the parties really have a contract and, if so, on what terms, can become an expensive nightmare. This is one main reason to put every agreement into writing and sign it.
THE ENTIRE AGREEMENT CLAUSE
For the Anglo-American exporter, signing a contract amounts to saying everything we discussed so far is now dead- this contract is the final form of our entire agreement. This principle derives from an ancient rule of English law known as the Parol Evidence Rule. For the Continental exporter this is not so: a letter that predates the contract, a memo, the minutes of a meeting- all might have some bearing on the contract,
CONCEPT REVIEW: buttoned up
Verbena Paintshop makes spray-painting equipment. It sells a unit costing $55.000 to Esperanza Respray, a small company that resprays busses and tracks. Delivery (FOB) takes place on 3rd August 2004. The machine is inspected in Esperanza on 18th September 2004. On 10th January, Esperanza Respray notifies the exporter that the compressor in the spraying unit has failed, and that the machine cannot be used. Verbena Paintshop sends a replacement compressor by air; it arrives on 5th February, 2005. On 16th September 2005, Esperanra Respray notifies the exporter that the compressor failed for a second tirne on 20th August and asks for a further replacement. Verbena Paintshop refuses.
Study the Defects Liability provision below. What arguments are the two two sides likely to put forward in making their cases?