The Non-disclosure agreement (NDA) is usually not the main contract, but it’s effective time may not coincide with the main contract, unlike other accompanying agreements. Basically, the NDA effective time is the period during which the Recipient is obliged to keep confidential information confidential as desired by the Provider.
How should this effective time be prescribed?
Benefit to the Provider: This effect should be “indefinite”, meaning that even if the Master Contract terminates and/or the transaction ends, the Recipient must keep confidential information confidential.
Example: This Non-disclosure agreement is effective from the time the Recipient first acquires the Confidential Information, continuously and forever (including if the Master Contract and/or Transaction is terminated, cancelled or invalidated).
Benefit to the Recipient: This effect should be “narrow”, meaning that when the Main Contract is terminated, the Recipient is no longer required to keep confidential information confidential.
Example: This Non-disclosure agreement is effective from the time it is entered into by the Parties, continues continuously and terminates at the same time as the Master Contract.
Cân bằng cho Các Bên: This effect should be “deterministic”, i.e. after a certain period of time (at which time the disclosed confidential information is not harmful to the Provider) the NDA ceases and the Recipient is no longer required to keep the confidential information confidential.
Example: This Confidentiality Agreement is effective from the time the Recipient first acquires the Confidential Information, is continuous and terminates [36 months] from the time of termination of the Master Contract.
(Where there is special confidential information that needs to be protected forever, an “exception rule” should be added.)
Note: In fact, many NDAs stipulate “… the obligation to keep confidentiality of Confidential Information in effect after thetermination of this NDA”, which may affect the enforceability, as the question arises: Does the NDA terminate, does the Recipient’s liability provision for breach of confidentiality obligation remain valid?
1. What is a digital signature? A digital signature (DS) is a form of electronic signature of an individual or organization. DS can be provided by an official unit (providing DS certification services in accordance with Vietnamese law, such as VNPT, Viettel, FIS CORP,…) or unofficially (not licensed by the Government of Vietnam).
2. Does DS invalidate a civil transaction?
Transactions signed with DS have the same legal validity as directly signed[i], when DS meets the security conditions prescribed by law (validity, secret key, public key, control of the signer’s secret key,…). In other words, signing with a legally satisfactory DS will not render the transaction invalid.
Note, according to Vietnamese law[ii], Transactions are considered invalid when the subject establishing the transaction laDS capacity (passive legal, active legal). Simply, we need to verify that the DS really belongs to the partner’s representative and is it legal?
We think that the use of DS provided by an official unit would be advantageous in this verification, as well as when requesting the deed as evidence if a dispute arises in this regard (using unofficial DS, even provided by a world-renowned unit, but it will be difficult to prove this).
3. Does the Company’s individual DS have a legal risk for transactions?
If the transaction is signed using the Company’s legitimate DS, then it is essentially valid, the likelihood of invalidity will be very low.
If the transaction is signed with a personal DS (whether a individual of the Company, a legal representative, even with the Company’s seal), then it can still be disputed as to the validity of the transaction resulting in the transaction being invalid. Because then, the conclusion will depend on the evidence proving the legitimacy of DS as mentioned above.
DEFINITION OF CONFIDENTIAL INFORMATION IN THE NON-DISCLOSURE AGREEMENT
Is the definition of Confidential Information (CI) important? Definition of CI as the first thing to know in the Non-Disclosure Agreement. It helps you determine the object of rights and obligations – helps to answer the question of what information must be kept confidential, which does not.
How should CI be defined?
Benefit to the Provider:CI should be understood in an expansive sense, meaning any information received and acquired by the Recipient arising out of and/or in connection with the transaction between the Parties.
Example: CI means any and all information that the Recipient (i) receives from the Provider or a Third Party; and/or (ii) obtained in the course of the Transaction arising out of and/or in connection with the Transaction between the Parties at any time (before, during and after the termination of the Transaction) in oral, written, digital data or any other form of communication (tangible or intangible).
Benefit to the Recipient: CI should be understood in a narrow sense, i.e. only trade secrets or information that have been jointly confirmed by the Parties to be confidential.
Example: TTM means the trade secret(s) and information in the possession of the Supplier which has been jointly confirmed by the Parties as confidential, which the Provider delivers to the Recipient during the execution and validity of the Transaction.
Balancing the Parties: CI should be construed in such a way that it is identified by the Provider at its sole discretion and notified to the Receiving Party as confidential.
Example: CI means any and all information received by the Recipient (i) from the Provider and/or obtained during the Transaction; and (ii) has been identified and notified by the Provider as confidential, arising out of and/or in connection with a Transaction between the Parties in oral, written, digital data or any other form of communication communication (tangible or intangible).
On 1st Feb 2020 in Vietnam, the Prime Minister issued Decision No. 173/QD-TTg about the Declaration of Covid-19 epidemic – novel coronavirus acute respiratory disease[1] (“Covid-19”). On that basis, recently the State authorities have issued a number of documents to prevent and control this Covid-19, which may have affected company’s production, business and human resources activities, as well as the ability to perform contractual obligations previously concluded.
Therefore, QNT Law Firm would like to send this Legal Update to you in order to help you get a basic view on some of legal issues related to Covid-19, namely: Force Majeure and Basic Change of Circumstances under laws of Vietnam. Hopefully this document will be useful to you in the meantime.
1. Force Majeure
Under the provisions of laws of Vietnam, where an obligor is not able to perform a civil obligation due to an event of force majeure, it shall not have civil liability[2], commercial liability[3] unless otherwise agreed or otherwise provided by law.
In particular, a force majeure event (“Force Majeure”) is understood to be an event which occurs in an objective manner which is not able to be foreseen and which is not able to be remedied by all possible necessary and admissible measures being taken[4]. Accordingly, to an event is called Force Majeure when:
An event occurs in an objective manner which is not able to be foreseen; and
(Consequences of the event/Liability) which is not able to be remedied (by the exempt Party) by all possible necessary and admissible measures being taken.
In connection with the Covid-19, we understand that:
Firstly, emphasize that, the Prime Minister’s Decision on the declaration of Covid-19 above is not a sufficient legal basis so that you do not have to bear civil and commercial liability due to the Force Majeure.
Secondly, the Prime Minister’s Decision on the declaration of Covid-19 above is the legal basis for determining that the Covid-19 is an objective manner occurrence[5] – only one of the conditions for obtaining the Covid-19 could be considered a Force Majeure to waive liability for the exempt Party.
Thirdly, when the Covid-19 may referred to as an force majeure event to waive liability for its failed obligations, the obligor must prove[6] that it failed to remedy the consequences of the event (cause of failure to comply with the obligations), although he/his has taken all necessary measures in its permissible capacity to remedy them.
In addition, from 18 December 2015, Vietnam officially ratified the accession to the Vienna Convention on the Contract of International Sales of Goods of the United Nations (CISG). In particular, Clause 1, Article 79 of the CISG also provides for exemption of liability, specifically: “A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.”.
The exemption of liability due to a Force Majeure shall be determined on a case-by-case basis, on the basis of consideration of the Parties’ lawful terms of agreement on definitions, conditions of application and legal consequences, etc. of the Force Majeure stipulated in the signed Contract.
2. Basic Change of Circumstances
Under the provisions of laws of Vietnam, in the case of basic circumstances change, the affected party may request the other party to the re-negotiate the contract in a reasonable period of time[7].
In particular, the basic change of circumstances (“BCC”) is construed as having fully met the following conditions:
The circumstances change due to objective reasons occurred after the conclusion of the contract;
At the time of concluding the contract, the parties could not foresee a change in circumstances;
The circumstances change such greatly that if the parties know in advance, the contract has not been concluded or are concluded, but with completely different content;
The continuation of the contract without the change in the contract would cause serious damage to one party;
The party having interests adversely affected has adopted all the necessary measures in its ability, in accordance with the nature of the contract, cannot prevent or minimize the extent of effect.[8]
The BBC and Force Majeure are mainly different in the following:
Criteria
Force Majeure
Basic Change of Circumstances
Desire
The obligor wishes to be exempt from liability.
The affected party wishes to renegotiate the Contract.
Conditions
Requests cannot overcome the consequences of an event even though all necessary measures have been taken in its ability (they cannot fulfill their obligations).
Requests has taken all necessary measures in its ability, in accordance with the nature of the contract, cannot prevent or minimize the extent of effect (they cannot prevent, minimize damage).
In connection with the Covid-19, we understand that:
Firstly, the Prime Minister’s Decision on the declaration of Covid-19 above is the legal basis for determining the condition of “objective reasons occurred”.
Secondly, the affected Party must basically demonstrate the following issues:
There is a great change in the circumstances of Contract performance compared to the signed time.
Serious damage to them if the content of the Contract is not changed.
It has taken all necessary measures in its ability, consistent with the nature of the Contract but could not prevent, minimize the extent of effect.
Therefore, if the consequences of the Covid-19 cause serious damage when performing the Contract, you can consider applying this BCC provision. If the Parties cannot reach an agreement on amending the Contract within a reasonable period of time, any of the Parties may request a Court to handle. Note that, in the process of negotiating amendments and termination of the Contract and the Court handling the case, the Parties must continue to perform its obligations under the Contract, unless otherwise agreed.
[1] Replaced by the Prime Minister’s Decision No. 447/QD-TTg dated April 1, 2020
[5] This issue is based on information officially published in Vietnam.
[6] Clause 2 Article 294 of Law on Commercial stipulates: “The contract-breaching party shall bear the burden of proof of cases of liability exemption”
