When unilaterally terminating an authorization contract, the authorizing party or the authorized party must pay attention to the authorization remuneration, agreements of the parties, and requirements for the authorization contract to ensure that it does not violate the law.
1. Forms of authorization contract
An authorization contract, Power of Attorney, or authorization letter is an agreement between the authorizing party and the authorized party. Accordingly, the authorized party will perform one or several certain tasks on behalf of the authorizing party. The parties can agree on authorization remuneration, duration, and even cases of unilateral termination of the authorization contract.
Vietnamese civil law does not specifically regulate the form of authorization contracts. In practice, authorization contracts can be established in writing or orally. However, for authorization transactions with important content, the parties often establish them in writing, such as authorization to manage assets, to receive payments, or authorization transactions to work with competent government agencies.
In addition, based on the Law on Notary 2014, the authorizing party and the authorized party are not required to notarize the authorization contract. Furthermore, if one party unilaterally terminates a notarized authorization contract, the notary will only modify or cancel the notarized authorization contract when the parties have an agreement or commitment. However, from a practical perspective, if an authorization contract is notarized, its trust and legality are enhanced. At this time, in addition to the authorization contract confirmed by both parties, there is also recognition of the authenticity and legality of the notary.
Some legal exceptions requiring authorization contracts to be made in writing include:
- Authorization to request a copy of the civil status extract, issue a certificate of marital status, or request registration of civil status matters (Circular 40/2020/TT-BTP);
- Authorization to establish a surrogacy transaction.
Specifically: The husband or wife who requests a surrogate pregnancy to authorize each other or the surrogate husband and wife authorize each other to establish a surrogacy agreement, the authorization must be made in writing and notarized (Clause 2, Article 96 of the Law on Marriage and Family 2014).
Although Vietnamese Law requires ensuring the formality of the authorization contract as above, if one party or parties have performed at least two-thirds of the obligations in the transaction, then at the request of one party or parties, the competent Court issues a decision recognizing the validity of that transaction. However, compliance with formalities is a way to ensure the rights and interests of the parties and avoid unfortunate disputes that may occur.
2. Unilateral termination of the authorization contract
Unilateral termination of an authorization contract means that the authorizing party or the authorized, by one party’s own will, party terminates the authorization contract established by the parties.
According to Article 569 of the Civil Code 2015, the unilateral termination of the performance of the authorization contract is divided into cases corresponding to the groups specified as follows:
2.1 As regards the authorizing party
- In case of remuneration authorization, the authorizing party has the right to unilaterally terminate the performance of the contract at any time, but must pay remuneration to the authorized party in proportion to the work performed by the authorized party and compensate for damage;
- In case of authorization without remuneration, the authorizing party may terminate the performance of the authorization contract at any time, but must notify the authorized party in advance within a reasonable time.
In addition, the principal must notify in writing a third person about the termination of the performance of the contract by the principal; if not notified, the authorization contract with the third person shall remain in force. This means that the principal is still responsible for any joint or agreed liability caused by the authorized party to the third party unless the third party knows or ought to know that the authorization contract has been terminated.
2.2 As regards the authorized party
- In case of authorization without remuneration, the authorized party has the right to unilaterally terminate the performance at any time, but must notify the principal in advance within a reasonable time;
- In case the authorization has remuneration, the authorized party has the right to unilaterally terminate the performance of the contract at any time and must compensate the principal if any.
It should be further noted that the authorizing party and the authorized party have the right to unilaterally terminate the authorization contract according to the cases agreed upon by the parties in the authorization contract.
Thus, to unilaterally terminate the authorization contract in accordance with the law and limit legal risks that may arise, the authorizing party and the authorized party need to clearly understand the authorization transaction between the parties with recorded rights to be unilaterally terminated or not. In addition, whether to receive remuneration will also affect the choice and responsibility of each party when unilaterally terminating the authorization contract.
