Source of the Case: Precedent 25 – Case No. 79/2012/DS-GDT

Overview:

For a contract to be formed which includes a deposit agreement the depositary has to perform its obligations for a period of time. Otherwise, if the depositary fails to perform its obligations, it must pay a fine. Under some certain circumstances, where the depositary is unable to fulfill its obligations due to objective reasons, the depositary may not be forced to pay the fine to avoid unjust enrichment.

Material Facts:

On May 12, 2019, Phan Thanh L (“L”) entered into a real property purchase agreement (“Agreement”) with Truong Hong Ngoc H (“H”) for the purchase of a parcel of land and a house in land (“Land”) which is obtained by a successful auction at the Office of the Civil Judgment-Executing Agencies of Ho Chi Minh City. L guaranteed the entering into of the Agreement by payment of a deposit. Accordingly, he made a deposit of VND 2 billion and then waited for H’s performance to obtain the House Ownership Certificate (“HOC”) after the auction. Notwithstanding L’s expectations, H was unsuccessful in fulfilling her obligations as agreed in time, due to the fault of settling the relevant procedures of the Office of the Civil Judgment-Executing Agencies of Ho Chi Minh City. L then brought an action against H that H must return the deposited property and pay a fine to her. The Trial Court found in favor of L, and the judgment was reserved by the Court of Appeals. For fair remedy, the Supreme Peoples’ Court of Cassation (“Court of Cassation”) found in favor of H at the final stage.

Judicial Reasoning and Legal Application:

The Court of Cassation determined that H failed to enforce the deposit agreement. However, H was unable to perform the contractual obligations due to substantial interference of the Office of the Judgment-Executing Agencies of Ho Chi Minh City through the delayed of the procedures to grant H the HOC. The Court of Cassation concluded that due to objective reasons, despite H’s failure to perform the contractual obligations, there was no breach of promises, to avoid unjust enrichment imposed by the Civil Code of Vietnam.

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