The use of extrinsic evidence for contract interpretation under Vietnamese Law

Bizar Male

Does “extrinsic evidence” exist under Vietnamese law?

Vietnamese law does not specifically deal the concept of “extrinsic evidence”. Extrinsic evidence is usually understood as evidence relating to a contract but not appearing on the face of the contract because it comes from other sources, such as statements between the parties or the circumstances surrounding the agreement.

However, Article 404.1 of the Civil Code 2015 provides that:

Where a contract contains terms and conditions which are unclear, the interpretation of such terms and conditions shall be based not only on the wording of the contract but also on the intentions of the parties which are expressed before and at the time of preparation and performance of the contract.”

Accordingly, the Civil Code 2015 appears to allow the use extrinsic evidence as a source of the contract interpretation.

When can extrinsic evidence be used?

In order to rely on Article 404.1 of the Civil Code 2015 for the use of extrinsic evidence, an “unclear” term in the contract must be identified. Article 404.4 of the Civil Code 2015 provides that the terms of a contract must be interpreted in relation to each other so that the meanings of the terms conform with the entire content of the contract.

When two contract terms are determined to not conform with each other, such terms should be considered as ‘unclear’, and, therefore, according to Article 404.1 of the Civil Code 2015, the extrinsic evidence can be relied on to interpret such ‘unclear’ terms.

How to determine intentions of the parties?

The intentions of the parties as provided under Article 404.1 of the Civil Code 2015 should include both (i) intention of each party, and/or (ii) mutual intention of all parties. This is because the Civil Code 2005, which is replaced by the Civil Code 2015, only refers to mutual intention of parties to interpret the contract when the contract term is unclear. The change from ‘mutual intentions of parties’ under Article 409.1 of the Civil Code 2005 to ‘intentions of the parties’ under Article 404.1 of the Civil Code 2015 suggests that the intention of each party should be also considered during the interpretation of the contract under the Civil Code 2015.

Vietnamese law does not provide a mechanics to determine mutual intention of the parties to a contract. However, in our view, there may be two ways to determine “mutual intention” of the parties:

(1) first, there is agreement between the parties that such intention is mutual intention of the parties. This is because the word “mutual” (chung) suggest that the relevant intention should be agreed by the parties; or

(2) second, the court will interpret intention of each party to the contract and find mutual intention of the parties (being the intention which both parties have based on interpretation of the court). This interpretation is supported by Article 404.1 of the Civil Code 2015. In particular, Article 404.1 of the Civil Code 2015 provides that contract will be interpreted based on the intention of the parties which could include intention of each party to the contract not just “mutual intention ” of the parties as provided in Article 404.5 of the Civil Code 2015.

Example using extrinsic evidence

In his book on Vietnamese contract law, Dr. Do Van Dai has given examples where the court used extrinsic evidence to establish intention of a party to the contract. For example, when interpreting various house selling contracts, the court has relied on:

(1) the advertisement posted by the seller before the sale of the house to establish that the seller intended to sell all of the house not part of the house as the seller argued;

(2) the fact that the seller did not raise objection when the buyer applies to pay for land rental for the surrounding land of the house after the sale contract is signed to establish that the seller intended to sell both the house and the surrounding land (not just the house);

(3) the fact that the seller does not specify in the contract that the seller only sells a part of the house to establish that the seller intended to sell all of the house not part of the house; or

(4) the fact that the sale price of the house is consistent with market valuation of the whole house to establish that the seller intended to sell all of the house not part of the house.

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