Measures to ensure the performance of obligations in accordance with the Civil Law

In case the obligor fails to perform, improperly performs or fails to fully fulfill the obligations that they have committed, the obligee may apply measures to secure the obligation as agreed or requested by the parties. Competent state agencies intervene to force the obligor to properly perform the committed obligations in order to ensure their interests.

Measures to secure the performance of a civil obligation are contingent and always exist with a main obligation, so they are only applied when the obligor has failed to perform or performed improperly or inadequately. primary obligation to which they have voluntarily committed themselves. Depending on each case and depending on the commitment and agreement, the measures to secure the performance of civil obligations have different handling regulations. The Civil Code and guiding documents prescribe measures to secure the performance of the following civil obligations: mortgage of property, mortgage of property, deposit, deposit, deposit, guarantee, fines for violations. offense. Each measure to secure the performance of a civil obligation has different characteristics and legal nature.

1. Measures to secure the performance of obligations

Article 292 of the 2015 Civil Code stipulates that there are 9 measures to secure the performance of obligations, including: Pledge of property, mortgage of property, deposit, deposit, escrow, title retention, guarantee receive, mortgage, hold property. Measures used to secure the performance of a present, future or conditional obligation. Obligations may be secured in whole or in part by agreement or in accordance with law; if there is no agreement and the law does not specify the scope of security, the obligation is considered to be fully secured, including the obligation to pay interest, fines and compensation for damage. In case of securing a future obligation, the obligation formed during the security period is the secured obligation, unless otherwise agreed. The parties have the right to agree specifically on the scope of the secured obligation and the time limit for performance of the secured obligation, unless otherwise provided for by law. Once a future obligation is formed, the parties are no longer required to re-establish security for that obligation.

2. Civil law provisions on measures to secure the performance of obligations

According to the principles specified in the 2015 Civil Code, the law respects the agreement of the parties when entering into a contract, as long as the agreement does not violate the prohibition of law or violate social ethics. . Therefore, the scope of security measures is determined by agreement of the parties, the parties have the right to agree on security measures for the performance of obligations. Assets used for security can be existing assets or assets formed in the future. Existing assets are assets that have been formed at the time the security transaction is entered into. Assets formed in the future are assets owned by the securing party after the time when the obligation is established or the secured transaction is entered into. Assets formed in the future include assets already formed at the time of entering into the security transaction, but after the time of entering into the secured transaction, it will be owned by the securing party. The value of collateral assets when a property is used to secure the performance of many civil obligations. An asset may be used to secure the performance of many civil obligations if its value at the time of establishment of the security transaction is greater than the sum of the values ​​of the secured obligations, unless otherwise agreed. or otherwise provided by law.

Only the work that must be performed is the subject of security measures (in guarantees and mortgage measures). Security measures for the performance of an obligation are essentially an illegitimate relationship: The obligee (the obligee) can only satisfy its rights through the obligee’s performance of the obligation. guarantor or secured party). When the secured party fails to perform or improperly performs its obligations before the secured party, it will infringe upon the legitimate interests of the secured party. At this time, the interests of the secured party can only be satisfied through the performance of obligations on behalf of the securing party. Therefore, when the subject matter of the security measures is work, it must be the work to be performed, for example, the guarantor’s performance of a job for the obligee as agreed.

The nature of security measures are civil contracts, so the validity of security measures must comply with the provisions on validity of civil contracts under Article 401 of the Civil Code 2015: “The contract is assigned A legal combination is in effect at the time of its conclusion, unless otherwise agreed upon or otherwise provided by relevant law”.

When considering the relationship of validity between the main contract and the sub-contract, the Civil Code stipulates: a main contract is a contract whose validity does not depend on the sub-contract. A sub-contract is a contract whose validity depends on the validity of the main contract (clauses 3 and 4, Article 402 of the Civil Code 2015). If the main contract is invalid, the sub-contract will be void. However, in Clause 2, Article 407 of the 2015 Civil Code, “The invalidity of the main contract will terminate the sub-contract, unless the parties have agreed that the sub-contract can replace the main contract. This provision does not apply. for measures to secure the performance of civil obligations. So with this provision we see that, in case a civil obligation is accompanied by a security measure but that civil obligation is invalid, the security measures are not necessarily invalid.

According to the provisions of Article 299 of the Civil Code 2015, the cases in which the security property can be handled includes: Due to the due date for performance of the secured obligation but the obligor fails to perform or improperly performs the obligation; the obligor must perform the secured obligation ahead of time due to a breach of the obligation as agreed upon or prescribed by law; other cases as agreed by the parties or provided for by law.

The Civil Code 2015 does not set forth the principles for handling the security property, but only stipulates the obligation to notify the disposal of the security property of the secured asset disposer prior to the disposal of the security property in Article 300. This notice must be in writing and must be given a reasonable period of time to the guarantor and the jointly secured parties. In case the party handling the security property fails to notify the handling of the security property, leading to damage to the secured party and the secured parties, it must compensate for the damage.

Depends on the content of each specific obligation relationship and the conditions of the subjects participating in that relationship. Most safeguards have the following common characteristics:

  • Securities are in addition to the primary obligation. Security measures do not exist independently but are always dependent on and attached to a certain obligation.
  • Security measures are intended to enhance the responsibilities of the parties in civil relations, especially to enhance responsibility in contracting of the two sides. Each security measure has its own characteristics and properties, so the application of any measure must be considered and evaluated by both parties.
  • The extent of the security of the security measures does not exceed the scope of the obligation specified in the content of the principal relationship, that is, the party security may only use security measures to secure part or all of the obligations contained in the contract.
  • Measures to secure an obligation are only applied when there is a breach of the obligation or as agreed between the two parties.

The above is the advice of Khoa Tin regarding measures to ensure the performance of obligations under civil law.

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