Reputational damage arising from breaches of commercial contract under Vietnamese law

Bizar Male

In Vietnam, it is not common to see the aggrieved party claiming for damage which causes harm to its reputation (Reputational Damage) due to breaches of commercial contracts by the defaulting party. However, in principle, Reputational Damage due to breaches of a commercial contract should be claimed and recovered under Vietnamese law for the following reasons:

  • Under Article 419.3 and 361.3 of Civil Code 2015, an aggrieved party may claim for moral damage arising from a breach of contract, which includes, among others, moral losses caused by infringement of reputation;

  • Reputational Damage may be considered as “actual and direct loss” under Article 302.2 of Commercial Law 2005 if the aggrieved party has actually incurred the loss of reputation directly arising from a breach of contract by the defaulting party;

  • The major change of one of the grounds to claim for damage from “there occurs material damage” under Article 230.2 of Commercial Law 1997 into “there occurs actual damage” under Article 303.2 of Commercial Law 2005 should arguably be interpreted to mean that claimable damages under Commercial Law 2005 should include both material damage and moral damage; and

  • This view is also supported by Dr. Do Van Dai under his book “Contract Law of Vietnam – Court judgments and Comments” (Vol 2, page 494).

That said, one could still argue that only individuals could make a claim for Reputational Damage. This is because Article 361.3 of Civil Code 2015 stipulates that moral damage is moral losses caused by harming life, health, honour, dignity, reputation and other personal interests (lợi ích nhân thân khác) of a subject. The words “other personal interests” suggest that the moral damage under Article 361.3 is associated with personal interests which should be personal rights (quyền nhân thân) of individuals. Under the Civil Code 2015, personal rights are civil rights personal to each individual, including, among others, the right to live, right to safety of life, health and physical body, and the right to protection of honour, dignity and reputation.

Both the Commercial Law 2005 and the Civil Code 2015 do not provide specific guidance on how to assess moral damage in general and Reputational Damage in particular arising from a breach of contract. Therefore, when assessing Reputational Damage to an aggrieved party under a contract, the court may need to apply by analogy the regulations on compensation for non-contractual damages under Resolution 3/2006. This view is also supported by Dr. Do Van Dai under his book “Commentaries on new points of Civil Code 2015”.

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