DISTINGUISHING BETWEEN VOID CONTRACTS AND CONTRACT CANCELLATION DUE TO BREACH

Inquiry: Hello Lawyer, I have a question regarding how to distinguish between a Void Contract and a Contract Cancellation due to a breach of obligations. I look forward to your response. Thank you.

Response: Thank you for sending your inquiry to Luật Kim Bảng. Regarding this issue, we provide our legal perspective as follows:

Legal Basis: Articles 122 to 131 and Articles 423 to 427 of the Civil Code 2015.

1. Similarities:

Both are ineffective from the time the parties entered into the contract.
Both result in the parties returning what they have received to each other.
Both terminate contracts that are currently being performed.
Both may give rise to liability for compensation.

2. Differences:

Criteria	Void Contract (Hợp đồng vô hiệu)	Contract Cancellation due to Breach (Hủy bỏ hợp đồng)
Legal Basis	Articles 122 to 131, Civil Code 2015.	Articles 423 to 427, Civil Code 2015.
Grounds	Violation of validity conditions imposed at the time of signing: – Content/purpose violates legal prohibitions or social morality. – Falsification to conceal another transaction. – Established by minors or persons lacking civil capacity. – Based on confusion, deception, threats, or coercion. – Non-compliance with mandatory forms.	Not due to initial validity conditions. Occurs during the implementation phase: – One party breaches terms agreed upon as grounds for cancellation. – Serious breach of contractual obligations. – Delay in performance. – Inability to perform. – Loss or damage of assets.
Circumstances	Violations of law during the signing process.	Serious violations during the performance process.
Legal Consequences	Parties return what was received, restoring the original state: – No civil rights/obligations arise from the start. – No agreement on breach penalties or damages is recognized.	Parties return what was received after deducting reasonable costs for performance and asset preservation: – Parties are released from obligations except for breach penalties, damages, and dispute resolution clauses.
Scope	Can be void in its entirety or partially void (if the void part does not affect the rest of the contract).	The contract is canceled in its entirety.
Procedure	Must be declared void by a Court decision.	Does not necessarily require court intervention; the canceling party only needs to notify the other party.

The above information is the consultation from LUẬT KIM BẢNG. For further details, please contact us directly via Phone/Zalo: 034.540.6523.

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