Contract for purchase and sale of agricultural goods in reality in mekong delta

w of Vietnam has not clarified the peculiarities of sales contracts of agricultural products in the relationship with property sales contracts and goods sales contracts. 6 - Respect for the implementation of sales contracts of agricultural products is not guaranteed, which raises the issue of the sense of law observance and the enforcement of the law. - It is necessary to complete the law on sales contracts of agricultural products in accordance with the current transaction conditions. 1.3. Basis of research theory and research methods 1.3.1. Basis of research theory The research question is: - What are the legal concepts and characteristics of sales contracts of agricultural products to distinguish them from other goods sale contracts? - What factors affect the amendment of the law on sales contracts of agricultural products? How is the legal relationship on sales contracts of agricultural products prescribed? - What is the current status of law enforcement on sales contracts of agricultural products in Mekong Delta? - How are the current inadequacies in law and practice of implementing the sales contracts of agricultural products overcome? The research hypothesis is set as: - The legal theoretical basis for sales contracts of agricultural products should be studied comprehensively. - The current situation of sales contracts of agricultural products in Vietnam in general and in the Mekong Delta in particular still has many problems and inadequacies from the law to implementation. - It is necessary to find solutions to perfect the law and improve the effectiveness of the implementation of sales contracts of agricultural products in the coming time. The thesis uses the following research theories: - The thesis uses the general theory of contract as the leading throughout in solving the issues of the thesis; Risk theory in general and risks in agricultural activities in particular; The theory of protecting the 7 weak in relation to the strong in order to ensure social justice; Asymmetrical Information theory shows the accessibility and transparency of information among contracting participant; Game theory aims to explain the opportunistic behaviors of participant involved in agricultural contracts. 1.3.2. Research Methods The thesis uses research methods such as: Multidisciplinary approach to legal economics, combining theory and practice; Methods of analysis, synthesis and comparison of jurisprudence; Methods of analysis, comparison and synthesis are most used in the thesis. The thesis is made on the basis of dialectical materialism and historical materialism, based on the guidelines and policies of our Party and State on judicial reform in the current period. Chapter 2 THEORETICAL ISSUES ABOUT AGRICULTURAL GOODS AND LAW ON SALES CONTRACTS OF AGRICULTURAL PRODUCTS 2.1. Overview of agricultural products Vietnamese law recognizes the concept of "goods" and "agricultural products" inconsistently and without specificity. However, the concept of "goods" in the current legislation also does not exclude living things such as animals and plants and includes animals, plants that have not yet been formed, are about to be born, and crop products formed in the future. In term of the view of "agricultural products", the author agrees with the WTO, including basic agricultural products such as rice, coffee, pepper, cashew nuts, fresh vegetables, etc., is suitable for the research subject of the thesis. 2.2. Awareness of trading contracts of agricultural products in the world and in Vietnam 8 The signing of a contract to consume seasonal agricultural products has existed for a long time in the world. Today, all countries determine the importance of producing and consumption of agricultural products through contracts. A sales contract of agricultural products is a form of property and goods sales contract organized in various forms. Depending on the legal system in each country, the relationship of sales contract of agricultural products may be placed in the relationship of civil law, commerce or based on the relationship of the law on goods trading etc. In Vietnam, a sales contract of agricultural products has access to research mainly from an economic perspective. Vietnamese law considers the sales contract of agricultural products as a part of civil and commercial contracts. 2.3. Concept, characteristics and legal form of sales contracts of agricultural products 2.3.1. Concept A sales contract of agricultural products is a specific form of goods sales contract under the provisions of the Commercial Law, whereby the seller is obliged to deliver goods and transfer ownership of agricultural products at the determined time or in the future to the buyer and receipt of payment; The buyer is obliged to pay the seller, receive the goods and own the agricultural products as agreed. In special cases, a sales contract of agricultural products may include a buyer's commitment to support production to ensure product outputs and to ensure the purchase of agricultural products of producers with price, quantity and quality of products as agreed. 2.3.2. Characteristics - The object of the contract is agricultural products - a specific commodity. 9 - The subjects of the contract include: Producers, processing, consuming and exporting enterprises; intermediaries such as traders, etc. - The form of a sales contract of agricultural products includes orally, or in writing or behavior. Setting up a contract is usually on a simple way. - In a sales contract of agricultural products, there may be dependencies, mutual support on obligations. The obligations of one party will correspond to the other, supporting each other. - The purpose of the contract is profit but sometimes just to cover the lives of farmers or to share risks in production and consumption of products. 2.3.3. Legal form of a contract for purchase and sale of agricultural goods A sales contract of agricultural products currently exists the following basic legal forms: a) Simple sales contracts of agricultural products; b) Basic sales contract of agricultural products; c) Contract of production and consumption of agricultural products; d) Sales contracts of agricultural products through the Goods Exchange Service. 2.4. Legal concept and content of a sales contract of agricultural products 2.4.1. Legal concept of sales contract of agricultural products The Law on sales contract of agricultural products is a combination of legal provisions governing the sales contract of agricultural products to ensure that the production, sale, purchase and consumption of agricultural products are made to meet the needs of the participants in the contract, in accordance with standard trading conditions of agricultural products. 2.4.2. The content of the law on a sales contract of agricultural products 2.4.2.1. Entry of a sales contract of agricultural products 10 - The order of entering into a sales contract of agricultural products must not be contrary to the general principles of contractual conclusion; - Participant in a conclusion often have an imbalance in information dominated by buyers. Therefore, the law practice of nations follows the tendency to protect producers. 2.4.2.2. Performance of sales contract of agricultural products In order to implement the a sales contract of agricultural products, participant must be obliged to perform acts in order to make the terms and contents committed in the contract become reality. Obligations in the sales contract of agricultural products are usually divided into two main groups: 1) The corresponding obligation group is directly related to the output of the product and 2) The obligation group is related to the production and consumption process. 2.4.2.3. Breach of sales contract of agricultural products The correct and complete implementation of the sales contract of agricultural products depends greatly on the attitudes and behaviors of the parties. A breach of contract may be an act of intentionally not fulfilling the obligations of selling price, delivery, delayed receipt or non-payment etc. or in an unintended case due to being influenced by outside factors reducing or losing the ability to perform the contract (force majeure event or when the circumstances for contract performance are substantially changed). 2.5. The law source regulates a sales contract of agricultural products In general, different countries around the world have approached the adjustment of agricultural contracts in different ways depending on the legal tradition and the process of application of the law. However, the Civil Code still plays a role as an important framework law to consider arising issues. In Vietnam, the Civil Code applies to most types of contracts, besides the Commercial Law and agricultural contract law can be applied directly. 11 However, in specific legal situations the adjustment may be extended to other specialized laws. 2.6. Factors governing the law on sales contracts of agricultural products. Factors that governing the law on the sales contract of agricultural products may be customs, commercial habits in each region or locality or risk factors for contract performance such as risks in production or consumption market of agricultural products. 2.7. Legal experience of countries in governing sales contracts of agricultural products The thesis has studied the legal experience of some countries that have quite successfully implemented in policies and regulations on agricultural contracts such as Thailand, Indonesia, or developed agricultural countries such as the United States, China. Conclusion of chapter 2 1. In terms of awareness, a sales contract of agricultural products is usually placed in the relationship of an agricultural contract or a production association contract. When viewed from the perspective of the relationship of property, good sales contract, national laws are largely governed by the Civil Code or Commercial Law, some countries may govern differently, but Civil Code and Commercial Law are still the basic source. 2. The sales contract of agricultural products is a special type of goods sales contract because of the particular characteristics of the form, object, obligations, purposes, legal relationship of the participants in the contract. 3. In the sales contract of agricultural products, farmers are the majority, but they are economically disadvantaged and limited in information and the other parties are often the merchants or businesses with economic potential and information advantages. This is a very specific legal relationship that strongly governs the outcome of the contract performance. 12 4. Factors such as customs, commercial habits or production risks and market risks are the major issues that regularly govern the outcome of the sales contract of agricultural products. 5. Some countries in the world have successfully implemented policies and legal regulations on agricultural contracts, which have suggested many lessons and experiences for Vietnam in governing and implementing laws. Chapter 3 CURRENT SITUATION OF VIETNAMESE LEGISLATION ON CONTRACT SIGNING AND IMPLEMENTATION OF SALES ONTRACT FOR AGRICULTURAL PRODUCTS AND RACTICE OF IMPLEMENTATION IN THE MEKONG DELTA IN THE RECENT YEARS 3.1. Current situation of Vietnamese legislation on contract singning and implementation of sales contracts for agricultural products 3.1.1. Current legislation adjustment on sales contracts for agricultural products For a long time, the State has been trying to promulgate a number of documents adjusting the relationship involving in sales contracts of agricultural products such as Decision 80/2002/QD-TTg, Decision 62/2013/QD-TTg and the most recently was Decree 98/2018/ND-CP. However, these documents seem not bo bring effective results yet, the adjustment is still a policy encouraging cooperative development, which is the reason for the current risky and inadequate relationship between production and consumption. 3.1.2. Current legislation situation on ways of signing sales contracts for agricultural productse 3.1.2.1. Verbal contract: 13 The verbal sales contracts for agricultural products only shows the issues of interest at the time of agreement. The belief is the decisive factor affecting to the outcomes of the contract. 3.1.2.2. Written contract: The written sales contracts for agricultural products from simple to complex documents are often employed by enterprises trading agricultural products in consumption or in export. Contracts may be drafted according to a form available for transactions for many customers with the same trading regulations. These days, the form of contract is not bound by the requirements to be notary, authentication or disclosure, registration. 3.1.2.3. Contract by specific acts: The form of signing a sales contract for agricultural products by specific acts can be executed by approving the harvesting acts of the buyer or trader with payment to be settled at the same time... In fact, this is also the form of the contract which results in many risks. 3.1.3. Current situation on procedures for signing sales contracts for agricultural products 3.1.3.1. Proposal for signing of sales contract for agricultural products Regarding sales contract for agricultural products that can be delivered immediately, stages such as offers, negotiations or proposals may not exist explicitly. The proposal for consumption of agricultural products usually comes from the needs of the enterprises trading agricultural products. Farmers will usually receive the consumer's request according to the production cycle. The problem is that whether the farmers have enough capacity to understand the full contents of the offers and whether the offer will bring benefits the producers. 3.1.3.2. Acceptance to sign a sales contract for agricultural products Given that the population in our agricultural production area has limited ability to understand the terms of the contract, it is a popular 14 obstacle to contract signing. The signing of contract in the condition of incomplete information is a mistake, the contract may be invalid pursuant to the Civil Code Law. For this moment, there is no specific legal support measures for farmers prescribed by the laws, on the contrary, there is a law that has multi-faceted support for enterprises (Law 04/2017/QH14). Contracts are based on standard samples are usually applied by consumers. The application of a standard contract form does not mean a form of model contract prescribed by the Civil Code Law. 3.1.3.4. Contents of basic terms of sales contract for agricultural product a) The object of the contract: is the parameters of quantity and quality, product specifications of agricultural products. The requirements for standards of product quality of the market are increasing. b) Prices and payment methods are the decisive factors to the effectiveness of the contract, depending on the fulfillment of the contractual obligations. c) Delivery of agricultural products is an important time to determine the outcome of the contract, usually associated with the harvest time of the product. In addition to the basic terms, the contract may have optional agreements to supplement the contractual rights and obligations. 3.2. Practice of the signing and implementation of sales contract for agricultural products in the Mekong Delta in recent years 3.2.1. Characteristics of agricultural products transaction in the Mekong Delta - Agricultural products are seasonal but transactions are continuous - Agricultural products entering the market must go through intermediate steps, causing high costs 15 - Transactions are established based on trust and private order - Trading of agricultural products goes beyond the scope of the Mekong River Delta region to countries around the world 3.2.2. Signing a sales contract for agricultural products in the Mekong Delta these days 3.2.2.1. The subjects of the sales contract for agricultural products The subjects participating in the sales contract for agricultural products are very diverse, their position in the market may also vary from the position of seller to the position of buyer or vice versa, depending on their roles the market, the key subjects include: - State or legal entity, organization of the State - Commercial enterprises - Co-operatives and production households - Co-operating group, private trader - Traders; - Supply chain members, production links. 3.2.2.2. Form of signing sales contracts for agricultural products Mekong Delta farmers prefer to make agreement with simple procedures to avoid complicated legal provisions. Forms of basic sales contracts for agricultural products and Production and Consumption Contract are often used by processing or exporting enterprises. However, the parties are not fully aware of the nature of the contract that results in an unsuccessful organization. Floating markets in the Mekong Delta are a specific form of transaction. The agreement is verbal and made on the basis of the word "trust". 3.2.3. Current situation of implementation of sales contract for agricultural products in the Mekong Delta - In terms of selling prices, agricultural products’ prices are hard to determined, depending on factors such as production cost, market price and 16 standard of each product. There are two basic methods of calculating prices: fixed and non-fixed prices - In terms of payment: Traders often use the deposit method (30% to 50%) and settlw the remainder after finishing the harvest. Farmers often break their commitment to enterprises to deal with traders due to the downpayment and timely settlement. - The force majeure risks are not paid due attention. When a force majeure event occurs, the handling is also not compliant with the law. Implementing the contract with changed basic circumstances is the new provisions of the Civil Code Law that is still quite strange for not only enterprises but also law enforcement organizations. - Actual situation of breach of the sales contract for agricultural products in the Mekong Delta takes place in all forms of signing, namely these following acts: + Violating the contract when there is a price fluctuation + Violating the contract due to failure to comply with the agreement on product quality and specifications. + Violating the contract due to failure to perform delivery obligations, receive products. + Violating the contract due to late payment, not following the payment deadline. + Violating the contract due to a force majeure event and the contract performance situation are fundamentally changed + Violating the contract due to legal awareness - In case of a dispute, the procedural solutions are often unsuitable for agricultural products because of their potential for loss and degradation in a short time. On the other hand, it is costly and time-consuming, but the effect is not high, so both farmers and consumers often choose to abandon their partners and do not continue to trade next time. 17 The damaged farmers may sue enterprises for compensation. But enterprises often do not intend to sue farmers, because suing thousands of production households is a completely different matter, both expensive and the ability to fulfill the obligation to pay compensation is low. 3.3. Comments on the current legislation situation and the practice of signing and implementing sales contracts for agricultural products in the Mekong Delta 3.3.1. Regarding the current legislation situation on sales contract for agricultural products - Vietnamese legislation tends to regulate contractual relations with the Civil Code Law and the Law of Commerce, but due to the generalization of the law, it is difficult to specifically address many issues arising in the relationship of sales contract for agricultural products. - The form of signing a sales contract for agricultural products is similar to the provisions on the transaction form in the Civil Code Law and the Law of Commerce. Verbal contracts are quite adaptable to the requirements of agricultural products transactions due to their convenience and speed. Written and electronic contracts are becoming more and more popular regarding basic sales contract for agricultural products and Production and consumption contracts. - The law of our country currently has no specific provisions to limit the information imbalance in the signing of sales contract for agricultural products. - Regarding the subject of the contract, it is difficult to distinguish the ownership of agricultural products with the participation of factors of co- operation and investment in production co-operation. 3.3.2. On the actual status of signing and implementing sales contracts for agricultural products in the Mekong Delta - In the relationship of sales contract for agricultural products, the role of enterprises has a decisive factor in the Regional market. Enterprises are 18 strongly influenced by profits, which can lead to commercial acts that cause loss to producers. - Legal entities such as households, co-operative groups, traders, private traders are important in transactions in the Mekong Delta. - The imbalance of market information has a great influence on the production results and consumption, economic benefits of farmers. - Regarding the legal form of the sales contract for agricultural products, there is a lack of attention of the involved parties, when there is a dispute, there are often insufficient legal grounds to protect the legal party. - The poor ability to enforce the sales contract for agricultural products has affected the legal awareness and the observance of law by the participants. - Participants have no awareness of contract respect. Naturally non- compliance with the contract can be considered as a legal phenomenon of concern. - Regarding enterprises, the poor ability to sign, draft and manage the contract performance is also the causes leading to disrespect to the contract. - In case of a dispute, the parties often choose the mechanism of self- settlement, overlooking legal solutions. The cause of this situation is that the Mekong Delta is maintaining a perfectly competitive market, encouraging self-resolution settlement without legal instruments. Conclusion of Chapter 3 1. Several negative and inadequate factors exist in the relationship among the parties involving in sales contract for agricultural products in the Mekong Delta. The State has issued a number of legal documents in order to adjust them but the results of implementation are not effecient. 2. The Mekong Delta host a diverse range of participants, with varied forms of transactions. Research has shown that violations still occur frequently, but the lack of handling attention combined with poor law enforcement mechanisms have made legal solutions ineffective in practice. 19 Chapter 4 SOLUTIONS TO IMPROVE THE LAW ON CONTRACT SIGNING AND IMPLEMENTATION OF SALES CONTRACT FOR AGRICULTURAL PRODUCTS AND TO ENHANCE THE IMPLEMENTATION EFFICIENCY IN THE MEKONG DELTA 4.1. Requests to improve the law on sales contract, enhance the effectiveness and efficiency of the implementation of the law on sales contract for agriculture products - To complete the law on sales contract, enhance the effectiveness and efficiency of the implementation of the law on sales contract for agriculture products pursuant to the viewpoints for agricultural and rural development of the Party and the State. - To improve the effectiveness and efficiency of the implementation of the implementation of the sales contract for agriculture products is the basis for completing the legislation on contracts and sales contracts for products. 4.2. Solutions to improve and enhance the effectiveness and efficiency of the implementation of sales contract for agriculture products 1. The improvement of the law on sales contract for agriculture products shall involve the completion of the legal framework on adjustments to sales contract for agriculture products. 2. A Law governing sales contract for agriculture products is necessary. There are two options of adjustment by