ASSIGNMENT

2 FRONT SHEET
Qualification BTEC Level 4 HND Diploma in Business

Unit number and

Unit 7: Business Law
title

Submission date 03/07/2021 Date Received 1st submission

Re-submission Date Date Received 2nd submission

Student names & codes Final scores Signatures

1. Le Minh Thu_GBS190809

2. Le Tran Uyen Thao_GBS200505

Group number:
3. Le Thi Khanh Dan_ GBS200477

4. Luu Hoang Van_GBS200453

Class GBS0901_NX Assessor name Nguyen Chi Thang

Student declaration
I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand that making a
false declaration is a form of malpractice.

P3 P4 P5 P6 M2 M3 M4 D2 D3



OBSERVATION RECORD

Student 1 LÊ MINH THƯ

Description of activity undertaken

- Compose introduction, conclusion.

- Analysis thougoughly all the theory of Dispute Resolution and take the discussion on Dispute resolution
method.
- M3: Analysis of the pros and cons of Dispute Resolution Methods.
- D3: Contribute in researching the most popular legal dispute resolution in Vietnam.
- Contribute in arraging references of the assignment.

Assessment & grading criteria

How the activity meets the requirements of the criteria

Student
Date:
signature:

Assessor
Date:
signature:

Assessor
name:

Student 2 LÊ TRẦN UYÊN THẢO

Description of activity undertaken

- Analysis and explain all requirements of the contract law theory.

- Contract law case example, solution, and comment on this tasks.
- M4: Analysis and add a comment about the advantages and disadvantages of Negotiation dispute
resolution and also contribute research for Court dispute resolution compare to the economic aspect.
- D2: Analysis of the most popular business organization in Vietnam and contribute to the research.
- In charge of editing table content and assignment format + review all tasks of member.

Assessment & grading criteria

How the activity meets the requirements of the criteria

Student
Date:
signature:

Assessor
Date:
signature:

Assessor
name:

Student 3 LÊ THỊ KHÁNH ĐAN

Description of activity undertaken

- Be in charge of all aspects of Company Law, including theory, case example and solution.
- M4: Analysis and add a comment about the advantages and disadvantages of Court dispute
resolution compare to the economic aspect.
- D2: Analysis of the most popular business organization in Vietnam and comment on the type of added
Dispute Resolution.
- D3: Analysis of the most popular legal dispute resolution in Vietnam and comment on this task.
- Contribute in arraging format of the assignment.

Assessment & grading criteria

How the activity meets the requirements of the criteria

Student
Date:
signature:

Assessor
Date:
signature:

Assessor
name:

Student 4 LƯU HOÀNG VĂN

Description of activity undertaken

- Take responsibility for Labor Law theory, clearly analysis this field and its applications.
- Contribute research in finding the most popular business organization in Vietnam (D2)
- Contribute research in finding the most popular legal dispute resolution in Vietnam (D3)
- Divide, collect, correct mistakes of each part and finalize files before submitting.
- Contribute in arraging headings for table content of the assignment.

Assessment & grading criteria

How the activity meets the requirements of the criteria

Student
Date:
signature:

Assessor
Date:
signature:

Assessor
name:

Student 5

Description of activity undertaken

Assessment & grading criteria

How the activity meets the requirements of the criteria

Student
Date:
signature:

Assessor
Date:
signature:

Assessor
name:

r Summative Feedback: r Resubmission Feedback:

Grade: Assessor Signature: Date:

Internal Verifier’s Comments:

Signature & Date:

TABLE OF CONTENTS

A. INTRODUCTION ...................................................... 9
B. BODY .................................................................... 10
CONTRACT LAW ........................................................................... 10
I. Definition of contract: ......................................................................... 10
II. Three types of contracts: ................................................................... 10
1. Oral Contract ................................................................................................. 10
2. Written Contract ............................................................................................ 11
3. E- contract ..................................................................................................... 11
III. Validity of contract: .......................................................................... 13
1. Valid contract: ................................................................................................ 13
2. Invalid contract: ............................................................................................. 13
IV. Real contract analysis: ..................................................................... 14
1. Clauses in the contract: .................................................................................. 15
2. Validity of the contract: ................................................................................. 16
V. Legal trouble arisen: .......................................................................... 17
1. Legal trouble description: ............................................................................... 17
2. Legal solution suggestion: .............................................................................. 17
3. Suggest dispute resolution: ............................................................................ 18
COMPANY LAW ........................................................................... 19
I. Enterprise: .......................................................................................... 19
1. Definition: ...................................................................................................... 19
2. Distinguish between charter capital vs legal capital: ...................................... 19
II. Types of company: ............................................................................. 20
1. Sole proprietorship: ....................................................................................... 20
2. Limited liability company: .............................................................................. 21
3. Partnership: ................................................................................................... 23
4. Joint – stock Company: ................................................................................... 26

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III. Advantages and disadvantages of each type of company: ................ 28

IV. Company introduction: ..................................................................... 32
1. Legal trouble description: ............................................................................... 35
2. Legal Solution suggestion: .............................................................................. 35
3. Suggest Dispute Resolution: ........................................................................... 37
THE MOST POPULAR TYPE OF ORGANIZATION IN VN (D2): ........... 39
LABOR LAW ................................................................................. 41
I. Company introduction: ....................................................................... 41
1. Case Brief: ...................................................................................................... 41
2. Problem: ........................................................................................................ 41
3. Legal Solution suggestion: .............................................................................. 41
4. Legal Dispute Resolution: ............................................................................... 42
5. Real world judgement: ................................................................................... 43
DISPUTE RESOLUTION METHOD ................................................... 43
I. Definition: .......................................................................................... 43
II. Types of dispute resolution method: .................................................. 43
THE POPULAR DISPUTE RESOLUTION METHOD IN VN (D3): .......... 49
C. CONCLUSION: ........................................................ 52
D. REFERENCES: ......................................................... 52
APPENDIX 1: .............................................................. 56

A. INTRODUCTION
Today, society is developing more and more, leading to society having more good and bad sides. In order
to develop the good and limit the bad, the law must be more and more developed and strict, especially in
the business field. Business needs to aim for profit, but more importantly, it must ensure the legal safety of
the country. Because if the enterprise does business illegally, the profits earned will be stripped by the law.
Leading a business in a safe legal corridor is the business owner's role. This cover is going to mention the
dispute resolution method, the company law, the labor law and the contract law.

B. BODY
CONTRACT LAW
I. DEFINITION OF CONTRACT:
A contract, in its simplest definition, is a legally enforceable promise. A promise can be to do something or
refuse to do something. The making of a contract requires the consent of two or more people, one of whom
usually makes an offer and the other accepts it. In addition, contracts are often associated with projects, in
which one party negotiates with other parties to implement a project or part of a project. The basic elements
required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid
offer and acceptance; adequate consideration; capacity; and legality.

II. THREE TYPES OF CONTRACTS:

1. Oral Contract

a.Definition:
Oral contracts are verbal agreements between two parties. An oral contract occurs when spoken words are
rendered valid and legally enforceable in a court of law.
However, an oral contract is difficult to be legally enforceable unless it is provable in court, and it must
meet various requirements of contract formation. Further, it must not be in violation of statutes prohibiting
oral contracts.
è For example, state statutes may require sales involving real property, and the agreements may have to
be in writing, or the performance must take over a year.

b. Pros and cons:

ADVANTAGES DISADVANTAGES
Easy to use Oral contracts do not have any
evidences to support its agreements
More difficult to prove the existence of
Create comfort and flexibility.
the contract
It is easier for one or both sides to forget
certain parts of it, or disagree on what
certain details were.

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2. Written Contract
a. Definition:
A written contract is a written document that outlines an agreement between two parties. Individuals,
businesses, or organizations may be involved. To be regarded valid, the agreement must include all
components or components of the agreement, and each person involved must agree to each other
conditions and sign the document.

b. Pros and cons:

ADVANTAGES DISADVANTAGES
Provides proof of what you and the other party agreed on. Inconvenient

By making the agreement clear from the start, it helps to

Time-consuming
avoid future misunderstandings or problems.
Gives you security and peace of mind because the
conditions of the agreement are written down and cannot
be changed.
Reduce the likelihood of a disagreement about payments,
duties, and timelines for the service to be done under the
contract.
Describes how any party might terminate the contract

before the work is finished.

3. E- contract
a. Definition:
An E-Contract, or electronic contract, is a legal document made and signed online which is basically a digital
adaptation of a traditional paper contract. Likewise with paper contracts, E-Contracts are agreements
endorsed by two parties. They are enforceable and legally restricting archives that are ordinarily utilized in
regards to online merchandise, employment, deals, service, or tenancy... With a run of the mill paper
contract, one parties drafts an "offer" and the other party peruses it (IRMI.com, 2021).
In the event that the two parties agree to the terms and conditions recorded in this initial offer, they will
each sign the archive and it turns into a legitimate agreement. Each parties must hold up to their finish of
the understanding although a paper copy is not presented, a digital signature actually enters both parties
into a legal agreement.

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b. Pros and cons:

ADVANTAGES DISADVANTAGES

Easier to get the information right:

E-contracts minimize the risk of people
Risk of publicing the individual information
making mistakes or leaving sections blank.
and people quite to reliant on service:
Because they can make the important
Some location may not be able to access the
sections of the contract mandatory to
E- contract.
complete, the signee won’t be able to send
it back to them until they’ve done it right.

Speed and ease of transfer: Risk of a system crash:

Within minutes, the recipient can have the Belongs to the online storage system or the

contract and return it to another party as internal computer system crashes, might lose
simply as they got it. data, including contracts.

Unreliable:
Easier to storage: Some people is not be able to believe in the
A huge plus of using digital contracts can contract that not face to face, or another
storage in space and cost on the computer or think the e-contract is so complex with a lot
internet. of step must be done and might not like them

Easier to access and online merchandise:

Can deal the contract at everywhere

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III. VALIDITY OF CONTRACT:

1. Valid contract:
A valid contract is a written or expressed agreement between two parties for the supply of a product or
service. Basically, there are six elements of a contract that make it a legal and binding document. For a
contract to be valid, it must contain:
• The offer spells out the specifics of exactly what will be provided.
• Acceptance or consent of the other party to the offer presented.
• Consider, or money or something of interest is exchanged between the parties.
• Competence of the parties in terms of age and intelligence.
• Intent to fulfill the promise of both parties.
• The subject matter of the contract is lawful and is not against public policy or violates the law.
In other words, a contract is enforceable when both parties agree to something, fulfill their promise with
money or something of value to comply with the law. (Study.com,2021)

2. Invalid contract:
a. Void contract:
The contract is void when it violates the prohibition of the law, contrary to social morality. The word void
means something invalid and it is not legally binding. That makes it unenforceable, and if anyone breaches
an unenforceable contract, the other party to the contract has no legal recourse against them.
(UpCounsel, 2021)
Contracts can be effective when formed and then become void. This happens when a contract fulfills all
the necessary conditions for a contract to be in effect when it was formed, but the law changes later or
something changes make the performance of the contract untenable impossible and beyond the
imagination or beyond the control of the parties involved. (UpCounsel, 2021)
The contract is void due to deception, threat or coercion. Deception in a contract is an intentional
act of one party or a third party to mislead the other party about the subject, nature of the object
or the content of a civil transaction, so that contract has been established. Threat or coercion in
a contract is an intentional act by one party or a third person to force the other party to perform
a contract in order to avoid damage to life, health, honor, reputation, dignity, property of his or
her relatives. (Casetext, 2020)

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b. Voidable contract:
A type of voidable contract works in a similar way like void contract, but has an option for the parties to
enforce the terms even if an element is missing or some other problem exists with the terms. The decision
to enforce the contract is between the parties. In a voidable contract, one of the parties is legally bound
to honor the contract. Thus, a voidable contract can be performed, albeit lacking an element, if the non-
legally bound party agrees to continue.
In addition, a contract is voidable when one or both parties do not have the legal capacity to enter into
the agreement, such as when one party is a minor. In contrast, a void contract is inherently unenforceable.
A contract can be considered void if the terms require one or both parties to engage in an illegal act or if
one party is unable to meet the terms as set forth, such as in the event of the death of one party. (Casetext,
2020)

c. Unenforceable contract:
An unenforceable contract is a valid contract that cannot be fully enforced due to some technical error.
An unenforceable contract has a number of legal consequences that may not be enforceable in a
particular act of damages or performance in the face of certain defenses including the Statute of Frauds.
(USlegal, 2021)
If a contract is found unenforceable, the court will not force one party to act or compensate the other for
failure to perform the terms of the contract. Although the elements of an enforceable contract (offer,
accept, review) may seem simple, there are strict standards of enforceability. A contract may be deemed
unenforceable for a variety of reasons related to the circumstances of its conclusion, the terms of the
agreement itself, or events occurring after the contract has been concluded. (Kirasystems, 2021)

A contract that is invalid due to failure to comply with the regulations on form.
A contract that violates the provisions of the conditions for formal validity shall be invalid, except for the
following cases: The contract has been established by text but the text is not correct by the rules that
either one side or the other has executed at least three points in the contract, according to the request of
one side or the other.

IV. REAL CONTRACT ANALYSIS:

The conplete chosen contract can be found in Appendix 1. (Click here)

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1. Clauses in the contract:

Electronic equipment warranty contract between Mr. Luu Hoang Van and XTMobile electronics store at
50 Tran Quang Khai Street inluding four main clauses, which are condition clause, warranty, exclusion and
force majeure clauses. Each clause will be shown and analyzed in more depth below.

a. Condition clause:
Article 1: Content of the contract:
Party B - the XTMobile store side receives service security and technical support for all electronic
equipment at the residence of Party A - Mr. Luu Hoang Van, specifically as follows:
§ Check operating system, applications, detect and remove viruses.
§ Support update to the latest version.
§ Check the connection network usage status.
§ Notice of safety results and instructions for use.
§ Support phone charger cord, ensure no damage and error.

b. Warranty clause:
The store will provide a warranty for Mr. Van for 12 months from the date Mr. Van buys the electronics
from XTMobile electronics store.
Since Mr. Van bought the VIP warranty package, the condition of this package is the warranty for the first
180 days (6 months):
- In the first 30 days, if there is a manufacturer defect, the device will be exchanged according to the
condition at the time of original purchase.
- From the 31st to the 180th, if it is damaged or faulty, it will be changed to another device equivalent to
the one in use.
è A detail warranty list is provided in Appendix 1.

c. Penalty clause:
Damage caused directly or further by chemical or physical effects such as chemical reactions from the
environment, mechanical impact, distorting, or damage to the device.
Data loss, related to icloud account, samsung cloud, as well as external aesthetic problems.
The device is subject to hardware interference without XTMobile's designation.
è A detail penalty list is provided in Appendix 1.

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d. Exclusion clause:
Because Mr. Van purchased the VIP warranty package at XTMobile's store, that warranty package included
all necessary warranty conditions when Mr. Van's device was damaged, so there is no exclusion clause in
this contract.
e. Force majeure clause:
In case of force majeure such as falling, breaking, entering water that cannot be repaired, XTMobile will
collect the device at the price of the remaining usable components.
The product is faulty due to the user, will lose the warranty, instead will be supported by 30% repair fee.
è A detail force majeure list is provided in Appendix 1.

2. Validity of the contract:

a. Form: The contract is in written form.
b. Consideration: The contract clearly states the rights and obligations of the two parties, including the
sale of electronic devices by XTMobile stores, including Samsung Galaxy S10 phones (which include the
charging cord and VIP warranty package) at 50 Tran Quang Khai street, Tan Binh District, Ho Chi Minh City,
in exchange for a payment of 10,790,000 VND on November 19, 2020. Based on the listed price of
Samsung phones from the Mobileworld and Fabo website with the average price range is from 10,300,000
VND to 10,600,000 VND, the specific price for the device this device in the contract is considered
reasonable.
c. Legality: Due to the subject of the contract is an electronic device, a mobile phone, it is legal and
allowed to transact in Vietnam. Besides, the purchase and sale of electronic equipment is in line with
social ethics.
d. Capacity: the contract was signed by two parties, Mr. Van & Sales staff with cashier of XTMobile.
Ø According to the information from the contract, Mr. Van signed a contract with XTMobile, it proves
that Mr. Van is over 18 years old and has full legal responsibility as well as full awareness to buy
products.
Ø The legal owner of the XTMobile chain of stores has authorized sales staff and cashier of the branch
store Tran Quang Khai to sign a contract. The hotline of this store is: 0867.002.022 or 1800.6229, which
is valid and listed publicity on their website.
Ø The two people who signed the contract is the the store’s official employees who are legally authorized
to sign contracts for each product sold on behalf of the company according to the company's policy.

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V. LEGAL TROUBLE ARISEN:

1. Legal trouble description:
On May 25th, 2021, Minh Chau Banana Export Company signed a contract with the Walmart Grocery store
chain in the US on the condition that they deliver 70 tons of bananas to the port of Long Beach, California
on June 27th, 2021. Unfortunately, on June 2nd, 2021, 10 employees of Minh Chau banana export
company were infected with Covid-19 the cause of sharing the same elevator with F0 (Minh Chau
company's salesperson). Therefore, the Vietnamese government has forced all employees of the company
to stop all business activities and quarantine them for 21 days to monitor their health status. Minh Chau
Banana Export Company had to postpone all export activities and was unable to ship 70 tons of bananas
to Walmart stores on June 27th, 2021 according to the previously signed contract. Therefore, Walmart
sued Minh Chau banana export company because the above issue did not comply with the terms signed
in the contract.




Source: Google

2. Legal solution suggestion:

In this case, Minh Chau banana export company must prove 3 factors to be exempt from liability and not
be sued by the Walmart chain:
§ Minh Chau banana export company must provide clear evidence proving that their employees have
been infected with Covid and the reason why.
§ Minh Chau banana export company cannot avoid this problem because this is a force majeure case,
both companies do not want this problem to happen.
§ Due to the fact that 70 tons of bananas are transported by ship, it will take a lot of time (about 3
weeks), Minh Chau company has tried to deliver the goods 3 days earlier than expected, but because
of the Covid epidemic, Minh Chau company had to postpone the transportation because they do not
want to cause bad effects to the partner’s company.
à In summary, these are force majeure events included in the contract that both companies do not want,
so Minh Chau company still wants to continue to perform the contract if the Walmart chain agrees to
extend the contract.

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3. Suggest dispute resolution:

In this case, negotiation will be used to resolve this legal issue. Advantages and disadvantages of
negotiation method are:

v Advantages:
o Procedurally, negotiation is perhaps the most flexible form of dispute resolution as it involves only
parties with an interest in the matter of both companies (Minh Chau and Walmart) and both
companies. Everyone is free to tailor the negotiations to suit their needs, e.g. setting the agenda,
choosing the forum (public or private) and defining the participants.
o By focusing on their common needs and interests and using mechanisms such as objective
standards, there is a greater chance of reaching an agreement that meets the needs of the parties.
This is sometimes referred to as a "win-win" approach.
o Negotiation is a voluntary and private process, so no one is obligated to participate in the
negotiations if both companies do not wish to do so. No need to resort to a neutral third party. This
is important when neither party wants to involve outside parties in the process.
o Negotiation can maintain and in some cases even strengthen the relationship between parties when
an agreement has been reached between them.
o The option to negotiate a lawsuit can be less expensive for the parties and can reduce delays.

v Disadvantages:
o A specific negotiation can have a successful outcome. However, Walmart is a big company and may
put Minh Chau exporter at a unfavorable situation.
o For example, if Minh Chau banana exporter has an interest in the disputed matter excluded or
inadequately represented in the negotiations, the value of the agreement will be reduced, thereby
making it may be challenged in the future.
o A successful negotiation requires each party to have a clear understanding of its negotiating task. If
there is uncertainty about the limits of a party's negotiating authority, then that party will not be
able to participate effectively in the negotiation process.
o The absence of a neutral third party may result in the parties being unable to reach an agreement
as both companies may not be able to identify the issues being negotiated.
o Neither party may be forced to continue negotiations. So if Walmart chooses to end the
negotiations, time, effort and money may cause great damage to Minh Chau banana exporter and
vice versa. The negotiation process cannot guarantee the honesty or reliability of any party.

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COMPANY LAW
I. ENTERPRISE
1. Definition:
Enterprise means an organization with its own name, assets, transaction office, established or registered
for establishment under the provisions of law for the purpose of doing business. The basic types of
businesses today are:
Ø State-owned enterprise: is an enterprise with 100% investment capital from the state, conducting
economic development activities to achieve the goals of society managed by the state.
Ø Sole Proprietorship: A business owned by one individual. by that individual to organize the
establishment of the enterprise, to manage and administer legal responsibilities.
Ø Joint capital enterprise or company: is a type of company in which many members contribute capital
to do business, share profits as well as suffer losses.

2. Distinguish between charter capital vs legal capital:

CHARTER CAPITAL LEGAL CAPITAL

When establishing a company, it is required to
Minimum regulations for each profession
register a charter capital.

There are no specific regulations on minimum or Must be satisfied when conducting business
maximum number. with conditional lines.

Charter capital may increase or decrease during The level of legal capital is fixed for each
the operation of the enterprises business line.

Contribute capital within 90 days from the date In some cases, a deposit is required according

of registration. to regulations.

The members of the company are responsible for

the amount of capital contributed or committed

to contribute depending on the type of business

Must not be less than legal capital for

occupations with corresponding conditions

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What is capital contribution?

Capital contribution is the contribution of assets to form the charter capital of the company. Capital
contribution includes capital contribution for the establishment of an enterprise or additional capital
contribution to the charter capital of an already established enterprise. Assets contributed as capital are
freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology,
technical know-how, and other valuable assets.

II. TYPES OF COMPANY:

1. Sole proprietorship:
a. Definition:
A sole proprietorship, also known as a sole proprietorship or sole proprietorship, is an unincorporated
business with only one owner who pays personal income tax on profits earned from the business.
A sole proprietorship is the easiest type of business to set up or break apart due to the lack of government
regulation. As a result, these types of businesses are very popular among sole proprietors of businesses,
individual contractors, and consultants.
Characteristics
• Number of members: be owned and controlled by an individual, a company or a limited liability
partnership. There are no partners in the business.
• Legal status: be not a separate legal entity from the business owner. The business owner has unlimited
liability and It can sue or be sued in the owner’s name.
• Property Liability: The owner is solely responsible with all assets for all business activities of the
enterprise, including tax, debts, judgements and other legal requirement.
Increase or Decrease Charter Capital of sole proprietorship company
Capital transfer mechanism:
o The owner can transfer the entire charter capital to another organization or individual, which means
that the owner has withdrawn all the capital from the company.
o If the owner transfers part of the charter capital to another individual or organization (withdrawing part
of the capital), the company must register to convert to another business model with many owners.
Capital raising mechanism:
o Mobilization from loans: Organizations and individuals, issue bonds & bring in more capital by yourself.

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b. Structure of the company:

A sole proprietorship has a simple organizational structure; it is owned and operated by a single individual
who has the final say about strategic, financial and marketing matters. Even if a sole proprietor hires
employees, a sole proprietorship is, in effect, a benevolent dictatorship. The business owner does not
have to answer to anyone regarding decisions about business operations. He only needs to keep business
operations safe and legal and run a business that is profitable enough to meet its financial obligations

2. Limited liability company:
a. Definition:
A limited liability company (LLC) is a legal entity which is formed by the capital contributions of each
member to the company. Remarkably, the liability of an LLC’s member for financial obligations of the
company would depend on this person’s capital contribution, but not his/her personal assets. There are
two types of a limited liability company under Law on Enterprise: One-member LLC and Multi-member
LLC.
Characteristics
Number of members: One or Multi-member LLC (in Vietnam, it must be under 50 members)
Member’s Liabilities: Therefore, a limited liability company’s members are only responsible for the liability
and financial obligations of the company corresponding to the amount of capital they contributed to the
company’s charter. Similarly, in case of a one-member or single-member limited liability company, this
structure has only one member who is also the company owner. For this reason, this person must be liable
for all relevant debts and obligations of the company to the extent of capital contribution to the company
Legal status: Not allowed to issue shares and bonds. A company incorporated can be subject to the
submission of a business license to legally operate. Depending on the 5 businesses sector of choice, they
may be required to apply for a license to the relevant authority
b. The way company raises capital:
A limited liability company in Vietnam is formed based on the capital contributions of its members. Capital
contribution refers to the total assets contributed to constituting the charter capital of the company.
However, to raise capital in special objective, the following is the way to raise money.
- Partners or Investors: through the equity route means selling ownership stakes in the business.
- Adding LLC owners to benefit on their capital, but, the new member's share of the profits can also
be specified and set up differently than for other member.

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c. Structure of a company:
State laws for LLCs vary, but most LLCs also have typically structured by following components for two or more
members:
Member’s council: This is the body with the highest position for making decisions of the company. It is
mandatory that the Member’s council must hold at least one meeting per year.
The chairperson of the Member’s council: An LLC has the duty to select a member to become the council’s
chairperson who can be the director or general direct of the company.
Director/Director General: manage daily business operations of the limited liability company, as well as
hold the liability for his/her exercise of rights to the Members’ Council.
Supervisory Board: formed or not is at the discretion of the LLC itself.

As for a one-member limited liability company, the corporate structure can be one of two following
models (roles and duties of each component are similar to the above-mentioned features of multi-
member LLCs):

Ø Company president and Director/Director General (applied for the one-member LLC of both
individual owners and organizational owners);
Ø Member’s council and Director/Director General (only available for the one-member LLC of
organizational owners

d. How a limited liability company work:

Though an operating agreement, Ownership changes will occur if existing members die or leave the firm
or new members are added. The operating agreement should address these potential changes. For
instance, it might outline a procedure for valuing and then selling a departing member's share. If the LLC
has only one member, the agreement should state how the firm will be dissolved if the owner dies. If
membership changes occur at an LLC that has multiple members but no operating agreement, state laws
might require the firm to dissolve and re-form.
Besides management and membership changes, the operating agreement should address profits, losses,
and taxes. Most LLCs are pass-through organizations. This means the company's profits and losses are
passed through to the members, who report them on their personal tax returns.

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3. Partnership:
a. Definition:
A partnership is a formal agreement by two or more parties to manage and run a business and share in
its profits. There are several types of partnership agreements. In particular, in a partnership business, all
general partners share the same obligations and profits, while other members may have limited liability.
There is also a so-called "silent partnership", in which one party is not involved in the day-to-day
operations of the business.
Characteristics
Number of members: There should be two or more people: running + profit-sharing
Legal consequences of termination of membership: In case of termination of membership of a limited
member or loss of civil act capacity, the contributed capital portion of such member shall be refunded
fairly and satisfactorily.
After termination of membership, if the terminated member's name has been used as part or the whole
of the company name, that person or their heir or legal representative has the right to claim request the
company to stop using that name.
Several liabilities: Each partner operates as the other's agent and no legal personality. The rights, duties,
and liabilities of a partner in a general, or ordinary, partnerships are unrestricted. Limited partners are
only liable for the amount invested. Merchandise is bought and sold through trading partnerships.
Services are provided by non-trading partnerships

b. Increase or Decrease Charter Capital of partnership company:

Increase Charter Capital
According to the Vietnamese legal system, the simplest approach for a partnership business to expand its
charter capital is to increase the contributed capital of its members or to accept new members. The
following is clearly stated in the Enterprise Law of 2014:
Admission of new members (Article 181).
1. The corporation may accept additional general partners or financial contributors; however, the
Members' Council must authorize the entrance of new members.
2. Unless the Members' Council determines differently, general partners or capital contributors must
fully pay the amount of capital agreed to contribute to the firm within 15 days of approval.
3. Unless that member and the existing members agree otherwise, new general partners must be
jointly liable for the company's debts and other property obligations with all of their assets.

23


As a result, if the Council of Members approves, the firm can fully accept new members and thereby raise
its charter capital.
Decrease Charter Capital
A partnership can reduce its charter capital under existing legislation by terminating the partnership
membership or over the course of its operation. By following the law's processes for registering capital
changes, it can fulfill its charter.
Termination of general partner membership in some cases
§ Withdrawing funds from the firm voluntarily
§ Dying, being declared missing by a court, having limited or lost civil act capacity
§ Being expelled from the company
§ Other cases defined by the company's charter.
§ In the following circumstances, a general partner will be dismissed from the company:
§ After the corporation has submitted the second request, the company is unable to contribute capital
or fails to contribute capital as promised;
§ Violating the terms of Article 175 of this Law by conducting business dishonestly, carelessly, or in
any other manner that endangers the company's and other members' interests.
§ General partners' obligations are not being fulfilled appropriately.

Legal consequences of termination of membership

In case of termination of membership of a limited member or loss of civil act capacity, the contributed
capital portion of such member shall be refunded fairly and satisfactorily. Within 2 years from the date of
termination of the general partner's status as prescribed at Points a and c, Clause 1 of this Article, such
person must still be jointly responsible with all his/her property for the company's debt incurred prior to
the date of termination of the membership. After termination of membership, if the terminated member's
name has been used as part or the whole of the company name, that person or their heir or legal
representative has the right to claim request the company to stop using that name.

24


c. Company Structure:

Source: https://luattoanquoc.com/mo-hinh-to-chuc-quan-ly-cua-cong-ty-hop-danh/

This is the general structure of partnership company, it usually includes:

Council members:
• The Members' Council includes all members of the company, is the authority to decide all activities
of the company. The Members' Council is the body of the company's owners, a meeting where the
owners have the right to express their opinions when approving the most important issues of the
company. General partners and capital contributors both have the right to participate in the
Members' Council, but the roles of these two types of members when participating in meetings and
voting are different.
• The Members' Council elects a general partner to be the Chairman of the Members' Council and
concurrently the Director or General Director of the company, unless otherwise provided for in the
company's charter.

Board of directors:
o As a general partner, a partnership's director or general director also oversees and operates the
company (Clause 4, Article 179 of the Enterprise Law 2014, now applying the 2020 Enterprise Law).
Any restriction on a general partner's ability to conduct the company's day-to-day operations
becomes effective against a third party only once that person is informed of the restriction.

25


o The following are the responsibilities of the Director or General Director:
§ Manage and run the company's daily business as a general partner
§ Convene and organize Members' Council meetings; sign Members' Council resolutions
§ Assign and coordinate business work among general partners
§ Organize, fully and honestly keep the company's accounting books, invoices, vouchers, and other
documents
o Other part of partnership company includes:
§ Organization department
§ Accountant department
§ legislation department

4. Joint – stock Company:
a. Definition:
A joint-stock company is a business that is owned by its investors. The shareholders buy and sell shares
and own a portion of the company. The percentage of ownership is based on the number of shares that
each individual owns. Shareholders can buy and sell shares and transfer shares between one another,
without putting the continued existence of the company in jeopardy.
Characteristic
Ø Number of members: allow a solid business to form and thrive with many working together.
Ø The operation capacity of joint stock companies is very wide, in most fields and industries.
Ø The transfer of capital in a joint-stock company is relatively easy, so the range of subjects allowed
to join a joint-stock company is very wide, even officials and employees have the right to buy
shares of a joint-stock company.
Ø Joint-stock companies are businesses that combine the structure of a corporation with the
flexibility and freedoms of a partnership/limited liability company. Joint-stock companies are built
to benefit all shareholders; each investor owns a piece of the company in accordance with the
amount they’ve invested and takes a percentage of the company’s profits.

26


b. Shareholder’s roles and benefits:

Ø Each shareholder invests in the company and is able to benefit from the business. Every
shareholder owns a piece of the company, up to the amount that they’ve invested.
Ø Ownership comes with additional privileges. Shareholders have a say in everything that happens
with a joint-stock company, without actually having to run the company.
Ø Shareholders elect a board of directors to manage the company on their behalf. Positions are
usually filled - through elections – once a year, though the specifics may be different for each
company.
Ø Shareholders get multiple voting rights, electing a board of directors to manage the company on
their behalf, while still having a say in every part of how the company is run.
Ø Shareholders not only vote for the board of directors, but also vote to approve or deny annual
reports, budgets, and how accounts are set up.
Ø In some instances, specific shareholders may be asked to step into a role if the role is not filled or
becomes unoccupied.

c. Company Structure:

Source: Unicap Expanding Future, 2021

27


In Vietnam, a joint stock company must consist the following:

- Management board supervised by an annual general meeting and an inspection committee.
- A management board’s chairman.
- A director or general director, who will also be appointed as the legal representative of the
company.

d. The way to raise capital:

Joint-stock companies have the right to issue shares of all kinds to raise capital. The ability to raise capital
of a joint stock company is very high through the issuance of shares to the public, this is a unique
characteristic of a joint stock company.

III. ADVANTAGES AND DISADVANTAGES OF EACH TYPE OF COMPANY:

TYPE OF
ADVANTAGES DISADVANTAGES
COMPANY
• Easy to establish, control and • The owner has unlimited
maintain. liability which means they are
• Low start-up and maintaining personally in charge of all
costs: while it may be need to business debts, judgments or
register the business and obtain other liabilities of the business
a business occupancy permit, • The owner must pay personal
but, no fees associated with the income taxes for all net

SOLE creation of the business entity. business profits.

PROPRIETORSHIP • Business and owner are legally • All the task and responsibilities

COMPANY the same entity. The owner has for making day-to-day business
total control of the business decisions by the owner, they
decisions and spending habits. have long working hours and
• No public revelation required: hard days off
they are not needed to • The company lack of structure
document annual reports or and be in a risk in managing the
other financial statements with budget because of not required
the state or government. to keep financial statements.

28


• Easy tax reporting: the owner • The raising capital activity is

only need to report net income difficult because the investors
or net business loss from their typically favor in the business
personal income taxes. that have strong financial
records and others forms of
security.
• Loans may also be drawback if
the owner does not have
enough credit to secure
additional money.
• Easy to establish because does • More expensive to establish
not requires as much as annual than other types of company.
paperwork or have as many • All members must belong to the
formalities as corporations. same profession.
• Owners of the business enjoy • The annual associated costs
limited personal liability for involved as well.
business debts, • Facing with difficult to raise
• More expensive to establish capital because form is less
than other types of company. popular hence, producing
LIMITED-
• All members must belong to the Equity and Debts are difficult
LIABILITY
same profession.13 judgments and leading to adding more new
COMPANY or other liabilities of the member to share profit from
business, even if the owners existing members who may
engage in significant control of have to share decision-making
the business. power with the new one.
• The business profits and losses • In regards to unemployment
can be allocated to the owners compensation, owners may end
along different lines than up paying more taxes and pay it
ownership interest. themselves.

29


• No restrictions on the number of • No perpetual existence because

members allowed and they have the existence of company
flexibility in structuring the would cease on death of
company management. member, promoter, etc.
• Avoiding double Taxation • Existence of separate records.
because income of company is This means owners must take
treated as income of members. care to keep their personal and
• − Ability to use the cash methods business expenses separate,
of accounting. This means that including any company records.
income is not earned until it is
received.

• No tough to create and maintain, • All members are jointly and

the partners can agree to create personally liable for sharing any
the partnership verbally or in debts, judgments or other
writing. It optional requires liabilities of the business.
minimal paperwork and legal • The business has no
documents to establish. independent legal existence
• The company not need to distinct from the partners.
complete a Corporation Tax • It is difficulty in transferring
Return ownership. Without a formal

PARTNERSHIP • Giving partner the freedom to agreement that explicitly states

COMPANY choose to leave if they wish to processes, business may come

without dissolving the company. to a halt when partners
• Can benefit from disagree and choose to end
companionship, mutual support their partnerships.
and sharing the burden. − • Members cannot make the
Partners can combine expertise decision themselves, that need
and more opportunities to to be approved by all partners
increase their collaborative and leading to possibility for
skillset. disagreements on some aspects
of the operation.

30


• With the benefits from the • Lacking of independent

unique perspective brought by existence aside from the
each partner, it helps better partners themselves,
decision-making. partnership can appear to be
• Distributing responsibilities and temporary enterprises, and the
workload help equally divided partnerships cannot be
among members. Besides, time independently checked can
and productivity get things done appear to present more risk.
faster.
• The partners both own and
control the business.
• More prospective partners,
more capital, more access to
profits, more opportunities to
fuel growth
• The huge capital required by • Difficulty in formation because
widespread investors of all of the requirement of legal
classes includes large-scale formalities, procedures and
enterprise. large number of people for its
• Having a stimulating effect on capital.
investment by limited liability of • Facing with delay in Decision-
the shareholders of a company making because all decisions
JOINT-STOCK
to face value of the shares they are taken by the board of
COMPANY have purchased. directors and shareholders in
• As an incorporated body, a general meeting, leading to
separate legal entity gives it a time consuming.
character of permanence,
continuity and perpetual
existence.

31


• Helping economies in purchases, • Often to be at the mercy of

management, distribution or bureaucracy. Misuse of
selling, provide goofs to the property, goods and money by
consumer at a cheaper price. the managerial personnel may
• Expansion of business is easy by harm the interests of the
issuing new shares and shareholders and create panic
debentures. among the investing public.
• All audited document, report, • Large joint stock companies
account… create confidence in tend to form themselves into
public. combinations or associations
• The shares of most joint stock exercising monopolistic power
companies are listed on the which may prove detrimental to
stock exchange and hence can be other firms in the same line or
easily sold. to the consumers.
• Change the ownership and • Leading to reduce employee
management does not affect the motivation and result in
continuity of the company. inefficiency because of lacking
• Company pays lower tax on a personal interest.
higher income because of the • Risk from undue speculation in
company pays tax on the flat the Shares of the Company
rates.
• Encouraging investment of small
investors.

IV. COMPANY INTRODUCTION

The part deals with the case scenario provided and the organization related – MWG Corporation – a large
company in Vietnam - through carry out an evaluation on their legal trouble, solution of company law and
some suggestion.
MWG is the large corporations with the achievement is the No.1 Retailer in Vietnam by revenue and net
profit after tax with 4500+ stores nationwide.

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MGW’s subsidiaries consists of trading, providing repair and maintenance of Information Technology,
electronic products, mobile devices, fresh foods, 16 pharmaceuticals, functional foods, medical
equipment and daily basic needs that including multiple chains under the following brands:

Thegioididong, DienmayXANH, BachhoaXANH, 4KFarm, Bluetronics (know as Bigphone) and An Khang
In addition, MWG has expanded to regional markets with the phones and consumer electronics retail
chain in Cambodia as well as invested in An Khang pharmacy chain.
Here is the detail information of MWG Corporation

33


Structure of ownerships/shareholders/members: the company has public all on annual report and the Ho
Chi Minh Stock Website.
Following are the Ownership structure:

34


1. Legal trouble description:

MWG deal under scrutiny by competition authority
Mobile World Group (MWG) has just announced completing the acquisition of a 95 per cent controlling
stake in Tran Anh (TAG). However, MWG’s resulting market share, as the company already held 30 per
cent before the deal, cause legal issues, blocking the corporation’s designs of expansion. The Vietnam
Competition Authority under the Ministry of Industry and Trade has set its eyes on the mergers and
acquisitions (M&A) deal between the two largest local electronic retailers—MWG and TAG. Based on the
researched acquisition documents and collecting opinions from similar businesses in the market, the
authority considered that MWG’s market share of IT products before the acquisition was over 50 per cent.
According to Article 18 of the Law on Competition, an ‘economic concentration’ is prohibited if the
combined market share of the two participating enterprises is more than 50 per cent. The department
has provided a lot of evidence stating that MWG held more than 50% of shares before buying back all
shares of Tran Anh company, but this was not announced by MWG. they sued MWG to court and asked
MWG to revert the merger. After that, The board of directors (BoD) at Tran Anh Digital pointed out that
the recently leaked information on the merger negatively influenced customer behaviour and shrunk the
company’s revenue. They suggested that MWG should stop this merger because it would greatly affect
the reputation of both companies.

2. Legal Solution suggestion:
To deal with this hassle with Tran Anh Company
Nguyen Duc Tai, co-founder cum chairman and CEO of MWG, hold a shareholder meeting and a press
conference, he recently confirmed that the transaction has been finished and company leaders have
started taking part in Tran Anh’s supermarket operations in October 2017.The negotiation stated that
Tran Anh Digital’s shareholders had approved of MWG purchasing over 25 per cent of the company’s
charter capital, with the caveat that the corporation will not submit a takeover bid, and to eliminate the
listed stock on the Hanoi Stock Exchange. Therefore, it is impossible to stop buying shares of Tran Anh, he
thinks that this is a rather unreasonable condition that Tran Anh's board of directors offers.
About the influence on the reputation of Tran Anh digital company, Nguyen Duc Tai and Tran Anh
company discussed that Tran Anh’s revenue was VND2.4 trillion ($105.5 million) in the first nine months
of 2017. They expect to hit over VND4 trillion ($176 million) in 2018.

35


It means the merger of Tran Anh and MWG will increase MWG’s scale to become the biggest retailer in
the country and raise the business efficiency of Dien May Xanh, Tran Anh, and their suppliers.
Therefore, MWG and Tran Anh Company decided to merge and MWG continuing own the shares of Tran
Anh Company, managing the company and maintain the name Tran Anh, but customers will enjoy
MWGstandard after-sales policies and service quality.
To deal with The Vietnam Competition Authority under the Ministry of Industry and Trade.
At the court, The Competition Administration Department under the Ministry of Industry and Trade
presented evidence that MWG break the law that clearly showing in Article 18 of the Law on Competition.
They pointed out that before announcing the merger, MWG's Board of Directors approved the purchase
of 23.6 million shares, equivalent to 95.2% of Tran Anh's charter capital. Thereby, MWG bought back
shares of 9 shareholders, including 7.7 million shares from Nojima Corporation (equivalent to 30.9% of
charter capital), 10.9 million shares of Mr. (44.2%) and 6 other shareholders.
After that, MWG published full evidence, documents, legal contracts about buying Tran Anh’s shares to
prove and made sure that the company’ total retail market share was over 30 per cent at the time of the
merger, it is unreal that MWG's shares in Tran Anh Company are more than 50% and MWG violates the
law.
They also point out that The Dien May Xanh retail chain is popular nationwide but needs to rise its
presence in Hanoi and big northern cities. Meanwhile, Tran Anh is a popular retail brand in the region
with 34 large-scale electronics supermarkets in northern locations. This merger also contributes to the
growth of the state economy as both are large domestic enterprises.
The department continuing saying that The economic concentration on business acquisition between The
Gioi Di Dong and Tran Anh is also said by this Department to have affected the structure of the retail
service market specializing in electronics and information technology products in the direction of reducing
the number of customers. number of competitors in the market (from being competitors to each other,
after implementing economic concentration activities, Tran Anh will become a subsidiary of Mobile
World).
In response to this, MWG confirmed that the transaction also increases the market power of Mobile World
after the economic concentration. However, the increase in power is not significant because Mobile World
before and after economic concentration are enterprises with a dominant position in the retail market
specializing in information technology products (accounting for >30 %). In addition, the self-development
of MWG and Tran Anh company in recent years has contributed to improving the domestic economy,
promoting foreign investment, contributing to social development and creating many jobs for workers.

36


This merger will be a lever to promote all the development of these positive mentioned things
furthermore.
à After reviewing the matter, carefully checking and comparing legal documents and stock purchase
contracts of MWG and Tran Anh Company, in addition, acknowledging MWG's positive contribution to
society and the domestic economy, the Court declared MWG innocent, allowed MWG and Tran Anh
Company to confirm and close the case. To this day, this case has been stopped because the Ministry of
Industry and Trade still has not had enough evidence to suing and charge MWG. With authentic evidence
of MWG released to the public, MWG and Tran Anh Company have successfully negotiated, merged and
been on the rise for over 3 years.
However, after the court, the department until satisfy with this result, they said it will continue to oversee
the activities of MWG in the retail market for household electronic devices and IT products to detect any
abuse of its dominant position in accordance with the law.

3. Suggest Dispute Resolution:
Between MWG and Tran Anh Company
For this legal trouble, the chosen dispute resolution of them is Negotiation that is a confidential process
where the parties try to together discuss, self-settlement, and resolve arising disagreements to eliminate
disputes. In detail, through Shareholder’s meeting, MWG and Tran Anh decided that continuing to finish
the transaction and company leaders have started taking part in Tran Anh’s supermarket operations.

Advantages of this method:

− Convenient, fast, simple, flexible, efficient and inexpensive;
− Protect the reputation of both two companies and business secrets
− Resolve disputes in such a way that allows them to continue with a working relationship.

Disadvantages of this method:

− The effectiveness of the negotiation depends on the understanding and goodwill and cooperation of
the disputing parties;
− Negotiating can fall through if the proposals are not fair because the results are not guaranteed by a
mandatory legal mechanism;
− The closed dispute settlement is easy to generate negative effects, the party with the most leverage
has power.

37


Between MWG and The Vietnam Ministry of Industry and Trade

The chosen dispute resolution is Court which is a method of settling disputes at trial agencies in the name
of State power, conducted according to strict and strict order and procedures and judgments guaranteed
by the State. After the trial, MWG is winner, they are allowed for merging with Tran Anh Company to
develop economic and be announced innocent by Judge.

This method brings many of Advantage:

− Public record: What litigation offers is a clear platform with a clear outcome. This is especially useful in
relation to social media, where accusations can quickly gain publicity without the opportunity for
reproach.
− An impartial decision: Judges are there to provide a balanced decision based on the evidence presented
to them.
− Parties are compelled to comply with judgments. In this case, the losing party (the Department) in
litigation is likely to comply with the judgment that is pronounced against it.
− Starting the litigation process will allow MWG to obtain information from the other side in the form of
documents and verbal responses through processes called document discovery and examinations for
discovery. These processes allow them to identify the strengths and weaknesses of both their own case
as well as the opposing party’s case, and give them access to information that may not have been available
through other forms of dispute resolution.
− Potential for a predictable outcome

And Disadvantage also:

− Longer time frame: both parties to a lawsuit may have to wait a significant amount of time until a
judgment is pronounced, and the matter is concluded.
- Judgment subject to appeal
− The costs of litigation will rise in accordance with the length of the pre-trial period as well as the length
of the trial.
− Damaging relationship, Increased supervision of the Ministry of Industry and Trade
− Public lots of information.

38


THE MOST POPULAR TYPE OF ORGANIZATION IN VIETNAM (D2):

According to Vietnamese experts in the field of economics, each type of business has its own advantages
and disadvantages. However, if based on the survey on the total number of companies in Vietnam today,
the type of business chosen by most companies is Limited liability company. The chart below will clarify
this information:

Source: dangkydoanhnghiep.gov.vn, 2020

Comparative statistics on the number of newly established enterprises by type in week 23 compared with
week 22. It shows that the one-member limited liability company has 1,882 enterprises (increasing 34
enterprises and accounting for 58.8%). ; type of limited liability company with 2 or more members with
744 enterprises (an increase of 79 enterprises and accounting for 23.2%); type of joint stock company
with 553 enterprises (increasing by 16 enterprises and accounting for 17.3%); the form of private
enterprise has 22 enterprises (reducing 05 enterprises and accounting for 0.7%) and the form of
partnership continues to have no registered enterprise.

One-member Limited Liabilities company is the most popular in Vietnam thanks to its compact and simple
organizational structure, suitable for an organization that wants to establish a subsidiary, or an individual
with sufficient financial capacity to establish their own company.

Although sometimes there will be capital constraints, this type of business is common to many businesses.
The advantage of a one-member limited liability company is that the company owner has the full right to
decide on all issues related to the company's operations, so decisions are made quickly and in a timely
manner based on discussing and making decisions on important issues such as limited liability companies
with two or more members and joint stock companies.

39


Due to its legal status, the owner of a one-member limited liability company is only responsible for the
company's activities to the extent of the amount of capital contributed to the company, so it poses little
risk to the owner and this is an outstanding point superior to other.

Another one belongs to the Multi-member Limited Liabilities Company which is suitable for all sizes and
business fields. The reason leads to this result lists:
• Due to their legal status, members of a limited liability company are only responsible for the
company's activities within the amount of capital contributed to the company, so they pose little
risk to capital contributors.
• The number of members in a limited liability company is not much and the members are usually
acquaintances and trust each other, so the management and administration of the company is not
too complicated.
• The capital transfer regime is strictly regulated, so investors can easily control the change of
members, limiting the penetration of strangers into the company.
In addition, a limited liability company can be established under the form of either a wholly foreign-owned
company or a partially foreign-owned company in Vietnam. This is one of the most popular business
structures for foreign investors in desire of business expansion to the Vietnam market.

The next popular is A joint stock company which possesses advantages that none of the following types
of businesses have, but this type of business encounters barriers that make it unpopular compared with
Limited Liabilities in Vietnam because this type of business requires a high level of investing capital and
how to organize, manage and run the business.

Beside, the operation of a Joint Stock Company is very complicated due to the large number of
shareholders, which leads to more difficult decision-making and bureaucracy. Most large companies with
at least 3 individuals or organizations contributing capital or more who want to do business in industries
that require large capital will give preference to the type of joint stock company to easily raise capital
from many sources and many different objects.

40


LABOR LAW
ADIDAS WAR OR WANT CASE IN INDONESIA
I. COMPANY INTRODUCTION:
Adidas is a German multinational firm that designs and manufactures shoes, clothes, and accessories. It
was founded and is based in Herzogenaurach, Germany. It is Europe's largest sportswear producer and
the world's second largest after Nike.
1. Case Brief:
On April 14, 2012, The Independent newspaper in the UK ran a series of articles on working conditions in
Indonesia, labeling the LOCOG1 supplier “sweatshops” and asking whether these factories breached the
adidas Group’s Workplace Standards and the aspirations for an ethical and sustainable supply chain for
the London 2012 Olympic Games.
2. Problem:
Ø Thousands of workers have to endure poor wages and clothing store-like harsh conditions to create
the coveted Adidas sneakers.
Ø Adidas also doesn't have a good track record when it comes to upholding union rights.
3. Legal Solution suggestion:
Better salary
ü Workers demand a living wage, which allows them to meet basic family needs after working full-time
for a week with no overtime. Adidas will not commit to a living wage for its workers.
ü But they will commit to paying sports stars who have earned millions of dollars to endorse their
products.
Right to form trade unions
ü Adidas manufactures most of its equipment in countries and free trade zones where workers are
illegal or extremely difficult to unionize. Without this unified structure, it would be nearly impossible
for individual workers to demand improved conditions without fear of reprisal.
ü Adidas has taken a positive step by signing the new Protocol of Freedom of Association in Indonesia.
Adidas is an active participant in negotiations with Indonesian trade unions and supplier factories to
develop the Protocol on Freedom of Association. The protocol, which Adidas signed in June 2011, has
had positive effects on a number of suppliers. But Adidas must work hard to ensure that the Protocol
is implemented at the factory level throughout its supply chain.

41


A secret complaint structure

ü When workers are subjected to sexual harassment, intimidation, violence or other human rights
violations, they need to be able to access a confidential complaints mechanism and they need those
complaints taken seriously and handled. tactfully. Under public pressure, Adidas has worked to
establish complaints mechanisms in some factories, but most Adidas workers do not have access to
a complaints mechanism they have reason to trust.
Ban on short-term contracts
ü Adidas moves its production where it likes and does not ban or discourage short-term contracts for
its workers. So when it leaves an area, short-term contract workers will be left with nothing.
Encourage respect for workers' rights
ü Adidas should provide meaningful incentives to factories that respect workers' rights, especially
workers' right to unionize. Without real encouragement, human rights abuses will continue.
4. Legal Dispute Resolution:
In this scenario, I suggest Court as a dispute resolution method due to the size and scale of the problem
involve a multi-national company like Adidas as well as it violate the Indonesia Labor law in term of wages
and poor working condition:

ADVANTAGES DISADVANTAGES
• In a company as big as Adidas, they usually • If an arbitrator determined on subjects that
don’t admit and try to cover the case, court were not covered by the arbitration
will find a fair way to resolve the problem agreement, a court could overturn the ruling.
both sides have. • Limited opportunity for judicial review of an
• Court also has a deterrent effect on Adidas arbitrator's decision.
who violate the law. • Both parties must voluntarily agree to
• The courts, have better conditions than arbitration, if the consent of one party is
arbitrators in conducting investigations this obtained by fraud or force, it will not be
means they has the right to coerce and enforced. Also, if the decision of the
summon a third party to court if necessary. arbitrator is patently unfair, it will not be
enforced.
• Time consuming
• Expensive process

42


5. Real world judgement:

• Allegations related to non-payment of minimum wages were not substantiated.
• At most factories, allegations around lack of union recognition and excessive working hours were not
substantiated. Where there were issues identified at individual factories, actions were agreed with
adidas Group related to support for on-going collective bargaining agreements and improved
production planning.
• Issues related to lack of awareness of the adidas worker grievance hotline were substantiated. The
adidas Group recognises that we have been overly reliant on issues raised by the local trade unions,
with whom we have regular contact, and remedial action is needed to improve the promotion and
communication of our hotline with the general workforce.
• In some of the factories, there were issues with verbal abuse from supervisors or workers feeling
under excessive pressure to reach production quotas. In those cases where this issue was
substantiated, we have agreed to implement training for managers and supervisors on harassment
and abuse.
• Both adidas’ investigations and the independent worker interviews revealed some additional issues
at each of the factories. These have been addressed with appropriate remedial actions which will be
subject to monitoring and review by LOCOG

DISPUTE RESOLUTION METHOD

I. DEFINITION:
Dispute resolution means that a competent agency or organization considers and issues a decision to
handle civil, marriage and family, business, commercial and labor disputes, on the basis of considering
legal documents. Data and evidence contained in the dispute in order to protect the legitimate rights and
interests of individuals, agencies and organizations.

II. TYPES OF DISPUTE RESOLUTION METHOD:

a. Negotiation:
Negotiation is the process of exchanging and discussing between two or more parties to reach an
agreement. The negotiation process takes place when there are conflicts, or common concerns, that need
to be resolved.

43


Characteristics:
- Willful: No gathering is compelled to take an interest in an exchange.
- Multilateral: Negotiations can include two, three or many gatherings.
- Non-adjudicative: The result of an arrangement is reached by the gatherings together without
response to an outsider impartial.
- Casual: The gatherings are allowed to receive whatever rules they pick, assuming any.
- Classified: The gatherings have the choice of haggling freely or secretly.

ADVANTAGES DISADVANTAGES
May not satisfactorily secure gatherings lawful
Classification and the aversion of exposure.
rights.

May further develop correspondence between In negotiation - absence of nonpartisan may

parties in this manner safeguarding or upgrading diminish shot at agreeing, especially in complex
connections between parties. debates or those including multi-parties.

May help with explaining and narrowing issues,

and encouraging environment of transparency,

co-activity, and cooperation, regardless of
whether a settlement isn't reached.

Settlement of contract disputes through Negotiation: is the method chosen by the disputing parties first
and in practice most disputes in business and commerce are resolved by this method.

b. Reconciliation:
Reconciliation is the intervention, the mediation of conciliation; the act of a third party to mediate
between two disputing parties in order to persuade them to settle or settle a dispute between them.
Characteristics:
• Reconciliations must be independent and objective in the dispute resolution process. This person
must be in a position to be independent of the parties and have absolutely no interest in the
dispute.
• Voluntary: Agreements and commitments as a result of the mediation process are not enforceable,
but depend on the goodwill and voluntariness of the parties.
• Confidential: When participating in the mediation process, the parties must sign a commitment
not to disclose information obtained from the mediation process.

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ADVANTAGES DISADVANTAGES
Reconciliation procedures are carried out Closed, non-public settlement form can
quickly and without restriction and save time. generate negative and illegal consequences.

The parties have the right to decide for Whether or not reconciliation is conducted
themselves, to choose any mediator as well as depends on the agreement of the parties, the
the location to conduct the mediation so that a reconciliation does not have the power to make
mediator can find a mediator with expertise in a binding decision or impose any issue on the
the matter in dispute. disputing parties.

Low cost.

Friendly reconciliation in order to continue to

preserve and develop business relationships for
the benefit of both parties, so in general it does
little harm to the inherent cooperation of the
parties.

Can be kept confidential business and dispute

issues.

Resolving contract disputes through Reconciliation: Mediation is the parties to the dispute through an
intermediary (Mediator/mediation center) to discuss and agree to come to an agreement on a solution.
disagreement between them and voluntarily implement the agreed solution through mediation.

c. Commercial Arbitration:
Commercial arbitration is a method for resolving questions by alluding them to an impartial individual, a
judge, chosen by the gatherings for a choice dependent on the proof and contentions introduced to the
assertion council. The gatherings concur ahead of time that the choice will be acknowledged as last and
restricting.

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Characteristics:
• Arbitration only settles commercial disputes at the request of the disputing parties and such
dispute must fall within the arbitration's jurisdiction. Disputes falling under the jurisdiction of
arbitration include: Disputes between parties arising from commercial activities, disputes arising
between parties in which at least one party has commercial activities, other disputes between the
parties as prescribed by law shall be resolved by arbitration.
• The subject of commercial dispute settlement is the arbitrators who perform through the
Arbitration Council consisting of one independent arbitrator or the council consisting of many
Arbitrators.
• Commercial dispute settlement by commercial arbitration ensures the combination of two
elements: agreement and award.

ADVANTAGES DISADVANTAGES
Arbitration procedures are simple and fast, the The arbitrator is not a state authority, so when
parties can be proactive in terms of time and adjudicating, in case it is necessary to apply
place to settle disputes, do not go through many temporary urgent measures to secure evidence,
levels of trial like in courts, thus limiting the cost the arbitrator cannot make a binding decision
of time and money. on the matter that requires the court to enforce
the arbitral award.
The principle of arbitration is not open to the
public, which partly helps the parties maintain The implementation of the arbitrator's
their prestige in the marketplace. This is decisions completely depends on the voluntary
considered to be the most favored advantage by consciousness of the parties.
the disputing parties.
The disputing parties have the ability to
influence the arbitration process, control the

provision of their evidence and this helps the
parties to keep their business know-how.

Arbitration when resolving disputes in the name

of the will of the parties, not in the name of the

state's judicial power, is very suitable for settling
disputes involving foreign elements.

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Settlement of contractual disputes through Commercial Arbitration: That is, the parties agree to bring the
disputes that have arisen or will arise between them to arbitration and the Commercial Arbitration, after
considering the dispute, will bring The award is enforceable against the parties.

d. Court:
Court, additionally called courtroom, an individual or assemblage of people having legal position to hear
and resolve questions in common, criminal, religious, or military cases.
A judicial court was established to administer justice. An organization within the government authorized
to administer the judiciary. In a broader sense, the term can also refer to a legislative assembly; a
deliberative body, such as the Massachusetts General Court, is its legislative body. The words court, judge,
or judge, when used in law, are often synonymous.

Characteristics:
• Keeping the harmony: The essential attributes of any court framework—to assist with keeping
homegrown harmony—is clear to the point that it is once in a while thought of or referenced.
• Choosing questions: On the off chance that, in a criminal case, the respondent (one accused of a
wrongdoing) denies perpetrating the demonstrations charged against him, the court should pick
between his adaptation of current realities and that introduced by the arraignment.
• Legal lawmaking: All courts apply previous standards (resolutions) planned by authoritative
bodies, however the methodology fluctuates incredibly between precedent-based law and
common law nations.
• Established choices: In certain nations, courts decipher enactment as well as decide its legitimacy
(lawfulness), and in this manner they some of the time invalidate rules elapsed by assemblies.
• Procedural standard making: Particular from the sort of lawmaking just depicted is a more
cognizant and unequivocal kind of legal enactment that is to some degree less disputable.

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ADVANTAGES DISADVANTAGES
If the parties fail to comply, they will be coerced
by the judgment enforcement agency. The The proceedings may be delayed and prolonged;
parties are entitled to their rights and may have to go through several levels of trial;
obligations and must comply with the Court's affect the production and business process.
ruling.
The principle of public trial has a deterrent Procedures in court are not flexible because they
effect on business traders who violate the law. are prescribed by law.
The principle of open trial of the court, although
The courts, representing national sovereignty;
it is considered a progressive principle; deterrent
have better conditions than arbitrators in
but sometimes hinder entrepreneurs when
conducting investigations; has the right to
business secrets are revealed; and reputation in
coerce and summon a third party to court.
the market diminished.
The parties do not have to pay remuneration to
the judge, in addition, the administrative costs
are very reasonable.

Settlement of contract disputes through the Court: This is a method of dispute resolution that the parties
through a procedure-conducting agency to settle.

e. Other types:
Mediation is another other question goal component that is generally embraced by parties associated with
a contention. Mediation is an interaction that includes utilizing the administrations of a nonpartisan
outsider to help parties at question to show up at a friendly and adequate answer for every one of them.
Mediation can be facilitative or evaluative, however it is for no situation an instrument where the arbiter
can give a choice voluntarily.
Authoritative tribunals are set up to be less formal, more affordable, and a quicker method to determine
debates than by utilizing the customary court framework. Tribunal members who decide (adjudicators) for
the most part have uncommon information about the theme they are approached to consider. Judges, in
any case, are required to have general information about numerous spaces of law, not specific mastery
about the law for the situation they are hearing.
An ombudsman is an individual who has been named to investigate protests about organizations and
associations. Ombudsmen are autonomous, free and fair-minded – so they don't favor one side.

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THE POPULAR DISPUTE RESOLUTION METHOD IN VIETNAM (D3):

In the period 2011-2015, Vietnam's integration into the global economy is deeper and deeper, and the
field of international trade develops strongly. However, along with that also arise international trade
disputes that require a more effective method of settlement. Businesses have positively recognized and
evaluated the method of mediation by arbitration. The number of dispute cases handled by arbitration
centers has increased by 30% compared to the past. According to statistics in the period from 2011 to
December 31, 2015, arbitration centers have issued 1,831 arbitral awards, in 2015 alone, arbitration
centers have resolved 1,255 cases, an increase of 389 cases compared to 2014. (VIAC, 2008-2020)

Source: nghien cuu phap ly, 2020

In recent years, the number of disputes resolved at arbitration centers has also increased, typically at
VIAC: In 2015, the center received and resolved 146 cases, in 2016 it was 155 cases. In 2017, VIAC received
and resolved 151 disputes with a total value of up to 1,400 billion VND. In 2018, this organization settled
180 commercial disputes with a total value of 9,400 billion VND (VIAC, 2008-2020).

In 2019, VIAC handled 274 disputes, an increase of 52.2% compared to the total number of disputes

49


handled in 2018, of which, domestic disputes were 231 cases, accounting for 84.3%. 43 cases with foreign
elements, accounting for 15.7%; the total value of disputes (including the value of counterclaims) is nearly
7.3 trillion VND, with an average value of 26.9 billion VND per case. Disputes about trade war 44%, real
estate 20%, services 15% and other disputes belong to the fields such as: Construction, insurance, logistics,
finance and banking, securities, etc. outsourcing, marine, guarantee (VIAC, 2008-2020)

è Because of the increasing popularity of economic integration in Vietnam, there are more and more
multinational companies in Vietnam, accordingly, commercial arbitration is always preferred by
Vietnamese enterprises when there is a dispute. Dispute settlement by commercial arbitration has many
advantages such as: faster settlement time, simpler procedures (only 1 trial instead of multiple levels: first
instance, appellate, cassation, reopening). The disputing parties can directly choose an arbitrator and
choose a place to settle the dispute (inside or outside the Vietnamese territory). Commercial arbitration
is a method of dispute resolution in the commercial field, equivalent to a court. Commercial arbitration
has a mechanism to ensure judgment enforcement like a court judgment or decision. Furthermore, the
arbitral award is immediately enforceable.

Comment
Although the method of dispute resolution by Arbitration is the most popular method in Vietnam with
many outstanding advantages. However, it is not the most effective method for resolving commercial,
contractual or labor law disputes.
For reason, firstly, Arbitration requires relatively high costs, it does depending on the value of the dispute,
the longer the case, the higher the arbitration costs.

Secondly, the arbitral award depends on a lot of the willingness of the disputing parties who may file a
request for the Court to cancel the arbitral award. As a result, the judgment debtor may find it difficult to
get the other party to fulfill its obligations.

Thirdly, the arbitration agreement is a required condition for the dispute to fall under the arbitration’s
jurisdiction. Therefore, in case that one party needs to settling dispute by arbitration but cannot reach an
agreement with the other party, the dispute cannot be resolved by arbitration.

50


Recommendation
Therefore, to recommend, our group so significantly support the Court Method to solve business dispute
in Vietnam. The effectiveness of this method can clearly saw in MWG and The Vietnamese Ministry of
Industry and Trade case.
To explain, principles of settling business and commercial disputes:
ü Fast, accurate, legal.
ü Limiting negative impacts on operation and production of business.
ü Ensure the party’s right to self-determination with the least cost.
ü Flexible, can combine many different forms of dispute resolution.
ü Protect the reputation of the parties and keep business secrets .
ü Reaching a highly feasible agreement (decision).
So, although the cumbersome, complication and inflexible nature of dispute settlement process and Court
is public trial, which makes the parties shall not be protect their trade secret, make this method not
popular in Vietnam, it cannot be negated that this method still meet most of principles outlined above.
In legal practice, when the measures of Negation, Conciliation and Arbitration do not bring results, all the
parties choose to the Court method to settle. Method of negotiation and conciliation completely depends
on the goodwill of the party, it will become unrealistic for high-value cases. Arbitration method requires
high costs and the enforcement of arbitral results is not always convenient and smooth.

In conclusion, Court is the most traditional and effective method of dispute resolution.
Firstly, the Court is an agency in the name of the State to settle the disputes, do the court’s judgments are
guaranteed to be enforced by the power of the State. Judgment enforcement agency is a specialized
agency and has sufficient state departments in order to execute legally valid judgments. So, judgment
enforcement is guaranteed in most cases.
Secondly, the settlement can go through many levels of trial, so the rules of multiple levels of trial ensures
that the court’s decisions are accurate, fair, objective and comply with the law.
Finally, the cost for the settlement of economic disputes in courts in accordance with the law is much
lower than using commercial arbitrations organizations or international arbitration.
Noted the above matters from the beginning will help the parties choose the right solution for settling
dispute. And these not be limited in the case of the inconsistence of additional criteria, bring about the
party’s passivity in the dispute settlement process. As a result, enterprises should consider the current
situation and select the suitable settle type.

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C. CONCLUSION:
In summary, this report has thoroughly analyzed Business Law in general, as well as Contract Law,
Company Law and Labor Law in particular. In addition, this report also analyzes the relationship of law to
political structures, including different legal cases and projects, and proposes solutions to legal problems.
with various dispute resolution proposals. At the same time, this report not only wants to introduce the
development of the legal system but also the advantages and disadvantages of all types of companies. As
society going to more and more advance, the role of law is more important to maintain order and help
develop businessess.

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APPENDIX 1: ç Click here to return

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