Cases of relative invalidity of civil transactions

A civil transaction is a legal act that consciously expresses the will of the subjects in a civil legal relationship in order to establish, change or terminate civil rights and obligations. Civil transactions are one of the most important and popular bases rising to civil legal relations. For a civil transaction to have legal effect, such a transaction must satisfy one of the conditions prescribed by law. According to the provisions of Article 131 of the 2015 Civil Code, a civil transaction is considered valid when the following four conditions are met:

1. Participants in the transaction have legal personality and/or legal capacity in conformity with such transaction
2. Participants in the transaction act entirely voluntarily;
3. The purpose and contents of the transaction are not contrary to the law and/or social ethics.
4. The forms of civil transactions shall be the conditions for its effectiveness in cases where it is so provided for by law.

In principle, a civil transaction that fails to satisfy one of the four conditions above will be considered invalid (according to Article 122 of the Civil Code). However, a question arises that when civil transactions violate which conditions, the order of absolute invalidation shall apply, and which conditions are violated, the order of relative invalidation shall be applied? Within the scope of this article, we will analyze the relatively invalid civil transactions.

Relatively invalid civil transactions are usually civil transactions that violate legal rules with the aim of protecting the legal rights and interests of a defined entity (individuals, legal entities, …) .Civil transactions are considered to be absolutely invalid in the following cases:

1. When a civil transaction is entered into by a minor from full 6 years old to under 18 years old (with partial civil act capacity);
2. When the transaction is established by a person with limited civil act capacity;
3. When the transaction is established by mistake;
4. When a party is involved in the establishment of a transaction due to refusal, threat or coercion;
5. When the person who establishes the transaction is not aware of his behavior.

Characteristics of the relatively invalid civil transactions

First, the invalidation order of the transaction. Relatively invalid civil transactions are not automatically considered invalid but should only be invalidated when certain conditions are met, that is (1) when there is a petition from a person with related rights and interests, and (2) a decision of the court.

Second, the time limit requires declaring the transaction invalid. The statute of limitations for initiating a lawsuit requesting the court to declare a civil transaction invalid is (02) two years from the date the civil transaction is established.

Third, the legal effect of the transaction. A civil transaction subject to relative invalidity has legal effect until it is declared invalid. The provision of a statute of limitations of 2 years to request a declaration of an invalid civil transaction means that during that period of time, the civil transaction is valid until it is declared invalid under a court decision; and when the statute of limitations for initiating a lawsuit has expired, the civil transaction will not be contested for validity anymore.

Fourth, the nature of the court’s decision. In both cases of absolute and relative invalidity, the court can decide to declare the transaction void. For a relatively invalid civil transaction, the court’s decision is the only basis for making the transaction invalid. The court’s decision is judgmental. The court shall proceed with the settlement of the case at the request of the parties or their legal representatives. The requesting party is obliged to prove before the court the basis of the request.

Fifth, the legal consequences of civil transactions are void. According to the provisions of Article 131 of the Civil Code:

“1. An invalid civil transaction shall not give rise to, change or terminate any civil rights and obligations of the parties as from the time the transaction is entered into.

2. When a civil transaction is invalid, the parties shall restore everything to its original state and shall return to each other what they have received.

If the restitution is not able to be made in kind, it may be paid in money.

3. A bona fide person in receiving yield and/or income is not required to return such yield and/or income.

4. The party at fault which caused damage must compensate therefore.

5. The settlement of consequences of invalid civil transactions regarding personal rights shall be prescribed in this Code and relevant laws”.

Depending on each specific case of violation, the court can force the parties to bear the consequences in one of three different ways:

1. Bilateral restitution: Both parties must return to each other what has been received from the other party;
2. Unilateral restitution: One party will be refunded the transaction property and the other party’s transaction property (the violating party) will be confiscated to the public fund; 
3. Confiscation of the whole: All trading assets of both violating parties will be confiscated to the public fund. This sanction is usually applied to civil relations in criminal cases.

For civil transactions that are relatively invalid, the court only applies one of two methods of refunding bilaterally or unilaterally. Bilateral refund is usually applied to cases of invalid transactions established and performed by minors, people who have lost their civil act capacity, or have limited civil act capacity; by mistake; because the creator is not aware of his behavior. The unilateral refund method is often applied to civil transactions that are invalid due to deception or threats.

In addition, depending on each case, the parties have not performed or performed a transaction, but a relative civil transaction will lead to different consequences on a number of issues as follows:

In case the civil transaction has not been performed

Relatively invalidated transaction as soon as a competent court accepts the involved party’s request to determine that the transaction is invalid, the transaction will terminate immediately, without giving rise to rights and obligations to any party. , the parties do not perform the transaction. When an invalid transaction has not been performed, it has not yet generated legal consequences for the parties to the transaction, so the problem of damage occurs, requiring recognition of the parties’ agreement and protection of rights. the benefit of a bona fide third party does not arise in this case.

In the case of civil transactions that have been, are being performed

In this case, the issue of property return, damage occurred, the agreement of the parties, protection of the interests of an honest third party all need to be raised to ensure thorough settlement of legal consequences. invalidity of civil transactions.

Above is our consultancy about this issue. If you need more detailed advice and answers as well as how to access this service, please contact directly the Deputy Director of Sales: Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com

Wishing you and your family good health, peace and success!

Best regards!