During the execution of the contract, compliance with the payment terms in the contract is a key factor in maintaining stability and trust between the parties. However, in reality, there are quite a few cases where debts are not paid according to the contract, causing serious consequences and affecting the rights of the party receiving the payment.

So, how does the law regulate the case of paying debts according to the contract? NPLAW will provide consultation to address your inquiries.

I. The current situation of not paying debts according to the contract

Customers not paying their debts according to the contract is a common situation nowadays as the economy is in a gradual decline, and companies cannot manage their cash flow in time to pay their customers. Delays or not paying debts somewhat affect and cause concern for creditors.

Some signs of not paying debts in the current situation include:

- Late or overdue payments: The debtor often extends the payment period far beyond the deadline specified in the contract.

- Not paying part or all of the debt: In some cases, the debtor intentionally fails to fulfill their payment obligation without providing a reasonable excuse.

- Delaying or evading payment obligations: The debtor uses reasons such as "facing financial difficulties" or "reviewing the contract terms" to delay.

- Deliberately not paying despite having the ability to pay: Some organizations and individuals intentionally exploit commercial credit or legal loopholes to avoid payment.

II. Understanding not paying debts according to the contract

1. What is not paying debts according to the contract?

Not paying debts according to the contract is understood as the situation where one party does not pay the entire or part of the amount committed in the contract on time, fully, and according to the agreed conditions.

2. What is debt? Classification of debts:

Debt is the result of transactions involving the buying and selling of goods, services, or payment obligations between individuals or organizations. When an individual or organization cannot pay the amount due in the payment duration, that amount will become a debt. Debts often arise during transactions and dealings between parties and can be transferred to the next payment duration to fulfill the payment obligation.

Debt arises when an individual or enterprise has transactions involving the exchange, purchase, or sale of goods and services with another individual, organization, or authority, which they are obligated to pay in that payment duration but must transfer to the next payment duration; that amount is called debt.

There are two common types of debts: receivables and payables. Specifically:

- Payable is the amount of money that an organization or individual owes and must pay to partners who have provided goods or services. Debt management is an important part of business operations, requiring monitoring and ensuring timely payments. Helps maintain good relationships with partners and ensures financial stability and the reputation of the organization or individual in the market.

- Receivable is the amount of money that an enterprise has not yet collected from selling goods or providing services to customers. Managing receivables so they are resolved on time is an important factor in business operations. From there, it helps ensure financial stability and attract capital for the business.

III. Legal regulations on not paying debts according to the contract

1. The right to file a debt collection lawsuit and apply remedies for specific performance in the case of not paying debts according to the contract

* Right to file a debt collection lawsuit 

Regarding the right to file a debt collection lawsuit, pursuant to Article 463 of the Civil Code 2015, an asset loan contract is a contract between the parties whereby the lender transfers the asset to the borrower; when the payment is due, the borrower must return the same type of asset to the lender in the correct quantity and quality and only pay interest if agreed upon or required by law.

Article 466 of the Civil Code 2015 details the borrower's debt payment obligations. If the borrowed asset is money, it must be repaid in full when due; if the asset is a physical object, it must be returned in the same type, quantity, and quality, unless otherwise agreed. If the borrower fails to fulfill their debt payment obligation, the lender has the right to file a debt collection lawsuit with the competent authority to protect their legal rights and interests.

* Applying remedies for specific performance

Specific performance of the Contract is regulated pursuant to Article 297 of the Commercial Law 2005, whereby the party that has been violated in the payment obligation has the right to demand the violating party to fulfill the contract properly. Thus, the party that has been violated in the payment obligation has the right to request the violating party to fulfill the contract, meaning they must pay the full amount as regulated in the contract.

2. The documents required when filing a lawsuit for not paying debts according to the contract

When filing a lawsuit for not paying debts according to the contract, the plaintiff needs to prepare several legal documents to prove their rights and ensure the lawsuit proceeds smoothly, specifically:

- Lawsuit petition

- Related contracts: copy of the original contract, contract appendices

- Documents proving the payment obligation such as the Goods/Services Delivery Receipt; Invoice, payment documents (if any);

- Documents proving non-payment: Debt ledger; Payment reminder notice; Meeting minutes or meeting records; …

- Documents proving non-payment: list of Debt; Payment reminder notice; minutes of work or minutes of meeting; …

- Documents proving the damage (if any): Financial statements or income and expenditure reports; Evidence of losses; …

IV. Answering questions related to not paying debts according to the contract

1. Measures to take when not paying debts according to the contract

In the event that the customer does not pay the debt according to the contract, meaning the customer has violated the payment obligation, the enterprise can apply commercial remedies pursuant to the Commercial Law 2005. The regulations are as follows:

- Applying remedies for specific performance: Specific performance is regulated by Article 297 of the Commercial Law 2005, where the party that has been violated in the payment obligation has the right to demand the violating party to fulfill the contract properly, meaning they must pay the full amount as regulated in the contract.

- Applying remedies for violations and compensation for damages: Enterprises can only apply remedies for violations when a violation occurs and both parties have agreed to violation remedies clauses in the contract. The enterprise can apply remedies for compensation if a violation occurs, damage occurs, and there is a causal relationship between the violation and the damage that occurs.

- Contract termination: The enterprise can apply contract remedies if a violation occurs that the parties have agreed is a condition for contract termination or if one party fundamentally violates the obligations of the contract.

- Dispute resolution: In the event that commercial remedies have been applied but the customer still fails to fulfill their payment obligations, the enterprise has the right to file a lawsuit with the dispute resolution authority.

- Enterprises can apply the following dispute resolution methods: Negotiation and mediation; Resolving disputes through the Court or Arbitration.

2. Is it allowed to demand payment for delayed debts?

Pursuant to Article 357 of the Civil Code 2015 regarding responsibility for delayed payment obligations, if the party with the payment obligation delays payment, that party must pay interest on the delayed amount corresponding to the delay duration.

Thus, if the party obligated to pay the debt delays payment, the party entitled to receive payment has the right to demand the delayed payment and charge interest on the delayed amount corresponding to the duration of the delay.

V. Consulting services and execution of procedures related to not paying debts according to the contract

Above is all the detailed information that NPLaw provides to assist esteemed customers with the issue of not paying debts according to the contract. In case you need consultation and assistance with procedures related to not paying debts according to the contract, please contact NPLaw immediately for direct consultation and guidance from our team.