1

PHẦN I: CONTRACT LAW (Luật Hợp đồng)......................................................... 4

1. Formation of contract (Giao kết hợp đồng)...........................................................4
What are the essential elements required to form a valid contract in U.S. and
Vietnamese law? How do the two systems differ in their requirements (e.g.,
consideration vs. mutual consent)?......................................................................4
Under U.S. contract law, what constitutes consideration, and why is it
necessary for a valid contract? Compare with Vietnam's approach.................... 5
How do UCC rules on contracts for the sale of goods address open terms (e.g.,
price, delivery), and how do U.S. courts resolve issues with missing or
unspecified terms? Khôi.................................................................................... 5
2. Validity of contract (Hiệu lực của hợp đồng)........................................................7
How does the U.S. legal system distinguish between void, voidable, and
unenforceable contracts?..................................................................................... 7
What is the difference between void, voidable, and unenforceable contracts?
Nghi Textbook p253...................................................................................... 7
What is the doctrine of estoppel in U.S. contract law, and how does it function
to prevent a party from denying a representation or promise?............................ 8
3. Breach of Contract (Vi phạm hợp đồng)............................................................... 9
What constitutes a fundamental (material) breach of contract under U.S. law,
and what are the legal consequences of such a breach? Compare with Vietnam's
approach...............................................................................................................9
4. Contractual Remedies (Chế tài Hợp đồng)........................................................... 9
How do liquidated damage clauses function, and under what circumstances are
they enforceable? Compare with Vietnam's approach.........................................9
What are the legal consequences (hậu quả pháp lý) of contract avoidance
(rescission: đưa lại vị trí ban đầu)? Compare with Vietnam's approach. Tiên 10
Chapter 12: Dan was hired by Laura to pave floor tiles for her 5-storey house.
Dan's work was so defective that the floor had to be replaced, causing
considerable delays in completion of the work. As a result, Laura had to delay
their plans to lease their house. Please decide if Laura shall be entitled to
damages for the cost of replacing the floor and to claim for loss of the rent as
remedies against Dan's failure to perform his obligations?Tiên........................ 11
5. Risk Allocation in Contracts (Phân bổ rủi ro).....................................................13
I. Contractual Mechanisms (Active Allocation)........................................................... 13
II. Default Legal Doctrines (Allocation by Law)...........................................................13
To manage unforeseen events (e.g., natural disasters, pandemics, wars), parties can
allocate risks through two main mechani[Link]
Chapter 14: Karen, who was disabled and required the use of crutches, was injured
when the tip of her crutch came into contact with a chip lying on the floor of an area
occupied by BestWood Co., Ltd., in a shopping centre in New South Wales. She
sued Best Wood on the grounds that there were probabilities the chip had dropped
 2

more than twenty minutes before her fall................................................................... 14

6. Discharge of Contract (Chấm dứt Hợp đồng)..................................................... 15
What are the primary ways a contract may be discharged under U.S. law, and
what are the legal consequences of discharge?..................................................15
7. Capacity to Contract (Năng lực giao kết)............................................................17
How do U.S. and Vietnamese laws treat contracts entered into by minors?..... 17
PHẦN II: AGENCY AND BUSINESS ORGANIZATIONS (Đại diện & Tổ chức
Công ty)........................................................................................................................17
1. Agency Relationship and Duties (Quan hệ Đại diện và Nghĩa vụ).....................17
What are fiduciary duties in U.S. agency law, and how do they govern the
relationship between agent and principal?.........................................................17
Chapter 15: Anna, the secretary of Fiore Co., Ltd., contracted with a hire-car
company (Panorama Co., Ltd.,) to hire three expensive cars, ostensibly to
transport Fiore's clients from Malpensa airport to the company's offices. In fact,
Anna had no actual authority to enter into such agreements and was using the
cars for her own purposes. The hire-car company sued Fiore Co., Ltd., to
recover the hiring charges..................................................................................18
2. Separate Legal Personality (Tư cách pháp nhân độc lập)................................... 19
What is the legal concept of separate legal personality, and how does it apply to
different business entities in U.S. and Vietnamese systems?............................ 19
What is the concept of the corporate veil, and how does piercing the corporate
veil occur? What factors do courts consider when determining whether to apply
it? Nghi - Chap 39..............................................................................................20
3. Directors’ Duties and Liability Standards (Nghĩa vụ Giám đốc)........................21
What is the business judgment rule (nguyên tác phán đoán kinh doanh) under
U.S. law, and how does it protect corporate directors and officers from
liability?............................................................................................................. 21
What is the fiduciary duty of loyalty, and how does it apply to corporate
directors and officers?An...................................................................................22
Case Study: Guth v. Loft, Inc............................................................................ 22
4. Tax Treatment of Business Entities (Xử lý Thuế)...............................................23
How are LLCs taxed under U.S. law, and what flexibility do business owners
have in choosing their tax treatment? Compare with Vietnam’s approach to
LLC taxation......................................................................................................23
5. Partnership Structures (Cấu trúc Công ty Hợp danh)..........................................24
What are the key legal features of general partnerships and limited partnerships
under U.S. law? Compare with Vietnam’s partnership models......................... 24
6. Corporate Governance Structures (Cấu trúc Quản trị)........................................25
What are the advantages and disadvantages of forming a Limited Liability
Company (LLC) compared to a corporation? (Chap 38, 39) Dương................ 25
Why is a Joint-Stock Company (JSC) in U.S. corporate law often considered a
hybrid entity, combining features of both partnerships and corporations?
 3

Compare with Vietnam's approach.................................................................... 27

7. Limited Liability Principle (Nguyên tắc Trách nhiệm Hữu hạn)........................ 27
How is liability allocated among partners in both U.S. and Vietnamese law?
Are limited partners shielded from personal liability in the same way?........... 27
8. Equity and Ownership Structure (Cấu trúc Vốn & Sở hữu)............................... 28
What are the main differences between common stock and preferred stock in a
corporation? Compare with Vietnam's approach...............................................28
III. Common Law vs. Civil Law Systems................................................................. 29
What are the fundamental differences between common law and civil law legal
systems in terms of judicial decision-making and statutory interpretation? Use
the Vietnamese and U.S. legal systems to illustrate.......................................... 29
How do courts in common law and civil law systems treat precedent and case
law? What roles do judges play in shaping legal doctrine?...............................29
IV. Dispute Resolution................................................................................................ 30
What are the main differences between arbitration and court litigation in
resolving business disputes?.............................................................................. 30
Under what circumstances can a party challenge an arbitral award in U.S.
courts?................................................................................................................30
2. Intellectual Property Framework...................................................................................31
Distinguish types of IP protection and basic mechanisms to obtain them..................31
Intellectual Property (IP) law protects intangible creations of the human intellect. To
obtain protection, businesses must understand the four primary mechani[Link]
3. Constitution and "Freedom of Business"......................................................................32
Constitutional Principle: Under Article 33 of the 2013 Constitution of Vietnam, the
fundamental principle of economic freedom is established: "Everyone has the right to
freedom of enterprise in industries and trades not prohibited by law." * Statutory
Implementation: This right is further codified in Article 7 of the Law on Enterprises,
granting businesses the autonomy to choose their business lines, corporate forms,
and geographic operations. However, this freedom is not absolute; it is subject to
legal boundaries, specifically:.....................................................................................33
 4

PHẦN I: CONTRACT LAW (Luật Hợp đồng)

1. Formation of contract (Giao kết hợp đồng)

What are the essential elements required to form a valid contract in U.S. and
Vietnamese law? How do the two systems differ in their requirements (e.g.,
consideration vs. mutual consent)?

(Relevant U.S. Law from Chapters 11, 12, 13, and 14)

In the U.S. common law system, a valid contract requires four essential elements:

-​ Agreement: This consists of a valid offer by one party and an acceptance by

the other.
-​ Consideration: This is a bargained-for exchange of something of legally
sufficient value (e.g., money, a promise, or a performance).
-​ Contractual Capacity: Both parties must have the legal ability to enter into a
contract (e.g., not be minors or mentally incompetent).
-​ Legality: The purpose and subject matter of the contract must be legal and not
against public policy.

In Vietnamese law, which is a civil law system, the requirements for a valid civil
transaction (including contracts) are outlined in the Civil Code. The core elements are:

-​ Voluntariness/Consent: The parties must enter into the contract freely, without
deception, duress, or mistake.
-​ Legal Capacity: The parties must have full civil act capacity.
-​ Lawful Purpose and Content: The object and content of the contract must not
violate the law or social ethics.
-​ Formality (if required): The contract must adhere to any specific form
required by law (e.g., being in writing or notarized).

The most significant difference lies in the concept of consideration. U.S. law requires
a "bargain" or an exchange. Vietnamese law does not have a doctrine of consideration.
Instead, it focuses on the "lawful purpose" and "mutual consent" of the parties. A
gratuitous promise (a promise to give a gift) can be legally binding in Vietnam if it
 5

meets the requirements of consent and form, whereas in the U.S., it is generally
unenforceable due to the lack of consideration.

Under U.S. contract law, what constitutes consideration, and why is it necessary for a
valid contract? Compare with Vietnam's approach.

(Relevant U.S. Law from Chapter 13)

In U.S. law, consideration is the value given in return for a promise or performance. It
has two parts:

1.​ Legally Sufficient Value: This can be a promise to do something one has no
prior duty to do, the performance of an action one is not obligated to undertake,
or refraining from an action that one has a legal right to do (a forbearance).
2.​ Bargained-for Exchange: The promise must induce the other party to incur a
legal detriment, and the detriment incurred must induce the making of the
promise. It is the "price" of the promise.

Consideration is necessary because it is the primary basis for distinguishing between a

legally binding bargain and an unenforceable gift promise. It provides evidence that
the parties intended to be bound by their agreement.

The most significant difference lies in the concept of consideration. U.S. law requires
a "bargain" or an exchange. Vietnamese law does not have a doctrine of consideration.
Instead, it focuses on the "lawful purpose" and "mutual consent" of the parties. A
gratuitous promise (a promise to give a gift) can be legally binding in Vietnam if it
meets the requirements of consent and form, whereas in the U.S., it is generally
unenforceable due to the lack of consideration.

How do UCC rules on contracts for the sale of goods address open terms (e.g., price,
delivery), and how do U.S. courts resolve issues with missing or unspecified terms?
Khôi

The UCC states that a sales or lease contract with open terms will not fail for
indefiniteness as long as the parties intended to make a contract and there is a
reasonably certain basis for the court to grant an appropriate remedy.

The UCC provides open-term provisions that can be used to fill the gaps in a contract

Term Meaning

Open price term If the parties have not agreed on a

price, the court will determine a
 6

“reasonable price at the time for

delivery”

Open payment term When the parties do not specify payment

terms, payment is due at the time and
place at which the buyer is to receive
the goods

Open delivery place term When no delivery place terms are

specified, the buyer normally takes
delivery at the seller’s place of
business.
●​ If the seller has no place of
business, the seller’s residence is
used

Open delivery time term If no time or date is specified, the court

will impose a reasonable time

Open quantity term Normally, if the parties do not specify a

quantity, no contract is formed and there
is no basis for determining a remedy
The UCC recognizes two exceptions to
this rule:
●​ Requirement contract: buyer
agrees to purchase and seller
agrees to sell all or up to a stated
amount of what buyer requires
●​ Output contract: seller agrees to
sell and buyer agrees to buy all or
up to a stated amount of what the
seller produces

How do U.S. courts resolve

The U.S. courts use the UCC's gap-fillers to provide missing terms, but they also
consider the following:

●​ Course of dealing: sequence of actions and communications between parties

to a particular transaction → provide an evidence of their intended meaning
 7

●​ Usage of trade: Customs and practices common in the industry can help
determine reasonable terms

●​ Course of performan0ce: The conduct that occurs under the terms of an

agreement

2. Validity of contract (Hiệu lực của hợp đồng)

How does the U.S. legal system distinguish between void, voidable, and unenforceable
contracts?

(Relevant U.S. Law from Chapter 11)

The U.S. legal system makes clear distinctions between these three categories based
on their legal effect:

-​ Void Contract: A void contract is not a contract at all. It is a nullity from the
beginning and has no legal force or effect. Neither party can enforce it. This
typically occurs when the purpose of the contract is illegal (e.g., a contract to
commit a crime).
-​ Voidable Contract: A voidable contract is a valid contract, but one or both of
the parties have the legal right to avoid or cancel it. The party with the option
can choose to either enforce the contract or "disaffirm" it. Common examples
include contracts entered into by minors or under fraudulent conditions.
-​ Unenforceable Contract: An unenforceable contract is a valid contract that
cannot be enforced by a court due to a specific legal defense or statute. For
example, a contract that is required to be in writing under the Statute of Frauds
but is only made orally would be unenforceable.

What is the difference between void, voidable, and unenforceable contracts?

Nghi Textbook p253

Voidable Contracts Unenforceable Contracts Void Contracts

Aspect
(có thể vô hiệu) (ko thể thực thi) (vô hiệu)

Legal Status Valid until one party opts Valid contract but Considered non-existent
to void it. unenforceable in court. in the eyes of law.

Enforceability Can be enforced unless Cannot be enforced by Cannot be enforced by

the party with the right law, though both parties either party.
chooses to void it. may still voluntarily
perform.
 8

Effect on Parties are bound unless Parties are not legally No obligations for any
Parties the party with the option required to perform if party.
cancels it. challenged in court.

Common - Contract by a minor - Violation of Statute of - Illegal purpose (e.g.

Causes - Fraudulent conditions Frauds (e.g. not in writing) drug trade)
or misrepresentation - Statute of Limitations - Mentally incompetent
- Duress or undue expired party (declared).
influence
- Temporary incapacity
- Mental illness or
intoxication.

Legal Remedy Yes, if the injured party No remedy through court, No legal remedies -
Available ratifies the contract. unless exceptions apply. contract is treated as if it
never existed.

What is the doctrine of estoppel in U.S. contract law, and how does it function to
prevent a party from denying a representation or promise?

(Relevant U.S. Law from Chapters 13 and 16)

The doctrine of promissory estoppel (also called detrimental reliance) is an equitable

tool used by U.S. courts to enforce a promise even if a formal contract does not exist.
It functions to prevent injustice when one party has reasonably relied on the promise
of another to their detriment.

To apply promissory estoppel, the following elements are required:

-​ A clear and definite promise was made.

-​ The promisor should have expected that the promisee would rely on the
promise.
-​ The promisee reasonably relied on the promise by acting or refraining from
some act.
-​ The promisee's reliance resulted in substantial detriment.
-​ Enforcement of the promise is necessary to avoid injustice.

Essentially, the doctrine "estops" (prevents) the promisor from arguing that their
promise is unenforceable because it lacked consideration or another contract element.
 9

3. Breach of Contract (Vi phạm hợp đồng)

What constitutes a fundamental (material) breach of contract under U.S. law, and
what are the legal consequences of such a breach? Compare with Vietnam's approach.

(Relevant U.S. Law from Chapter 18)

In U.S. law, a material breach (or fundamental breach) occurs when a party's failure
to perform is so significant that it deprives the non-breaching party of the substantial
benefit they bargained for. It goes to the very heart of the contract. A minor,
non-substantial deviation is not a material breach.

The legal consequences are significant: The non-breaching party is excused from their
own performance obligations under the contract and has the right to sue for damages
immediately. They can treat the contract as terminated.

Vietnamese law (specifically the Law on Commerce) also recognizes the concept of a
"fundamental breach" (vi phạm cơ bản). It is defined as a breach that causes such
damage to the non-breaching party that it deprives them of what they expected to gain
from the contract. The consequences are similar: the non-breaching party has the right
to cancel the contract and claim damages. The key difference is that U.S. law is
developed through case law (common law), while Vietnam's definition is codified in a
statute.

4. Contractual Remedies (Chế tài Hợp đồng)

How do liquidated damage clauses function, and under what circumstances are they
enforceable? Compare with Vietnam's approach.

(Relevant U.S. Law from Chapter 19)

In U.S. law, a liquidated damages clause is a provision in a contract that specifies a

certain dollar amount to be paid in the event of a future breach. This clause is
designed to pre-estimate the damages that would be difficult to calculate later.

For such a clause to be enforceable, two conditions must be met:

1.​ At the time the contract was formed, was it apparent that damages would be
difficult to estimate in the event of a breach?
2.​ Was the amount set as damages a reasonable estimate and not excessive?

If the amount is excessive or designed to punish the breaching party, the court will
declare it a penalty and the clause will be unenforceable.
 10

Vietnamese law has a similar concept called a "penalty for breach" (phạt vi phạm).
However, its approach is slightly different. The Law on Commerce allows parties to
agree on a penalty amount, but it caps the maximum penalty at 8% of the value of the
breached portion of the contract obligation. U.S. law does not have a specific
percentage cap, focusing instead on the "reasonableness" of the pre-estimate.

What are the legal consequences (hậu quả pháp lý) of contract avoidance
(rescission: đưa lại vị trí ban đầu)? Compare with Vietnam's approach. Tiên

Rescission: Refers to the cancellation of a contract in order to return the parties to

their pre-contract position. When a contract is cancelled, legal consequences applied
to both parties are

●​ Termination of Contractual Obligations: When a contract is rescinded, the

parties are no longer obligated to fulfill their duties under the contract. This
means that any contractual promises or commitments are void and
unenforceable.
●​ Restoration of the Parties: Both parties are required to return whatever they
received under the contract. If one party paid money or transferred goods, they
have the right to demand the return of those goods or money.
●​ Discharge of Rights and Obligations: Rescission discharges any rights and
obligations that arise from the contract. After rescission, neither party can
enforce the contract or claim performance of any terms.
●​ Loss of Right to Sue for Breach: After the contract is rescinded, the parties
lose the right to sue for breach of contract, as the contract no longer exists.

Compare with Vietnam’s approach

In Vietnam, contract rescission is similarly governed by the Civil Code 2015. The
consequences of rescinding a contract are largely consistent with international
standards, but with specific legal nuances under Vietnamese law.

Restoration to original position:

●​ Article 429 of the Civil Code 2015 mandates that when a contract is rescinded,
the parties must restore each other to their original positions. If restoration is
not possible (e.g., if the goods cannot be returned), the parties must
compensate each other in monetary terms or equivalent value.

Termination of obligations:

●​ As in other legal systems, rescission under Vietnamese law terminates the

obligations under the contract. The contract is treated as void, and no further
 11

performance is required by either party. However, any performance that has

already been made can be reclaimed.

Right to recover

●​ The right to recover property or money is also established under Article 429. If
one party has provided something under the contract, they are entitled to
demand its return or equivalent value.

Grounds for rescission:

●​ Under Vietnamese law, rescission can be based on similar grounds as in other

jurisdictions, such as fraud, misrepresentation, mistake, or duress. However,
there are additional specific provisions for contract formation, such as the
requirement for certain contracts (like those involving real property) to be in
writing to be enforceable.

⇒ Differences

●​ In Vietnam, the Civil Code 2015 provides specific rules on the recovery of benefits
when rescission occurs. Meanwhile,In some cases, if the contract is rescinded due to
fraud or other unfair actions, the party that caused the rescission may be liable for
additional damages beyond simple restoration, whereas in the United States, parties
are generally required to choose only one legal remedy.​

●​ Vietnam has more structured provisions regarding the time limits for rescission,
particularly if one party has already performed under the contract. In some
cases, a party may not have the right to rescind if a significant amount of time
has passed or if the rescission would unduly harm third parties (such as
creditors).

Chapter 12: Dan was hired by Laura to pave floor tiles for her 5-storey house. Dan's
work was so defective that the floor had to be replaced, causing considerable delays
in completion of the work. As a result, Laura had to delay their plans to lease their
house. Please decide if Laura shall be entitled to damages for the cost of replacing
the floor and to claim for loss of the rent as remedies against Dan's failure to perform
his obligations? Tiên

Applying IRAC method, Laura has the right to require Dan to compensate for the
damages with the following analysis

ISSUE

The legal issue in this case revolves around whether Laura is entitled to damages for
the cost of replacing the floor tiles and for the loss of rent caused by the delays due to
 12

Dan’s defective work. Specifically, the question is whether Dan's failure to properly
perform his obligations under the contract entitles Laura to claim compensation for
these losses.

RULES

The rules applicable to this case are grounded in contract law, specifically regarding
breach of contract and remedies for breach. These include:

●​ Breach of Contract: A breach occurs when one party fails to perform its
contractual obligations as agreed. In this case, Dan was hired to pave floor tiles,
but his work was defective, leading to the need for replacement. This
constitutes a breach of contract.​

●​ Damages for breach of contract: Under contract law, the injured party
(Laura) is entitled to claim damages that will place them in the position they
would have been in had the contract been performed properly. This includes
compensating for both direct and consequential losses.

APPLICATION

Overall, due to Dan's defective work causing damages to the floor and Laura’s plan to
lease the house, he must compensate for two types of damages responsively:

Cost of replacing the floor: Dan’s defective work directly led to the need to replace
the floor, making the cost of replacement a direct damage. Thus, he is responsible for
paying the full cost of replacing the floor. For example, if the cost of replacing the
floor is $5000, Dan is obligated to pay this amount to Laura or personally hire
qualified contractors to repair for the damaged flooring

Loss of rent: The delay caused by the defective floor also led to a delay in leasing the
house, causing Laura to lose rent. Therefore, Dan is obligated to compensate Laura for
the loss rent. For exx, if the leasing was delayed by 2 months and the expected
monthly rent was $1,500, Dan would be required to pay Laura $3,000 as
compensation for consequential damages.

CONCLUSION

Laura is entitled to claim damages from Dan for the following:

●​ Direct damages: The cost of replacing the defective floor tiles. This is a
straightforward compensatory damage resulting from Dan’s failure to properly
 13

perform the contract.​

●​ Consequential damages: The loss of rent due to the delay in completing the
work. Since the delay and the subsequent loss of rental income were
foreseeable consequences of Dan’s breach, Laura is entitled to recover this as
well.

Thus, based on the principles of breach of contract and the rules on compensatory and
consequential damages, Laura is entitled to both the cost of replacing the floor and the
loss of rent as remedies for Dan’s failure to perform his obligations.

5. Risk Allocation in Contracts (Phân bổ rủi ro)

Risk allocation involves mechanisms used to determine which party bears the loss when
unexpected events occur. These are divided into active contractual agreements and default
legal doctrines applied by courts.

I. Contractual Mechanisms (Active Allocation)

Parties can proactively allocate risk within the contract text to create certainty and avoid
future litigation.

●​ Liquidated Damages Clauses:

○​ Function: These provide a predetermined amount of compensation to be
paid in the event of a breach.
○​ Purpose: They aim to reduce uncertainty, avoid complex litigation, and offer a
streamlined resolution by fixing the cost of a potential breach upfront.
○​ U.S. Enforceability: These are only enforceable if:
1.​ Damages were difficult to estimate at the time the contract was
formed.
2.​ The amount set is a reasonable estimate and not a penalty intended
to punish the breaching party.
●​ Gap-Filling for Open Terms (UCC):
○​ Under the Uniform Commercial Code (UCC), a sales contract does not fail for
indefiniteness even if terms like price or delivery are left "open".
○​ The law provides "gap-fillers" (e.g., a reasonable price at the time of delivery)
to ensure the contract remains valid despite unforeseen market fluctuations.

II. Default Legal Doctrines (Allocation by Law)

When a contract is silent, U.S. law provides three primary doctrines to discharge obligations
due to unforeseen events:

●​ Impossibility of Performance:
 14

○​ Occurs when an unforeseen event, such as the death of a party, destruction

of the subject matter, or a change in law, makes performance objectively
impossible for anyone.
●​ Commercial Impracticability:
○​ Performance is excused when an extreme and unforeseen difficulty or cost
arises that was not contemplated by either party at the time of formation.
●​ Frustration of Purpose:
○​ The contract is discharged when an unexpected event makes the original,
main purpose of the agreement pointless for both parties.

To manage unforeseen events (e.g., natural disasters, pandemics,

wars), parties can allocate risks through two main mechanisms:
●​ Contractual Mechanisms (Active Allocation): The primary tool used by parties to
proactively manage unforeseen risks is the Force Majeure clause. This clause
explicitly lists unforeseeable and unavoidable events that will excuse one or both
parties from performing their contractual obligations without being held liable for a
breach of contract.
●​ Default Legal Doctrines (Passive Allocation): If a contract lacks a Force Majeure
clause, courts apply default common law doctrines to allocate the risk of unforeseen
events:
○​ Impossibility of Performance: Performance is excused when it becomes
objectively impossible for anyone to perform (e.g., the specific subject matter
of the contract is destroyed).
○​ Commercial Impracticability: Performance is excused when an unforeseen
event makes it technically possible but extremely and unreasonably difficult or
expensive to perform.
○​ Frustration of Purpose: Performance is excused when an unforeseen event
completely destroys the underlying purpose of the contract, making the
performance worthless to one party (e.g., the Krell v. Henry coronation case).

Chapter 14: Karen, who was disabled and required the use of
crutches, was injured when the tip of her crutch came into contact with
a chip lying on the floor of an area occupied by BestWood Co., Ltd., in a
shopping centre in New South Wales. She sued Best Wood on the
grounds that there were probabilities the chip had dropped more than
twenty minutes before her fall.
In your view, whether or not Karen satisfied her onus of proof in this case. Nghi An
Issue: Did BestWood breach its duty of care by failing to address a hazardous condition (a
chip on the floor), thereby causing Karen's injury?​
Rule:
Under negligence law, a plaintiff must establish the following elements:​
●​ Duty of Care: The defendant owed a duty to the plaintiff.
 15

●​ Breach of Duty: The defendant failed to meet that standard of care.

●​ Causation: The breach caused the plaintiff's injury.
+​ Factual causation can be proven by consideration of the probabilities, even if precise
details about the origin of the hazard are unknown.
●​ Damages: The plaintiff suffered actual harm or injury.​
In premises liability cases, business owners owe a duty to maintain a safe environment for
their customers. If a hazardous condition exists, the owner may be liable if they knew or
should have known about it and failed to take reasonable steps to remedy it.
Application:
Duty of Care: As a business establishment, BestWood owed a duty to its customers,
including Karen, to maintain safe premises.​
Breach of Duty: Karen alleges that a chip remained on the floor for over twenty minutes,
suggesting that BestWood failed to conduct adequate inspections and cleanings. The
absence of any system of inspection or cleaning during the relevant period, according to The
Court, supported a finding of breach. Also, courts have held that if a hazardous condition
exists for a significant period (e.g., over 25 minutes), the owner may be deemed to have
constructive notice of the danger.
However, Karen must provide concrete evidence, such as maintenance logs, surveillance
footage, or witness testimony, to support her claim.​
Causation:
Karen must prove the presence of the chip had been there long enough for BestWood to
detect it with reasonable care.
Also, Karen can make a probabilistic inference: that if BestWood had followed a reasonable
cleaning routine—such as checking the area every 15 minutes—there is a strong likelihood
the chip would have been found and cleared before she walked through that spot. Thus, the
absence of an inspection system supports an inference that BestWood’s failure to act
contributed to the accident.
Damages: Assuming Karen suffered an injury, she must provide medical records or evidence
of treatment. This element is typically straightforward if supported by documentation.
Conclusion: While BestWood owed a duty of care to Karen, her success depends on proving
whether she can clearly establish a causal link. Without strong probabilistic or circumstantial
evidence about timing or inspection failures, her claim could be unsuccessful.

6. Discharge of Contract (Chấm dứt Hợp đồng)

What are the primary ways a contract may be discharged under U.S. law, and what
are the legal consequences of discharge?

(Relevant U.S. Law from Chapter 18)

In U.S. law, discharge means the termination of contractual duties. The primary ways
a contract can be discharged are:

-​ Discharge by Performance: The most common way. The contract ends when
both parties fully perform their respective duties.
 16

+​ Complete Performance: The contract ends because a party has done

exactly what they promised.
+​ Substantial Performance: A party that performs in good faith, with
only minor deviations, can be discharged. The other party must still pay,
but can deduct for any small losses.
-​ Discharge by Agreement: The parties can agree to end the contract through
mutual rescission, novation (substituting a new party), or an accord and
satisfaction.
+​ Mutual Rescission: Both parties agree to make a new contract that
cancels the original one.
+​ Novation: The parties agree to substitute a new party, who takes over
the duties of an original party, discharging the old contract.
+​ Accord and Satisfaction: The parties agree to accept a different type of
performance to discharge the original duty.
-​ Discharge by Breach: If one party commits a material breach, the
non-breaching party's duties are discharged.
+​ Material Breach: A serious failure to perform that defeats the
contract's purpose. This discharges the non-breaching party from their duties
and allows them to sue.
+​ Anticipatory Repudiation: When a party announces in advance
that they will not perform. This acts as a material breach, discharging the
other party immediately.
-​ Discharge by Operation of Law: This includes events like the statute of
limitations passing, bankruptcy, or when performance becomes objectively
impossible (e.g., the subject matter is destroyed).
+​ Statute of Limitations: A law that sets a time limit for suing. If the
time runs out, the contract duty is discharged.
+​ Bankruptcy: A court order in bankruptcy usually discharges a debtor's
contracts.
+​ Impossibility of Performance: A duty is discharged if an unforeseen
event makes it objectively impossible for anyone to perform.
+​ Commercial Impracticability: Performance is discharged when an
unforeseen event makes it extremely and unreasonably difficult or
expensive.
+​ Frustration of Purpose: A duty is discharged when an unforeseen
event makes the original purpose of the contract pointless for both
parties.
 17

7. Capacity to Contract (Năng lực giao kết)

How do U.S. and Vietnamese laws treat contracts entered into by minors?

(Relevant U.S. Law from Chapter 14)

In U.S. law, a contract entered into by a minor (generally someone under 18) is
voidable at the option of the minor. This means the minor can choose to "disaffirm"
(cancel) the contract at any time while they are still a minor or for a reasonable time
after reaching the age of majority. The adult party to the contract, however, is bound if
the minor chooses to enforce it. The purpose is to protect minors from their own
inexperience.

In Vietnamese law, the treatment is similar in principle but structured differently

under the Civil Code.

-​ Persons under six years old have no civil act capacity, and transactions must be
established by their legal representative.
-​ Persons from six to under fifteen have partial civil act capacity, and their
transactions must be agreed to by their legal representative, except for
transactions serving their daily needs.
-​ Persons from fifteen to under eighteen can establish and perform transactions
on their own, except for those related to real estate or other high-value assets,
which still require the representative's consent. Both systems aim to protect
minors, giving them a way out of contracts while holding the adult party
accountable.

PHẦN II: AGENCY AND BUSINESS ORGANIZATIONS (Đại diện & Tổ chức
Công ty)

1. Agency Relationship and Duties (Quan hệ Đại diện và Nghĩa vụ)

What are fiduciary duties in U.S. agency law, and how do they govern the relationship
between agent and principal?

(Relevant U.S. Law from Chapter 37 and 38)

In U.S. law, a fiduciary duty is the highest standard of care one person can owe to
another. It arises in a relationship of trust, like between a principal (the person who
hires) and an agent (the person who acts on their behalf). These duties govern the
relationship by requiring the agent to act exclusively in the best interests of the
principal. The two main fiduciary duties are the duty of loyalty and the duty of care.
 18

The duty of loyalty means the agent must be completely loyal to the principal. The
agent cannot take actions that would benefit themselves at the principal's expense. For
example, an agent cannot secretly make a profit from a transaction they are handling
for the principal, nor can they represent two parties in the same transaction without
consent. The duty of care requires the agent to act with the same level of skill and
diligence that a reasonable person in a similar situation would use. This means the
agent must not be negligent or careless in performing their responsibilities.

Chapter 15: Anna, the secretary of Fiore Co., Ltd., contracted with a hire-car
company (Panorama Co., Ltd.,) to hire three expensive cars, ostensibly to transport
Fiore's clients from Malpensa airport to the company's offices. In fact, Anna had no
actual authority to enter into such agreements and was using the cars for her own
purposes. The hire-car company sued Fiore Co., Ltd., to recover the hiring charges.

Please provide your opinion if you were a judge hearing this case? Dương
Khôi

Issue:

Is Fiore Co., Ltd. legally bound by the contract made by Anna, the secretary, with
Panorama Co., Ltd., even though she lacked actual authority and used the cars for
personal purposes?

Rule:

From agency and contract law principles, a company may still be bound by a contract
if:

●​ Apparent authority existed - meaning the third party reasonably believed the
agent (Anna) had authority based on the principal’s conduct.​

●​ Fraudulent misrepresentation by the agent binds the principal if the third

party reasonably relied on the misrepresentation and suffered loss.
○​ Fraud requires: misrepresentation of material fact, intent to deceive,
justifiable reliance, and damage.
○​ Voluntary consent can be negated by fraud, making the contract
voidable.

Application:

●​ Anna clearly lacked actual authority, as she used the cars for personal use.​
 19

●​ If Panorama Co., Ltd. had no reason to suspect this and believed - based on
Anna’s position as secretary and her representation - that the cars were for
corporate use, they might have reasonably relied on her apparent authority.​

●​ However, a secretary typically does not have implied or apparent authority

to make high-cost contracts like hiring luxury cars. This could be seen as
outside the scope of what a secretary would normally be authorized to do.

If Panorama failed to verify her authority, especially given the nature and expense of
the transaction, the court may find that reliance was not justified.

Conclusion:

If I were the judge, I would likely rule in favor of Fiore Co., Ltd., because:

●​ Anna had no actual authority.​

●​ She committed fraudulent misrepresentation for personal gain.​

●​ Panorama Co., Ltd. should have verified authority for such a costly and
unusual contract.​

●​ There was no justifiable reliance given the role of the employee and the nature
of the transaction.

⇒ Therefore, the contract is not enforceable against Fiore Co., Ltd. The hire-car
company may have to seek restitution from Anna personally.

2. Separate Legal Personality (Tư cách pháp nhân độc lập)

What is the legal concept of separate legal personality, and how does it apply to
different business entities in U.S. and Vietnamese systems?

(Relevant U.S. Law from Chapters 37 and 38)

Separate legal personality is a fundamental legal concept meaning that a business

entity is legally recognized as a separate "person" from its owners. This artificial
person can own property, enter into contracts, sue, and be sued in its own name. The
most important consequence of this is that the entity's debts and obligations belong to
the entity itself, not to its owners. This principle creates the "corporate veil" (bức màn
che công ty) that shields owners from personal liability.
 20

In the U.S. system, this concept applies strongly to corporations and Limited
Liability Companies (LLCs). They are legally distinct from their shareholders or
members. In contrast, a sole proprietorship or a general partnership does not have a
separate legal personality; the law views the business and its owners as one and the
same, which is why owners have unlimited personal liability.

The Vietnamese system operates on the same principle. A Joint-Stock Company

(JSC) and a Limited Liability Company (LLC) are recognized as legal entities
(pháp nhân) with separate legal personality. They have their own assets and are
responsible for their own debts. A sole proprietorship (doanh nghiệp tư nhân) in
Vietnam, just like in the U.S., is not a separate legal entity, and the owner is fully
liable for all of the business's obligations.

What is the concept of the corporate veil, and how does piercing the corporate veil
occur? What factors do courts consider when determining whether to apply it?
Nghi - Chap 39

●​ Concept of corporate veil:

The corporate veil treats a corporation as a separate legal entity from its shareholders
or owners. This separation grants limited liability to the shareholders, meaning they
are not personally responsible for the company’s debts or obligations beyond their
investment.

●​ How piercing the corporate veil occur:

In certain exceptional cases, courts may "pierce the corporate veil” which means
disregarding the corporation’s separate legal status, and hold shareholders
personally liable for the company’s obligations. This happens when there has been
serious misconduct including abusing the corporation (e.g. intermingling of personal
and corporate assets ) or having undercapitalization at the time of incorporation.

●​ Factors considered:
1.​ Commingling of Assets
Commingling occurs when personal and corporate assets are mixed, undermining the
corporation’s separate legal identity. Courts examine financial records for signs of
commingling. To avoid this, business owners must maintain separate bank accounts,
detailed financial records, and proper documentation for all transactions.

2.​ Undercapitalization
Undercapitalization indicates that a corporation was intentionally left without
sufficient capital to meet its liabilities, suggesting misuse of the corporate form.
Courts assess whether the corporation was adequately funded at its inception and
 21

whether it maintained sufficient capital to operate effectively. Business owners should

ensure their corporations are properly funded and regularly review financial needs to
maintain solvency.

3.​ Misrepresentation
Misrepresentation involves providing false or misleading information about the
corporation’s financial status or operations. Courts evaluate the extent and impact of
the deception, as well as the intent behind it. Corporations must ensure transparency in
financial disclosures, provide accurate information to creditors and investors, and
implement strong internal controls to prevent fraudulent activities.

[Link]
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3. Directors’ Duties and Liability Standards (Nghĩa vụ Giám đốc)

What is the business judgment rule (nguyên tác phán đoán kinh doanh) under U.S.
law, and how does it protect corporate directors and officers from liability?

(Relevant U.S. Law from Chapter 38)

The business judgment rule is a legal principle in U.S. corporate law that protects
directors and officers from being held personally liable to the corporation or its
shareholders for honest mistakes or poor business decisions. The rule presumes that in
making a business decision, the directors and officers acted on an informed basis, in
good faith, and in the honest belief that the action taken was in the best interests of the
company.

This rule provides powerful protection. As long as a director or officer made a

reasonable effort to become informed, had no personal conflicts of interest, and had a
rational basis for believing their decision was good for the business, a court will not
second-guess that decision, even if it turned out badly and the company lost money.
The rule exists to encourage directors to take reasonable business risks and to prevent
courts and shareholders from unfairly judging business decisions with the benefit of
hindsight.
 22

What is the fiduciary duty of loyalty, and how does it apply to corporate directors and
officers? An

The fiduciary duty of loyalty is one of the cornerstone responsibilities that corporate
directors and officers owe to the corporation and its shareholders. It requires them to
act in the best interests of the company, avoiding conflicts between their personal
interests and their obligations as fiduciaries. This duty ensures that corporate power is
exercised with integrity and fairness, and that directors and officers do not use their
positions for personal enrichment at the expense of the corporation.

The fiduciary duty of loyalty obligates directors and officers to place the corporation’s
interests above their own. This duty becomes most significant when there is a
potential conflict of interest, such as in self-dealing transactions, corporate opportunity
situations, or competing ventures. Fiduciaries must not exploit inside information,
seize business opportunities that belong to the corporation, or engage in actions that
would benefit themselves while harming the company.

In evaluating whether the duty of loyalty has been breached, courts often assess:

-​ Whether the director or officer disclosed any personal interest,

-​ Whether the corporation was deprived of an opportunity it could reasonably
pursue,
-​ Whether the individual used corporate resources for personal benefit.

To illustrate how this duty is applied in practice, we can look to a foundational case in
U.S. corporate law: Guth v. Loft, Inc. (Delaware, 1939).

Case Study: Guth v. Loft, Inc.

>> Facts:

Charles Guth was the president of Loft, Inc., a company operating retail stores and
soda fountains. Dissatisfied with Coca-Cola’s terms, Loft was seeking an alternative
beverage supplier. Guth personally acquired the Pepsi-Cola formula and trademark
without informing or offering the opportunity to Loft. Moreover, he used Loft’s
finances, employees, and facilities to support and grow the Pepsi business, which he
controlled independently.

>> Issue:

Did Guth violate his fiduciary duty of loyalty by acquiring the Pepsi-Cola opportunity
for himself instead of offering it to Loft, and by using corporate resources for personal
gain?
 23

>> Ruling:

The Delaware Supreme Court ruled that Guth breached his fiduciary duty of loyalty.
The court emphasized that the opportunity to acquire and develop Pepsi-Cola was
closely aligned with Loft’s business interests. Since Loft had the financial capacity
and a reasonable expectation to pursue such an opportunity, Guth was obligated to
offer it to the corporation before acting on it himself. By failing to do so and using
Loft’s resources for personal benefit, Guth acted disloyally.

Implications for Corporate Directors and Officers

The ruling in Guth v. Loft laid the foundation for what is now known as the corporate
opportunity doctrine. This principle holds that directors and officers may not take for
themselves any opportunity that:

1.​ Is within the corporation’s line of business,

2.​ The corporation is financially capable of undertaking, and
3.​ The corporation has an interest or expectancy in.

If a fiduciary wants to pursue such an opportunity, they must fully disclose it and
obtain approval from disinterested board members or shareholders. Failing to do so
exposes them to liability and the risk of restitution.

This doctrine continues to be relevant in modern corporate governance. Today, courts

enforce the duty of loyalty to prevent misuse of insider knowledge, protect against
insider trading, and scrutinize executive decisions in mergers, acquisitions, and
related-party transactions. With increasing scrutiny from shareholders and regulators,
directors and officers must take proactive steps to manage conflicts and maintain
transparency.

4. Tax Treatment of Business Entities (Xử lý Thuế)

How are LLCs taxed under U.S. law, and what flexibility do business owners have in
choosing their tax treatment? Compare with Vietnam’s approach to LLC taxation.

(Relevant U.S. Law from Chapter 37)

Under U.S. law, an LLC offers incredible tax flexibility. By default, the Internal
Revenue Service (IRS) treats an LLC as a pass-through entity. This means the LLC
itself does not pay federal income taxes. Instead, the profits and losses are "passed
 24

through" to the owners (members), who then report the income on their personal tax
returns. This avoids the "double taxation" that can happen with corporations, where
the company pays tax on its profits, and then shareholders pay tax again on the
dividends they receive.

The flexibility comes from the LLC's ability to choose a different tax treatment. Using
what are known as "check-the-box" regulations, an LLC can select to be taxed as a
corporation if its owners believe that would be more beneficial. This choice allows
business owners to select the tax structure that best fits their financial situation.

In Vietnam, an LLC (Công ty TNHH) is treated as a distinct legal entity for tax
purposes. It must pay Corporate Income Tax (CIT) on its profits. When the remaining
profits are distributed to the owners, they must then pay Personal Income Tax on that
income. This system does not offer the same pass-through option or the flexibility for
the company to choose its tax classification in the way a U.S. LLC can.

5. Partnership Structures (Cấu trúc Công ty Hợp danh)

What are the key legal features of general partnerships and limited partnerships under
U.S. law? Compare with Vietnam’s partnership models.

(Relevant U.S. Law from Chapter 37)

In U.S. law, a general partnership is a business created by two or more persons who
co-own and operate a business for profit. Its key legal feature is that all partners
typically participate in management and, most importantly, they have unlimited
personal liability for the partnership's debts. This means their personal assets are at
risk.

A limited partnership (LP) is a more formal structure composed of at least one

general partner and one or more limited partners. The general partner manages the
business and has unlimited personal liability. The limited partners are passive
investors who contribute capital but do not participate in management. In exchange
for giving up management control, their liability is limited to the amount of their
investment. Their personal assets are protected.

Vietnam's Law on Enterprises also provides for similar models. The "công ty hợp
danh" is very similar to a general partnership, with general partners (thành viên hợp
danh) having unlimited liability. This entity can also have capital-contributing
members (thành viên góp vốn) who function much like limited partners in the U.S.,
 25

having liability limited to their capital contribution. The core concepts of management
responsibility being tied to unlimited liability are present in both legal systems.

6. Corporate Governance Structures (Cấu trúc Quản trị)

What are the advantages and disadvantages of forming a Limited Liability

Company (LLC) compared to a corporation? (Chap 38, 39) Dương

Forming an LLC

Advantages:

-​ Limited Liability Protection: Like corporations, LLCs protect owners

(members) from personal liability for business debts or lawsuits. A member's
liability is typically limited to their investment.​
Ex: If an LLC defaults on a loan, creditors can’t go after the member’s
personal car or house - only what’s invested in the LLC.

-​ Flexible Taxation Options: LLCs can choose how they want to be taxed

+​ As a sole proprietorship (for single-member LLCs)

+​ As a partnership (default for multi-member LLCs)

+​ Elect to be taxed as an S- or C-corporation.

→ This avoids the double taxation that corporations (especially C-corps) face.

Ex: A two-member LLC can be taxed as a partnership and report profits/losses

on each member's individual tax return.

-​ Simpler Formalities and Fewer Reporting Requirements: LLCs face fewer

administrative burdens - no requirement for annual meetings, complex bylaws,
or boards of directors.​
Ex: A small LLC isn’t required to hold annual shareholder meetings like
corporations are.

-​ Management Flexibility: LLCs can be either

+​ Member-managed (all members participate)

+​ Manager-managed (delegated authority)

Ex: In a restaurant LLC, the chefs (members) can run daily operations directly.
 26

-​ Foreign Ownership Permitted: LLCs allow foreign individuals or entities to

own membership interests, unlike S-corporations.

Disadvantages:

-​ Lack of Uniformity Across States: State laws vary significantly for LLCs,
which can create challenges for businesses operating in multiple states.​
Ex: A Delaware-formed LLC might face different tax treatment or liability
rules when operating in California.

-​ Limited Life Span (in some states): Some states still impose limitations on
the duration of an LLC, especially if a member dies or leaves. In contrast, a
corporation generally enjoys perpetual existence.

-​ Investors Prefer Corporations: Raising venture capital or issuing shares is

easier for corporations. Investors often prefer the structure and predictability of
corporations.​
Ex: Venture capitalists typically require incorporation before investing.

-​ Self-Employment Taxes: Unless the LLC elects to be taxed as an S- or

C-corp, members may be subject to self-employment taxes on the entire
income.

Forming a corporation

Advantages:

-​ Perpetual Existence: Corporations continue to exist even if shareholders

change or die.

-​ Easier to Raise Capital: Corporations can issue stocks and bonds, which
makes it easier to raise large sums of capital.

-​ Transferability of Ownership: Shares can be easily bought or sold, unlike

LLC interests which often require member approval.

Disadvantages:

-​ Double Taxation: C-Corporations pay taxes at the corporate level and

shareholders pay taxes again on dividends.​
Ex: Corporation earns $100,000, pays corporate tax, and then dividends are
taxed again.
 27

-​ More Regulatory Formalities: Corporations are subject to more rules:

bylaws, board meetings, annual reports, and director elections. In contrast,
LLCs can operate informally and don’t require a board of directors.

Conclusion: LLCs offer flexibility and simplicity, especially for small businesses or those
wanting tax advantages. Corporations provide stability, easier capital raising, and perpetual
existence, making them better suited for larger enterprises or those seeking investors.

Why is a Joint-Stock Company (JSC) in U.S. corporate law often considered a hybrid
entity, combining features of both partnerships and corporations? Compare with
Vietnam's approach.

(Relevant U.S. Law from Chapter 37 and 38)

In the U.S. legal system, the business structure that is truly considered a hybrid entity
is the Limited Liability Company (LLC), not the traditional corporation (which is
equivalent to Vietnam's JSC). The LLC is the entity that best combines features of
both partnerships and corporations.

The LLC gets its most important corporate feature from the corporation: limited
liability. This means the owners, called members, are generally not personally
responsible for the company's debts. Their personal assets are protected. From the
partnership, the LLC gets its operational flexibility and tax treatment. An LLC can
be managed with less formality than a corporation, and it benefits from "pass-through"
taxation, where profits are taxed only once at the owner's personal level, just like a
partnership.

In Vietnam, a Joint-Stock Company (JSC) is a pure corporate form, much like a U.S.
corporation. It is not a hybrid. It offers limited liability but is subject to more rigid
corporate regulations and taxation rules. The Vietnamese Limited Liability Company
(LLC) is also a distinct corporate form with limited liability, but the U.S. LLC is
unique for its ability to choose to be taxed like a partnership, which provides a level of
flexibility not found in the same way in the Vietnamese structure.

7. Limited Liability Principle (Nguyên tắc Trách nhiệm Hữu hạn)

How is liability allocated among partners in both U.S. and Vietnamese law? Are
limited partners shielded from personal liability in the same way?

(Relevant U.S. Law from Chapter 37)

 28

In a U.S. general partnership, liability is significant. All partners are subject to joint
and several liability. This means a third party can sue all the partners together or one
or more of them separately for the entire amount of the partnership's debt. A partner
who is forced to pay more than their share can then sue the other partners to contribute
their portion. This creates substantial personal risk.

In a limited partnership, liability is allocated differently. The general partner(s) bear

all the risk with their unlimited personal liability. The limited partners, however, are
shielded from personal liability in much the same way as corporate shareholders.
Their risk is confined to their capital investment in the business. As long as they do
not participate in the active management of the business, their personal assets are safe.

This structure is mirrored in Vietnamese law. General partners (thành viên hợp danh)
in a partnership company have joint responsibility for the company's obligations with
all of their personal assets. The capital-contributing members (thành viên góp vốn)
are shielded in the same way as U.S. limited partners

8. Equity and Ownership Structure (Cấu trúc Vốn & Sở hữu)

What are the main differences between common stock and preferred stock in a
corporation? Compare with Vietnam's approach.

(Relevant U.S. Law from Chapter 39)

In a U.S. corporation, common stock represents the basic ownership interest.

Common stockholders have voting rights, which allow them to elect the board of
directors and vote on major corporate matters. They have a residual claim on the
corporation's assets, meaning they get paid last if the company is liquidated, but they
also have the greatest potential for appreciation in value if the company is successful.

Preferred stock is a class of stock with features of both equity and debt. The main
difference is that preferred stockholders have priority over common stockholders in
two key areas: dividends and liquidation. They receive their specified dividend
payments before any dividends are paid to common stockholders. If the company is
liquidated, they get their investment back before common stockholders do. In
exchange for this priority and lower risk, preferred stock usually does not carry voting
rights.

The approach in Vietnam is very similar. A JSC can issue ordinary shares (cổ phần
phổ thông), which are equivalent to common stock and carry voting rights. They can
also issue preference shares (cổ phần ưu đãi), which function like preferred stock.
Vietnamese law specifies different types of preference shares, such as dividend
preference shares (cổ phần ưu đãi cổ tức) and redeemable preference shares (cổ phần
 29

ưu đãi hoàn lại), which grant holders priority in receiving dividends or having their
shares bought back by the company, often at the expense of voting rights. The
fundamental trade-off between voting control (common/ordinary) and financial
priority (preferred/preference) is the same in both systems.

III. Common Law vs. Civil Law Systems

What are the fundamental differences between common law and civil law legal
systems in terms of judicial decision-making and statutory interpretation? Use the
Vietnamese and U.S. legal systems to illustrate.

(Relevant U.S. Law from Chapter 1)

The fundamental difference between the common law and civil law systems lies in the
primary source of their law. The U.S. legal system is a common law system, which
means that while it has statutes passed by legislatures, a significant portion of the law
is created by judges through court decisions. This is often called "judge-made law."
When a judge decides a case, that decision becomes a precedent, which acts as a
legally binding rule for future, similar cases.

In contrast, the Vietnamese legal system is a civil law system. In this system, the law
is almost exclusively found in comprehensive, written legal codes, such as the Civil
Code or the Commercial Law. The judge's main role is not to create law but to
investigate the facts of a case and apply the relevant provisions from the code to reach
a decision. The code is the ultimate source of law.

This leads to different approaches in judicial (tư pháp) decision-making. In the U.S., a
judge's reasoning often involves analyzing past cases (precedent) to find the correct
legal principle. In Vietnam, a judge's reasoning focuses on identifying the correct
article in the legal code and explaining how it applies to the situation.

How do courts in common law and civil law systems treat precedent and case law?
What roles do judges play in shaping legal doctrine?

(Relevant U.S. Law from Chapter 1)

In the common law system of the U.S., precedent and case law are the cornerstones of
the legal structure. This is due to the doctrine of stare decisis, which means "to stand
on decided cases." Courts are obligated to follow the precedents set by higher courts
within their jurisdiction. This ensures that the law is stable and predictable. Because
their decisions become binding law, judges in a common law system play a very
 30

active and powerful role in shaping legal doctrine over time. They don't just apply the
law; they also create and refine it.

In the civil law system of Vietnam, precedent traditionally does not have the same
binding force. A judge's primary duty is to the written code, not to the decisions of
other judges. While judges might look at past court decisions for guidance, they are
not legally required to follow them. Therefore, judges in a civil law system have a less
direct role in shaping legal doctrine, as that is primarily the job of the legislature that
writes and amends the codes.

IV. Dispute Resolution

What are the main differences between arbitration and court litigation in resolving
business disputes?

(Relevant U.S. Law from Chapter 3)

When businesses have disputes, they can resolve them either through traditional court
litigation or through arbitration, and the two processes are very different. Court
litigation is a formal, public process run by the government. A judge, and sometimes a
jury, makes the final decision based on strict rules of procedure and evidence. Because
it is public, all documents and hearings are open for anyone to see, which can be a
problem for businesses wanting to protect their privacy. Litigation is also known for
being very slow and expensive.

Arbitration, on the other hand, is a private process that the parties agree to use. Instead
of a judge, they present their case to a neutral third party called an arbitrator, who is
often an expert in their industry. The process is much less formal, faster, and generally
less expensive than litigation. Most importantly for many businesses, arbitration is
completely confidential, so the dispute and its outcome remain private. The arbitrator's
final decision, called an award, is legally binding, just like a court judgment.

Under what circumstances can a party challenge an arbitral award in U.S. courts?

(Relevant U.S. Law from Chapter 3)

One of the most important features of arbitration in the U.S. is the finality of the
arbitrator's decision. An arbitral award is very difficult to challenge in court. A party
cannot appeal (kháng cáo) the decision simply because they disagree with it or believe
the arbitrator made a mistake in interpreting the facts or the law. The grounds for
 31

challenging an award are extremely narrow and are set by the Federal Arbitration Act
(FAA).

A court will only set aside an award if there was a fundamental problem with the
fairness of the process itself, not with the conclusion. These limited circumstances
include situations where the award was obtained through corruption or fraud; the
arbitrator was biased; the arbitrator was guilty of serious misconduct, such as refusing
to hear important evidence; or the arbitrator made a decision on an issue that was
outside the scope of their authority. The focus of a court's review is to ensure the
integrity of the process, not to second-guess the arbitrator's judgment on the merits of
the case.

2. Intellectual Property Framework

Distinguish types of IP protection and basic mechanisms to obtain them.

The legal framework for Intellectual Property (IP) is integrated into the broader classifications
of property and the rights of business entities.

●​ Legal Classification: IP is classified as Intangible Personal Property. Unlike

tangible property (movable items like cars or furniture), intangible property consists of
assets such as patents, stocks, and digital assets.
●​ Entity Ownership Rights: Under the doctrine of Separate Legal Personality, a
registered business entity is recognized as a "legal person" distinct from its owners.
This status empowers the entity to own intellectual property independently in its
own name.
●​ Asset Protection: Because the corporation or LLC is a separate entity, its IP assets
are legally distinct from the personal assets of the shareholders or members. This
creates a "corporate veil" that shields owners from personal responsibility for the
company's debts or liabilities.
●​ Enforcement Mechanisms: In commercial contexts, the separate identity of the
business allows it to enter into contracts regarding its IP and pursue legal action (sue
or be sued) to protect those assets without involving the owners personally.

Intellectual Property (IP) law protects intangible creations of the human

intellect. To obtain protection, businesses must understand the four
primary mechanisms:
●​ Trademarks: Protects brand identifiers such as logos, brand names, and slogans
used to distinguish goods/services.
○​ Mechanism to obtain: Rights are acquired through actual use in commerce,
but formal registration with the government (e.g., USPTO or NOIP) provides
stronger, nationwide legal protection.
●​ Patents: Protects novel, non-obvious, and useful inventions, processes, or technical
designs.
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○​ Mechanism to obtain: Must be formally applied for and granted by the

government patent office following a rigorous examination. It grants a
temporary monopoly (usually 20 years).
●​ Copyrights: Protects original works of authorship fixed in a tangible medium of
expression (e.g., books, software code, music, paintings).
○​ Mechanism to obtain: Automatically granted the moment the work is created
and fixed in a tangible form. Registration is not mandatory but highly
recommended for enforcement in court.
●​ Trade Secrets: Protects confidential, commercially valuable business information
(e.g., the Coca-Cola formula, algorithms, customer lists).
○​ Mechanism to obtain: No government registration is required (registering
would destroy the secret). It is protected by implementing reasonable internal
security measures (e.g., Non-Disclosure Agreements, restricted access) to
keep the information secret.

3. Constitution and "Freedom of Business"

The "Freedom of Business" is primarily explored through the lens of contractual freedom
and the limitations placed on it by social or public policy.

●​ U.S. Philosophy — Contractual Freedom:

○​ The U.S. legal system promotes contractual freedom by enforcing voluntary
exchanges while generally avoiding judicial review of the "fairness" of a
bargain.
○​ Courts focus on the existence of consideration rather than its adequacy; as
long as something of value is exchanged voluntarily, the contract is held valid.
○​ This freedom is bolstered by the Business Judgment Rule, which
encourages directors to take informed risks and make bold decisions without
the fear of personal liability for honest mistakes.
●​ Vietnam Philosophy — Party Autonomy and Social Ethics:
○​ Similar to the U.S., Vietnam’s civil law tradition emphasizes contractual
freedom and party autonomy.
○​ However, a significant constitutional and legal constraint is that the purpose
and content of a transaction must not be contrary to social ethics.
○​ This "social ethics" criterion is a broad concept that allows the state to
invalidate contracts for moral or cultural reasons, even if the transaction is
technically legal under statutory law.
●​ Public Policy Limitations: In both systems, business freedom is not absolute.
Contracts that are discriminatory or contrary to public policy (e.g., contracts to
commit crimes or exculpatory clauses that shield parties from intentional harm) are
deemed unenforceable and void.
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Constitutional Principle: Under Article 33 of the 2013 Constitution of

Vietnam, the fundamental principle of economic freedom is established:
"Everyone has the right to freedom of enterprise in industries and trades
not prohibited by law." * Statutory Implementation: This right is further
codified in Article 7 of the Law on Enterprises, granting businesses the
autonomy to choose their business lines, corporate forms, and
geographic operations. However, this freedom is not absolute; it is
subject to legal boundaries, specifically:

●​ Banned business lines: Activities explicitly prohibited to protect national

security, public health, or social ethics (e.g., narcotics, human trafficking).
●​ Conditional business lines: Activities requiring businesses to satisfy specific
conditions, obtain licenses, or meet capital requirements before operating (e.g.,
banking, healthcare, real estate).