Chapter 1.

INTRODUCTION TO BUSINESS LAW

I. INTRODUCTION TO LAW
Human societies have always required rules to function. In ancient times, informal laws
governed by leaders or elders guided communities, ensuring that people coexisted
peacefully. With the growth of civilizations, more structured systems emerged. The Code
of Hammurabi, one of the earliest known legal codes from ancient Babylon, laid down
laws with corresponding punishments. Similarly, Roman law laid the groundwork for
many modern legal systems. As societies evolved, so did the complexity and scope of their
laws, shaping what we recognize today as organized legal frameworks.
Law is all-pervasive. It exists in every cell of life. It affects everyone virtually all of the
time. It governs everything in life and even what happens to us after life. It applies to
everything from the embryo to exhumation. It governs the air we breathe, the food and
drink that we consume, our travel, sexuality, family relationships, and our property. It
applies at the bottom of the ocean and in space. It regulates the world of sport, science,
employment, business, political liberty, education, health services – everything, in fact,
from neighbour disputes to war.
1. Definition of the concept of law
- Law is a system of rules created and enforced by social or governmental institutions to
regulate behaviour, maintain order, and establish norms within a society. The legal
meaning of law is a multifaceted concept that is foundational to the functioning of societies
and the governance of human behaviour. At its essence, the law is a system of rules created
and enforced through social or governmental institutions to regulate conduct, ensuring
order, justice, and predictability within a society. Law is an abstract concept, but its
implications and applications are very real and tangible. It encompasses statutes passed
by legislatures, regulations issued by government agencies, and constitutional principles
and precedents established by judicial decisions.
- Law is a set of rules created by the state which forms a framework to ensure a peaceful
society. If the rules are broken they can be enforced by mechanisms created by the state
and sanctions imposed. This definition covers the key features of the law as we know it.
+ It is created by the state to ensure that society works smoothly.
+ If laws are broken then the people who broke them will face some form of punishment.
+ The state also provides for methods of law enforcement.
- Laws will be considering some of the rights and responsibilities it entails, and how these
are acquired and used.
- Law can be stated as “a repeated action which holds good at every time and at every
place or if an action is repeated again and again and we get the same result and the result
holds good at every time and at every place it is called a law”.
Law is the cornerstone of civilization. It protects us, defines our rights, and shapes the
societies we live in. While laws evolve, their essence remains the same: to ensure justice,
peace, and order. Today’s legal systems face multiple challenges. Overcrowded courts,
high legal fees, and unequal access to justice are prevalent issues. There is a growing call
for legal reform to make laws more accessible and efficient. Technology is reshaping the
legal landscape. Cyber law deals with internet-related crimes, while digital evidence is
now common in courtrooms. Additionally, the rise of automated legal services and
artificial intelligence is changing how legal work is performed, raising questions about the
future of the profession.
Q&A: Spend a few minutes thinking about what you have done today. Identify anything
you have done that you think may have been governed by ‘laws’.
2. Functions of Law
Laws govern nearly every aspect of our lives, yet their complexity can often make them
difficult to understand. Despite this, the role of law is foundational in any functioning
society, helping to maintain peace, ensure fairness, and resolve disputes. The primary
purpose of law is to maintain order. By establishing clear rules, societies can prevent chaos
and anarchy. Laws protect individual rights, ensuring that no one is unfairly treated or
oppressed. They provide frameworks for resolving disputes, whether between individuals,
organizations, or even nations. Without laws, there would be no safeguards against
wrongful acts or injustices. In essence, law acts as both a deterrent against crime and a
mediator in conflicts. Moreover, laws regulate economic activities, defining fair business
practices and laying out what’s legal and what isn’t. They serve as the backbone for
national and international trade, ensuring economic stability. In summary, laws influence
our daily behavior and set expectations for societal conduct. The primary functions of law
include:
- Regulating Behaviour: Law sets standards for what is acceptable conduct in society. It
guides behaviour and sets boundaries for actions, deterring harmful behaviour and
promoting social order.
- Resolving Disputes: Law provides mechanisms (like courts and arbitration) for resolving
disputes between individuals, organisations, and states, ensuring peaceful and fair conflict
resolution. Most importantly, the law also provides a mechanism to resolve disputes arising
from those duties and rights and allows parties to enforce promises in a court of law.
- Protecting Rights and Liberties: Law safeguards fundamental rights and freedoms, such
as freedom of speech, equality, and privacy. Laws are created because it help prevent chaos
from happening within the business environment and as well as society. We may not agree
with all the laws that exist but they have each been created for a purpose, whether it is to
protect society, such as laws against violence, or to protect us, such as laws regulating the
quality of products we buy.
- Providing a Framework for Transactions: Law facilitates and governs business
transactions, property ownership, contracts, and other economic activities.
3. A legal system
3.1. Definition of legal system
A system has been defined as considered principles or procedures of classification. Legal
has also been defined as something of or relating to law; falling within the province of law.
Thus, from the above definition of ‘legal’ and ‘system’, a legal system can be defined as
the principles or procedures for the classification of laws, matters or procedures relating to
them. It can also be defined as a body of rules, including the principles, rules or doctrines
associated with them that have the force of law in a given society. A legal system is an
organised set of laws and regulations, including the processes and institutions necessary to
enforce them, which governs the conduct of a society and administers justice. A legal
system encompasses statutes, regulations, and case law, administered by various
institutions designed to guide, interpret, and apply the law.
At the core of a legal system is a written or unwritten constitution. This document, or set
of principles, serves as the supreme law, outlining the powers and responsibilities of
government entities and the rights of individuals. From this central core, branches extend
into various types of laws: criminal, civil, administrative, and sometimes religious, each
with its specialised courts and enforcement mechanisms.
Central to the legal system of justice and governance is the rule of law, a principle that
mandates the application of the law equally to all individuals, institutions, and entities
within the state. This ensures that no one, regardless of position or power, is above the law.
That means “The Rule of Law as a Cornerstone”. This concept is primary in maintaining
the integrity and fairness of the judicial process, providing a predictable and systematic
method for resolving disputes.
3.2. Legal systems around the world
a. Common Law Legal System
The common law legal system is one that revolves around the principle of stare decisis
which means ‘let the decision stand’. It is further explained as a golden rule which states
that decisions of higher courts are binding on lower courts and decisions of courts of
coordinate jurisdiction are for all intents and purposes, binding between them. There are
some features of the common law legal system:
1. It operates the doctrine of judicial precedent. In the case of Global transport vs free
enterprises, judicial precedent was described as meaning that decisions of courts of
superior record are binding and the decisions of courts of coordinate jurisdiction are for all
intents and purposes, binding between them.
2. The method of adjudication is adversarial in contrast to inquisitorial. This means that
judges are not expected to leave the bench and come into the field.
3. Unlike civil law, most of the laws in the common law legal system are not codified.
4. Also, the jury system originated in common law.
5. Unlike civil law, its judges are not career judges. Before a person can be a judge in a
common law legal system he has to have been a practising lawyer for a while.
6. In the common law, judges make law through their various decisions.
b. The Civil Law Legal System
Civil law legal system is one which originated from the Roman empire and whose primary
feature is codification. Also, in comparison to common law, the doctrine of judicial
precedents does not apply in civil law courts. Historically, civil law encompasses the legal
ideas and systems derived from the code of Justinian but heavily overlaid by Napoleonic,
Germanic, Canonical, feudal and local practises as well doctrinal strains such as natural
law, codification and legal positivism. There are some features of the civil law legal
system:
1. The influence of scholars on the evolution of civil law is very significant. It is usually
said that while common law is judge-made, civil law is university-made.
2. The laws in civil law legal systems are largely codified. Codification is the compilation
of laws into a single document according to subject matter.
3. The doctrine of judicial precedent doesn’t apply in civil law.
4. The judiciary in civil law is made up of career judges in contrast to common law where
judges have to be initially lawyers.
5. Another feature is that in civil law the administration of justice is inquisitorial in contrast
to the adversarial nature of common law.
c. Islamic Legal Systems
Islamic law, unlike the previously discussed systems, is not an independent branch of
knowledge. Law is integral to Islamic religion, which defines the character of the social
order of the faithful who create laws in the name of Allah, or God . Islam means
“submission” or “surrender” and implies that individuals should submit to the will of God.
Islamic religion states what Muslims must believe and includes the Shari’a (“the way to
follow”), which specifies the rules for believers based on divine command and revelation.
Unlike other systems of law based on judicial decisions, precedents, and legislation,
Islamic law is derived from four principal sources.
d. Socialist legal system
The socialist legal system is more scientific, evidence-based, and people-oriented. It has
the ultimate aim to build a classless and lawless society. But the application was not
successful as the spirit of the concept of the system. Despite the fewer followers of this
system, it has so many positive aspects. The concept of a welfare state, economic planning,
social security, and social inclusion are the products of a socialist legal system, which are
being adopted by almost all countries of the world and it is also received in apex law and
other specific legislations as well as practiced in Nepal. Thus, the relevancy of the socialist
legal system is still prevailing.
4. Elements of an effective legal system
An effective legal system comprises several essential elements:
- Legislative Bodies: These are institutions like Congress or Parliament responsible for
creating laws.
- Judiciary and Courts: Courts interpret and apply laws, ensuring that justice is served
fairly. Judges play a critical role in upholding the law.
- Law Enforcement Agencies: Police and investigative agencies ensure laws are followed,
acting as the enforcement arm of the legal system.
- Legal Interpretation in Legal Systems: Interpretation is a vital function within the legal
system. Courts interpret the laws, applying them to specific cases. This interpretation,
particularly in common law jurisdictions, creates precedents, which form case law—a
critical component of the law in many countries. The dynamic nature of interpretation
means that the law is not static but evolves with new decisions and societal changes.
5. The branch of law in the national legal system
5.1. Definition and classification of branch of law
Law is the set of principles and norms that regulate human societies around the concepts of
justice and order, and that States are capable of coercively imposing. But its study and
analysis is also called that. In other words, Law is at the same time the legal order of
societies and the discipline that studies them. It comprises a set of categories or
subdisciplines, specialized in the different criteria for applying the law, as well as in the
formulation of its principles themselves.
These categories are known as the branches of law.
First, the classification of the right is given based on three criteria, which are:
- Due to its national or religious scope: That is, to the cultural, political, and
historical tradition that engendered them. For example, Germanic law, Anglo-Saxon
law, Roman law, etc.
- For the specific activity it regulates: That is, depending on what specific reality the
laws studied regulate. For example, it includes military law, labor law, banking law,
etc.
- Due to its technical field: That is, for the parts of the legal process that they
regulate. For example, civil law, criminal law, administrative law, etc.
Second, broadly speaking, however, the classic division between the branches of law
occurs following the parameters inherited from Roman jurisprudence, one of the most
historically important. That is to say that Law is divided into three branches: public law,
private law, and social law, each with its particular branches.
Public law: It is dedicated to controlling the way in which citizens establish links with
the State whether in a personal capacity or as private organizations, or to the organization
of the Public Powers of the State, as long as they act legitimately and within the framework
of what is established in the Constitution (or its equivalent). This division of law
contemplates the following branches:
 Political right It studies and regulates the exercise of politics, that is, command
and subordination, the elements and types of State, forms of government, political
philosophy and other aspects related to it.
  Constitutional law: It is dedicated to the analysis of the fundamental rights
enshrined in the Magna Carta or in the basic legal text of society, whatever it may
be, and ensures the regulation of public powers, subjecting them to what is legal.
 Administrative law: Dedicated to the study of public administration, that is, the
regulation of the State, its public services and auxiliary bodies, which must operate
to guarantee order, justice and security.
 Immigration law: That which has to do with the international transit of
individuals, their nationalization, immigration mechanisms, and the right of entry,
exit, or permanence of citizens of other countries.
 Procedural law: Dedicated to the resolution of conflicts in an orderly, legal, and
valid manner, between individuals and the State, or between themselves, in
accordance with the regulations of the State and what is contemplated in the laws
regarding the judicial process and due guarantees.
 Public international law: It is the one that deals with relations between States,
within the international community and its bilateral cooperation, regulation and
mediation organizations in conflicts between national and international
communities.
 Fiscal or tax law: One who studies the collection and tax mechanisms of the State.
 Criminal law: Linked to the exercise of justice as punishment for the guilty and
compensation for the victims, according to the legal code that distinguishes
between what is legal and what is not.
Private law: It is in charge of the regulation of legal relations between constituted
individuals, that is, subjects of law, in a condition of equals, and without the interests of
the State intervening in it. It is divided into three different branches:
 Civil law: It includes the set of rules that regulate the daily life of human beings,
such as family relationships or the formation or dissolution of marital ties, parental
authority, maternity, private property, civil registration, and the right to usufruct and
possession of the different types of goods, individual obligations and types of
contracts between people.
 Commercial law: It deals exclusively with commercial, financial, mercantile, or
economic exploitation acts that occur in legal, fair, and formal terms between
subjects of law, whether natural or legal persons.
 Private international law: It regulates the international operations of individuals
and regulates nationalities and possible conflicts between different legal
frameworks.
Social law: Understand and study the laws and regulations that ensure the harmonious
coexistence of individuals within a society which is equal before the law but disparate in
terms of socioeconomic classes. To do this, it covers the following branches:
 Labor law: It is responsible for regulating the conditions under which work takes
place to guarantee that they are fair, equitable, and respectful of the law, as well as
 the possibilities of union or union representation and other aspects that concern
professional practice. It comprises three sub-branches: individual labor law,
collective labor law, and procedural labor law.
 Economic law: It includes the rules that regulate the participation of the State in
the economic activity of a society to provide legal certainty to the participants in
the productive chain in its different stages.
 Agrarian law: It regulates land ownership, agricultural exploitation, and various
forms of non-urban property.
 Ecological law: Deals with the set of rules for the defense of the environment and
the ecological legacy of society to prevent the indiscriminate and irresponsible use
of natural resources or excessive pollution and severe ecological damage.
5.2. Some important branches of law and their functions
- Criminal Law - Order and Social Control: The segment of the legal system that deals with
conduct considered harmful to society as a whole is known as criminal law. This not only
includes the definition of criminal offences but also the prosecution and punishment of
those offences. Through this mechanism, the state imposes sanctions, ranging from fines to
imprisonment, to maintain social order and deter future wrongdoing.
- Civil Law - Resolving Disputes Among Citizens: In contrast to criminal law, civil law
deals with the rights and duties of individuals towards each other. It encompasses a broad
spectrum of issues, from contracts to property and from torts to family relations. Civil
courts provide a venue for parties to seek remedies for breaches of duty or violations of
rights, often resulting in compensation or specific performance.
- Administrative Law - Governmental Actions Under Check: Administrative law governs
the activities of governmental agencies. It ensures that these bodies do not overstep their
authority and that they perform their functions in accordance with the law. This branch
provides a check on executive power, offering citizens a way to challenge governmental
decisions and seek redress when their rights are infringed upon by the state’s actions.
- Procedural Law vs Substantive Law: Within the judicial construct, a distinction is made
between procedural and substantive law. Procedural law provides the machinery for
enforcing rights and obligations, laying down the steps for conducting a trial. It is the oil
that keeps the gears of justice turning smoothly. On the other hand, substantive law defines
the actual rights and duties of individuals and the penalties for their violation.
- International Law - Beyond Borders: In the age of globalisation, no discussion of the
judicial architecture is complete without mentioning international law. This is the body of
rules that governs the conduct of states and international organisations and deals with their
relationships with each other, as well as with individuals and other entities. It is a complex
tapestry of treaties, conventions, and customary international law.
II. VIETNAM’S LEGAL SYSTEM
1. Introduction to the Legal System
The legal system in Vietnam plays a crucial role in shaping the nation’s socialist-oriented
market economy and governance framework. As the country has transitioned from a
centrally planned economy to a socialist-oriented market framework, the legal landscape
has evolved to facilitate economic growth, protect citizens’ rights, and maintain social
order. The legal system is pivotal in ensuring that market mechanisms operate efficiently
while adhering to socialist principles.

Vietnam’s legal system is rooted in its historical context, influenced by various legal
traditions, including traditional Vietnamese customs, French colonial law, and socialist
legal theory. This amalgamation has created a unique legal framework that emphasizes
state control and collective rights. The principles of the socialist-oriented legal structure are
enshrined in the Constitution, which serves as the supreme law and establishes the
foundational legal order. The Constitution not only affirms the state’s commitment to
socialism but also underscores the importance of individuals’ rights and responsibilities in
society.
The core principles of the legal system include the rule of law, equality before the law, and
the protection of human rights. Vietnam emphasizes the necessity of law in guiding
socioeconomic policies and governance, demonstrating this commitment through the
establishment of various legal documents, regulations, and organizations responsible for
enforcement. The legal system comprises multiple components, including the judiciary,
legislative bodies, and administrative regulatory frameworks. Each element plays a
significant role in ensuring that laws are applied consistently and justly throughout the
country.
Understanding the intricacies of Vietnam’s legal framework is essential for both domestic
and international stakeholders engaged in commerce, human rights advocacy, and
governance. As Vietnam continues to develop, its legal system will likely undergo further
transformation, reflecting the nation’s commitment to adapt and thrive in a rapidly
changing global landscape.
2. Historical Development of the Vietnamese Legal System
The legal system in Vietnam has undergone significant transformations over the centuries,
reflecting broader sociopolitical changes within the country. Initially, the Vietnamese relied
on customary laws and local norms, which were deeply rooted in Confucian principles and
the collective ethics of village community life. These traditional practices emphasized
harmony, respect for hierarchy, and familial obligations, profoundly influencing the socio-
legal landscape.
During the colonial period, starting in the late 19th century and continuing until the mid-
20th century, the French imposed their legal framework on Vietnam. This colonial
influence marked a significant departure from Vietnam’s indigenous customs, introducing
Western legal concepts such as codified laws, courts, and a centralized system of
governance. While these changes created a more structured legal environment, they also
sparked resistance movements that aimed to reclaim Vietnamese identity and autonomy.
The aftermath of World War II and the subsequent establishment of the Democratic
Republic of Vietnam in 1945 ushered in a new era for the legal system. With the
consolidation of socialist principles, Vietnamese law was fundamentally reoriented toward
Marxist-Leninist ideologies. This period saw the development of socialist law, which
sought to eliminate class distinctions and redistribute power, aligning legal practices with
the goals of the state. From 1954 to 1975, the north and south of Vietnam operated under
distinct legal regimes, each reflecting their respective governing philosophies.
Since the economic reforms initiated in the late 1980s known as “Đổi Mới,” Vietnam has
pursued a path toward modernization of its legal system. Key milestones, such as the
adoption of the 1992 Constitution and subsequent legal codes, demonstrate efforts to
incorporate international norms and best practices. Additionally, recent reforms aim to
enhance transparency, promote foreign investment, and strengthen the rule of law,
ultimately facilitating Vietnam’s integration into the global community.
3. Core Principles of the Legal System
The legal system in Vietnam is fundamentally anchored in several core principles that
guide its operation and implementation. One of the most essential tenets is the rule of law,
which asserts that all individuals and institutions are accountable to the law. This principle
aims to ensure that laws are applied uniformly, fostering a legal environment where
arbitrary decisions are minimized. The rule of law is crucial not only for maintaining order
but also for promoting stability within the society, as it sets clear standards against which
the actions of citizens and the state can be measured.
Another critical principle in the Vietnamese legal framework is the concept of equality
before the law. This principle posits that all individuals, regardless of their socioeconomic
status, ethnicity, or background, have the same rights and responsibilities. Legislation in
Vietnam endeavors to reflect this principle through various laws designed to reduce
discrimination and protect the rights of marginalized groups. Equality before the law is
particularly significant in judicial processes, where it ensures that every individual has
access to legal recourse and representation, thereby enhancing the integrity of the legal
system.
Moreover, the protection and promotion of human rights is a fundamental aspect of the
Vietnamese legal system. Recognizing the importance of safeguarding individual rights,
the government has established various laws and policies that aim to protect citizens’
freedoms. Human rights considerations are reflected in legislative practices, influencing
the enactment of laws concerning labor, education, and social welfare. The judiciary also
plays a pivotal role in upholding these rights by interpreting laws in ways that affirm
individuals’ freedoms while balancing societal interests.
Ultimately, these core principles - the rule of law, equality before the law, and human rights
- serve as the foundation upon which Vietnam’s legal system is built. They inform both
legislative practices and judicial decision-making, fostering a legal culture that aspires to
uphold justice and contribute to social governance.
3. Structure of the Vietnamese Legal System
The legal system in Vietnam is characterized by a hierarchical structure that reflects the
country’s socialist orientation. At the top of this structure is the National Assembly, which
is the supreme representative body of the people. This legislative institution holds the
power to draft, discuss, and pass laws. The processes followed by the National Assembly
illustrate the democratic principles that underpin Vietnam’s legal system, showcasing the
importance of popular representation in law-making.
Following the legislative branch, the executive power is vested in the government, which is
responsible for implementing laws and managing the day-to-day affairs of the state. The
government consists of various ministries and governmental agencies that oversee specific
areas such as justice, finance, education, and public security. This branch plays a critical
role in the enforcement of laws, ensuring that legislation passed by the National Assembly
is carried out effectively across the nation.
The judiciary serves as the third essential pillar of the Vietnamese legal system.
Comprising several levels of courts, including the Supreme People’s Court and local
people’s courts, this branch interprets and applies the law. The judiciary’s independence is
constitutionally guaranteed, allowing judges to adjudicate cases free from external
influences, though this independence is often scrutinized by various observers. Courts at
different levels handle civil, criminal, administrative, and economic cases, demonstrating
the comprehensive nature of judicial proceedings within the country.
The interplay between these branches—legislative, executive, and judicial—facilitates a
balanced legal system. Laws created by the National Assembly are interpreted and
enforced through government and judiciary channels, ensuring that all processes align with
the Constitution and serve the best interests of the Vietnamese populace. This structural
configuration reflects the commitment to rule of law and the protection of citizens’ rights
within the framework of Vietnam’s unique governance model.
The legal system of Vietnam has all the characteristics of a civil law tradition, which is
essentially based on the written law. The Vietnamese law system comprises three
fundamental elements as follows:
– Legal norms (elementary unit of the system): Legal norms are binding rules, or norms, of
conduct that organisations of sovereign power promulgate and enforce in order to regulate
social relations. Legal norms determine the rights and duties of individuals who are the
subjects of legal relations within the governing jurisdiction at a given point in time.
Competent state authority issues and publishes basic aspects of legal norms through a
collection of laws that individuals under that government must abide to, which is further
guaranteed by state coercion.
– Legal classes: group of legal norms that have the same features and regulate a group of
correlative social relations.
– Legal branches (system of legal norms with the same specialities to govern social
relations in a certain field of society). In the Vietnamese law system, there are various legal
branches, as follows:
1. Constitutional law
2. Administrative law
3. Financial law
4. Banking law
5. Property law
6. Civil law
7. Labor law
8. Marriage and family law
9. Criminal law
10. Criminal procedure law
11. Civil procedure law
12. Economic law
III. BUSINESS AND LAW
1. Definition of the concept of business
1.1. Business concept: the economic aspects
Business includes certain economic activities in which people are busy or engaged. Such
activities relate to the production, distribution, trading, or exchange of goods and services
to satisfy the needs of people so as to earn income or profit. There are some general
definitions of the concept of business:
- Business may be defined as human activity directed towards or acquiring wealth through
buying and selling of goods.
- Business may be defined as an activity in which different persons exchange something of
value, whether goods or services, for mutual gain or benefit.
- A business is an enterprise engaged in the production and distribution of goods for sale in
the market or rendering service for a price.
Overall, business refers to all those activities that are concerned with the production and/
or purchase and sale of goods or services with the purpose of selling them at a profit. It
includes activities concerned with manufacturing, trading, transportation, insurance,
warehousing, banking and finance, etc. Technically, the term ‘business’ is derived from the
word ‘busy’. This means that someone is busy in earning profit through the process of
purchase and sale. Business also consists of:
(a) Creating demand for the products and services before producing and purchasing the
goods.
(b) Production of the goods and converting the economic resources into goods and
services.
(c) Continuous research and development in order to improve the quality of goods and
services.
(d) Activities to ensure that the goods and services not only reach the consumers but also
satisfy them in fulfilling their needs.
1.2. Business concept: the legal aspects
- Business or business operation means the continuous execution of one, some, or all
stages, including investment, manufacturing, sale, or provision of services on the market
for profit (Art.4(21) Law no. 59/2020/QH15).
- Commercial activities mean activities for the purpose of generating profits, including the
sale and purchase of goods, provision of services, investment, commercial promotion, and
other activities for the profit purpose (Art.3(1) Law no. 36/2005/QH11).
- A business line, also known as a product line or offer, refers to a specific segment or
classification of a company’s products or services offered to its customers. Business lines
can be broadly classified into three categories:
+ Customer-Defined Business Lines: Businesses that offer products or services based on
specific customer requirements, such as bespoke or tailor-made solutions.
+ Market-Derived Business Lines: Companies that offer products or services in response to
specific market needs, trends, or demand.
+ Brand-Derived Business Lines: Businesses that offer products or services centered
around their brand identity, reputation, and image.
- Conditions for doing business: When conducting business in conditional business
lines, the foreign investors must satisfy all business conditions in accordance with
the applicable Law on Investment and ensure that those conditions for business investment
are maintained throughout the course of their business operations. These conditions shall
be applied generally to all organizations and individuals doing business in Vietnam,
including foreign-invested enterprises. The list of sectors and trades subject to conditional
business investment is listed in Appendix IV of the applicable Law on Investment and
detailed in laws, resolutions of the National Assembly, ordinances and resolutions of the
Standing Committee of National Assembly, Government decrees and international treaties
to which the Socialist Republic of Vietnam is a signatory. Conditions for doing business to
be fulfilled are those specified in:
+ License.
+ Certificate.
+ Practicing certificate.
+ Credential.
+ Written confirmation or written approval.
+ Other requirements that must be satisfied by individuals and business entities to conduct
business investment activities without obtaining written confirmation from a competent
authority.
2. Role of law in Business: the role of the legal environment
The term “legal environment” refers to the collective body of laws, regulations,
administrative orders, and judicial precedents that influence business operations. This
environment provides a legal framework that guides businesses in complying with
standards, ensuring ethical practices, and meeting their obligations toward employees,
customers, and society. By understanding the legal environment, businesses can align their
operations with legal standards, enhance credibility, and reduce the risk of legal disputes.
The legal environment includes various legislations, policies, and regulatory measures that
governments implement to regulate and support business activities. These regulations
might differ across countries based on each nation’s unique priorities, economic structure,
and social objectives. In addition to ensuring compliance, these regulations support
business growth by protecting intellectual property, ensuring fair competition, and
establishing fair labour practices.
The rule of law plays an important role in the business world. When setting up a business,
it is the laws that determine what type of business it is to become and the structure to be
formed. Also the law sets up a reasonable expectation of how the business should operate
in order to protect the business owner’s interest of the Customer of that business. The rule
of law not only allows people to understand what is expected of them in their personal
capacities but also sets forth rules for businesses so that they, too, know what is expected
of them in their dealings and transactions. the law protects those who work for a business.
It sets guidelines on how to treat your employees, equal opportunities, pay scale, hours,
breaks, benefits, and a host of other rights and privileges. In short, the laws for business
create an honest environment where consumers' and business owners' interests can be
protected, and we have ways to solve any disputes that arise. If these laws are in any way
violated it sets up Guidelines for punishment. Knowing and implementing laws related to
business is very important due to the following reasons:
- Business setup – It helps to set up a business in a legal and planned way by following the
law step by step.
- Rights of stakeholders – It helps to meet stakeholders’ ownership and requirements by
maintaining a transparent and healthy operation, thus keeping stakeholders happy and
satisfied.
- Compensations – Business law helps settle compensation for management and
employees. Violation of such laws may lead to severe legal consequences.
- Drafting contract – This helps to draft a contract in business law by following the rules.
In such contracts, one party agrees to exchange for some consideration, signed by both
parties and made legally enforceable.
- Litigation settlement – Court cases may be due to reasons like employment or contract-
related disputes, workplace discrimination, intellectual property violation, etc.
- Labor management – Any business has several laws related to labor relations. Laborers
are an integral part of a company, and it is necessary to look after their utmost welfare.
IV. BUSINESS LAW
1. Business Law and Commercial Law: meaning and scope
1.1. Business Law
Business law is the body of laws that govern how business organizations and business
entities are established, run, and managed. The same is true of a sole proprietorship.
Ideally, all commercial matters, business decisions, business transactions, business debts,
employee rights, state laws, contract drafting, regulatory compliance, limited liability,
mercantile law, and any other legal requirements should be overseen by a qualified
business lawyer. It is vital that a corporate entity follows all local laws, state laws, and
federal laws. Business law covers a wide range of topics such as contracts, property rights,
corporate governance, taxes, business formation and dissolution, consumer protection,
environmental regulations, and many more. And business law doesn't just apply to a
company or other corporate entity; a sole proprietor should become well-versed in business
law. Business law has many purposes. It helps ensure fairness in a business transaction
between other businesses involved in a deal or dispute; it protects individual rights; it
provides standards for responsible behavior; and it promotes economic stability through
legal certainty.
Business law, also called commercial law, governs every business operation area, including
formation, daily operation, employee and labor relations, purchase and sales, marketing
and advertising, sale, bankruptcy, etc. Therefore, it is necessary to strictly follow them to
ensure a transparent and efficient company working. Any national and international
business law has two different areas. One is commercial entity regulation, and the other is
commercial transaction regulation. However, the above types fall under either common law
(some rules implemented based on court decisions) or statute law (formulated by elected
officials). All business or commercial law aims to protect stakeholders’ interests and lead
the company toward growth and expansion. A business entity might be a sole proprietor, a
small partnership firm, a registered limited company, or a multinational corporation
(MNC). Such entities, while working, will face financial issues, employee and customer
dissatisfaction, market competition, natural or artificial calamities, etc., for which
commercial laws should be in place to guide them. The various types of business law are
given below:
- Employment law- An employment law covers the rights and duties of the employer and
employee. It deals with issues like health and safety, workplace harassment, wages,
workplace discrimination, etc. The law establishes employment rules to adhere to and deal
with such circumstances.
- Tax law – All businesses must pay taxes to the government, regardless of type. If not paid
on time, there are serious consequences.
- Antitrust law – Antitrust laws ensure there is healthy competition in the market without
unnecessary dominance. It helps to avoid market allocation, which creates a geographic
area for operation so that other similar firms can also operate. Antitrust law also avoids
price fixing and monopoly.
- Litigation law – A company might face litigation due to consumer complaints due to
dissatisfaction or any other adverse situation. These legal actions are expensive, and
settling them with a formal agreement is necessary.
- Bankruptcy law- Bankruptcy happens when the liabilities are more than the assets. Thus,
a business cannot pay the dues, and the court declares it bankrupt. There are methods to
reorganize or file for bankruptcy, as detailed in the law.
- Formation law: Promoters should follow some legal steps to form or set up a new
company, which are detailed in the formation law of a business.
- Intellectual Property law – Intellectual property is related to any invention or innovation
the business might make to expand in this rapidly changing digital world. Thus, any
trademark, logo, design, or creative art the company uses for its growth is intellectual
property that it should protect from exploitation.
- Negotiation law - The company may enter into a contract or merger with another
company to grow, expand, or reduce competition. Such rules are elaborated in the contract
in business law.
1.2. Commercial Law

Commercial law is a broad area of rules and regulations governing merchants and other
entities engaging in commerce. This group of laws provides a framework for protecting
business interests, promoting fair competition, resolving disputes, and supporting
economic growth. Some of the concepts of commercial law overlap with international,
federal, and state laws, as well as business laws. There are numerous branches of
commercial law, including contract, intellectual property, and consumer protection laws.
Historically, commercial law is related to merchant-consumer relations or laws protecting
the rights of consumers.

Commercial law, also known as business law, is the body of law that governs business and
commercial transactions. It’s a complex field that touches almost every aspect of business
operations, from contracts to consumer protection, intellectual property, and more. The
primary branches of commercial law include the following:

 Contract Law - These rules regulate the formation and enforcement of legal
contracts. Contract Law involves the elements of a valid contract and the legal
actions a party may take if a breach of contract occurs.

 Commercial Property Law - This commercial law governs the transactions related
to different types of property. Although the law mainly deals with the sale, lease,
transfer, or rental of immovable property, it also can cover the bailment of
moveable property.

 Business Regulations - This branch of commercial law covers government

regulations for the organizational structure of business entities. These rules refer
to incorporation, partnerships, and limited liability corporations (LLCs). They also
apply to trade unions and other business organizations.

 Tax Law - Tax law includes government taxes on income, sales, excise, gifts, capital
gains, and profit distribution taxes.
  Corporate Law - The formation, management, and termination of corporations are
what comprise corporate law. It includes provisions for electing directors, raising
capital, preventing insider trading, distributing dividends, redeeming shares, and
handling mergers and acquisitions.

 Intellectual Property Law - This law covers copyrights of creative work and patents
of inventions.

Inconclusion, Commercial Law is often called by different names: business law, trade law,
or mercantile law. Ultimately, commercial law covers all people and businesses who buy,
sell, trade, or merchandise products, goods, and services. It is often considered to be a
branch of civil law and deals with issues of both public law and private law. While some
legal practices focus primarily on public law (laws that apply to the general population) or
private law (laws designed for specific groups, businesses, or industries), commercial law
touches both: i) Public commercial law handles interstate commerce and consumer
protections; ii) Private commercial law deals with merger or acquisition contracts between
businesses and the transfer of securities (stocks and bonds) between private entities.
1.3. Economic law is a set of legal rules for regulating economic activity. Economics can
be defined as "a social science concerned with the production, distribution, and
consumption of goods and services." The regulation of such phenomena, law can be
defined as "customs, practices, and rules of conduct of a community that are recognized as
binding by the community", where "enforcement of the body of rules is through a
controlling authority." Accordingly, different states have their own legal infrastructure and
produce different provisions of goods and services.
Economic law is a field of study built on the foundation of jurisprudence, combined with
knowledge of economics. In the context of a market economy, economic law is
increasingly of interest to business entities to minimize risks and protect legitimate rights
and interests when participating in business and commercial activities and when
participating in business and commercial activities. a dispute occurred.
Economic law regulates specific material interest relations formed between people
through things and economic relations that occur in the process of coordinating the
operation of the domestic economy. Specifically, these relations include market regulation
relations and macro-control relations. The former mainly refers to the administration and
supervision by state organs of market entries and exits by business entities and their
activities during their existence. The latter is intervention by the state in the overall
activities of the national economy when the market fails.
2. Importance of Business Law
Business law plays a vital role in regulating business practices in a country. Here are some
points that prove why business law is so relevant:
 Business Formation – Business law plays the role of a foundation stone for any
business concern. Establishing business includes a lot of legal processes, leasing,
and permits. A business law attorney is well-versed with all the relevant
regulations, and can help the concern establish its operations successfully.
  Safeguard the Rights of Shareholders – Business law plays a vital role when it
comes to safeguarding the rights of a company’s shareholders. An experienced
business law attorney can successfully handle such issues along with conflicts
related to minority shareholders, constitutional documents, and resolution by
arbitration, and more.
 Handles compensation issues: Business law handles compensation issues in
organisations. Attorneys can help take care of compensation issues as it relates to
salary management. They ensure their client abide by the law, thereby preventing
them from facing the consequences.
 Contract drafting or negotiation laws ensure a smooth running of business deals
between two parties. During a property lease or a sale of a product, attorneys
present these laws to ensure that there's an agreement between the parties involved
in a contract. They also represent the best interest of the company they're working
for.

Bankruptcy - Without proper legal advice, businesses may go bankrupt when they suffer
certain losses. Business lawyers use bankruptcy laws to provide solutions to challenges
faced by businesses. Using their experience and expertise, they provide business owners
with several options along with their advantages and disadvantages, which can help tackle
the challenge.

3. Subjects of Business Law

3.1. Trader
Traders include lawfully established economic organizations and individuals that conduct
commercial activities in an independent and regular manner and have business
registrations. Commercial activities mean activities for the purpose of generating profits,
including: sale and purchase of goods, provision of services, investment, commercial
promotion and other activities for the profit purpose.
- Purchase and sale of goods mean commercial activities whereby the seller is obliged to
deliver goods, transfer ownership of goods to the purchaser and receive payment; the
purchaser is obliged to pay to the seller and receive goods and the ownership thereof as
agreed.
- Provision of services means commercial activities whereby a party (hereinafter referred
to as the service provider) is obliged to provide a service to another party and receive
payment; the service-using party (hereinafter referred to as the customer) is obliged to pay
to the service provider and use the service as agreed.
3.2. Enterprise
Enterprise means an organization that has a proper name, assets, premises, is established or
registered in accordance with law for business purposes, including limited liability
companies, joint stock companies, partnerships and sole proprietorships; groups of
companies.
3.3. Household
Household business is the official word specified in legal documents. In society, there are
common words to call household businesses such as Individual Business Household,
Personal Business Household. Household business is defined as a business establishment
registered by an individual or members of a household and is responsible with all his assets
for the household's business activities. In case household members register as business
households, they shall authorize one member to act as the business household
representative. Individuals registering business households, the person authorized by
household members to act as the business household representative is the owner of the
business household. Individuals and household members who are Vietnamese citizens with
full civil act capacity as prescribed by the Civil Code have the right to establish business
households, except for the following cases:
- Minors, persons with limited civil act capacity; persons who have lost their civil act
capacity; people with difficulties in cognition and behavior control;
- The person is being examined for penal liability, is detained, is serving a prison sentence,
is serving an administrative handling measure at a compulsory detoxification
establishment, a compulsory education institution or is being prosecuted by a court. ban
from holding certain posts, practicing certain professions or doing certain jobs;
- Other cases as prescribed by relevant laws.
3.4. Cooperative
Cooperative means an organization that has the status of a juridical person, is voluntarily
established by at least 05 official members who cooperate with and assist each other in
production, business and job creation with the aim of meeting general economic, cultural
and social demands of its members and making contribution to sustainable community and
social development, and adheres to the principles of autonomy, equality and democracy.
3.5. State administrative agencies
State administrative agencies are the most important subjects of the administrative law and
public administrative relations. These organs function to perform the state administration
and carry out executive activities on the basis of law and law enforcement. Other state
bodies such as the National Assembly, People’s Councils, People’s Court and People’s
Procuracy also carry out state-administration activities that are not their main activities, but
they only aim to basically complete their respective functions.
3.6. Competent authority to resolve commercial business disputes
3.6.1. Commercial mediation centers
Commercial mediation centers shall be established in accordance with this Decree and
have the legal person status and own seals and bank accounts, to operate not for profit1.
3.6.2. Arbitration center
An arbitration center shall have the function of organizing and co-ordinating activities of
dispute resolution by institutional arbitration, and of assisting arbitrators by providing
administrative and office facilities and other assistance during the process of the arbitration

1
Art. 19 Decree No. 22/2017/NĐ-CP on commercial mediation dated February 24, 2017.
proceedings2. An arbitration center shall have legal entity status, and its own seal and bank
account and shall be a non-profit institution.
3.6.3. People’s Court
The People’s Courts are the judicial bodies of the Socialist Republic of Vietnam, exercising
the judicial power. The People’s Courts are responsible for the protection of justice, human
rights, citizen’s rights, socialist regime, interests of the State and legal rights and interests
of organisations and individuals. Business and commercial disputes within the jurisdiction
of the court including3:
- Disputes arising from business or commercial activities between individuals and
organizations with business registration, which are all for profit purposes.
- Disputes over intellectual property rights or technology transfers between individuals and
organizations, which are all for profit purposes.
- Disputes between non-members of a company who have transactions involving transfer
of capital contributions with the company or a company member.
- Disputes between a company and its members; dispute between a limited liability
company and its managers, between a joint stock company and members of the board of
directors, director or director general, or between members of a company regarding the
establishment, operation, dissolution, merger, consolidation, division, splitting, handover
of assets of the company, or organizational transformation of the company.
- Other business and commercial disputes, except cases that fall under the competence of
other agencies and organizations as prescribed by law.
4. Sources of Business law
4.1. Legislative Documents
Legislative Documents or Statutes are laws created by a legislative body. Legislative
documents are documents that contain legal regulations and the promulgation of which
complies with regulations of law on authority, manner, and procedures provided for in this
Law4. Normative regulations are general rules of conduct, commonly binding, and applied
repeatedly to agencies, organizations and individuals nationwide or within a certain
administrative division, promulgated by the regulatory agencies and competent persons in
this Law, and the implementation of which is ensured by the State.
The system of legislative documents in Vietnam including:
1. The Constitution.
2. Codes and Laws (hereinafter referred to as Laws), Resolutions of the National Assembly
3. Ordinances, Resolutions of the Standing Committee of the National Assembly; Joint
Resolutions between the Standing Committee of the National Assembly and the
2
Art.19 Law No.54/2010/QH12 on Commercial Arbitration, dated June 17, 2010.
3
Art. 30 Code of Civil Procedure No. 92/2015/QH13, dated November 25th, 2015.
4
Art. 4 Law No. 80/2015/QH13 on promulgation of legislative documents, dated June 22, 2015 and Law
Amending Law on Promulgation of Legal Documents, Law No. 63/2020/QH14.
Management Board of Central Committee of Vietnamese Fatherland Front; Joint
Resolutions between the Standing Committee of the National Assembly, the Government,
the Management Board of Central Committee of Vietnamese Fatherland Front.
4. Orders, Decisions of the President.
5. Decrees of the Government; Joint Resolutions between the Government and
Management Board of Central Committee of Vietnamese Fatherland Front
6. Decision of the Prime Minister.
7. Resolutions of Judge Council of the People’s Supreme Court.
8. Circulars of the Executive Judge of the People’s Supreme Court; Circulars of the Chief
Procurator of the Supreme People’s Procuracy; Circulars of Ministers, Heads of ministerial
agencies; Decisions of the State Auditor General.
8.a. Joint Circulars between the Executive Judge of the People’s Supreme Court, the Chief
Procurator of the Supreme People’s Procuracy, the State Auditor General, Ministers, Heads
of ministerial agencies. Joint Circulars between Ministers and Heads of ministerial
agencies shall not be promulgated.
9. Resolutions of the People’s Councils of central-affiliated cities and provinces
(hereinafter referred to as provinces).
10. Decisions of the People’s Committees of provinces.
11. Legislative documents of local governments in administrative - economic units.
12. Resolutions of the People’s Councils of districts, towns and cities within provinces
(hereinafter referred to as districts).
13. Decisions of the People’s Committees of districts
14. Resolutions of the People’s Councils of communes, wards and towns within districts
(hereinafter referred to as communes).
15. Decisions of the People’s Committees of communes.
4.2. Common Law or Precedent5
Binding legal principles also come from the courts. When appellate courts decide a case,
they may interpret and apply legal principles in a way that are binding on lower courts in
the future. The process of applying a prior appellate decision to a case is called precedent6.
Simply put, precedent is when judges use past decisions to guide them. The benefit of
precedent is that it makes the law predictable and furthers the rule of law by applying legal
principles to the greater community, not just the parties to a lawsuit. Businesses value
common law systems because they reduce the cost of business. For example, if a business
is unsure of how its contract rights will be applied by the court, it can understand its rights
by learning how courts interpreted similar contract provisions in past lawsuits. This allows
5
https://dulieuphapluat.vn/van-ban/thu-tuc-to-tung-van-ban/resolution-no-042019nq-hdtp-dated-18th-of-
june-2019-on-process-for-selecting-publishing-and-applying-precedents-1112106.html
6
Precedent means “Lower courts have to follow the decisions of the higher courts. This is called precedent,
binding precedent or judicial precedent”.
businesses to assess their risks, determine their liability, and make rational business
decisions without the expense of litigation. In Vietnam, precedents are arguments and
rulings written on effective judgments or decisions (hereinafter referred to as judgment) of
the courts that are selected by the Judicial Council of the Supreme People’s Court and
published by the Chief Justice of the Supreme People’s Court in order for other courts to
study and adopt them when deciding later cases7.
4.3. Custom and application in business
Commercial practice means a custom that is widely recognized in commercial activities
in an area, a region or a commercial domain, has an explicit meaning, and is recognized by
involved parties in order to identify their respective rights and obligations in commercial
activities (Art. 3(4) Law No. 36/2005/QH11 on commerce). Article 13, Law No.
36/2005/QH11 on commerce regulates principle of application of practices in commercial
activities: Where it is neither provided for by law nor agreed by the parties, and there exist
no customs pre-established between them, commercial practices shall be applied provided
that such practices are not contrary to the principles provided for in this Law and the Civil
Code.
Practices mean rules of conduct obvious to define rights and obligations of persons in
specific civil relations, forming and repeating in a long time, recognized and applying
generally in a region, race, or a community or a field of civil (Art.5(1) Civil Code, 2015).
Practices will apply “In cases where it is impossible to apply analogy of law as prescribed
in Clause 1 of this Article, basic principles of civil law provided for in Article 3 of this
Code, case law, and justice shall apply” (Art.5(2) Civil Code, 2015). Basic principles of
civil law including8:
1. Every person shall be equal in civil relations, may not use any reason for unequal
treatment to others, and enjoy the same protection policies of law regarding moral
rights and economic rights.
2. Each person establishes, exercises/fulfills and terminates his/her civil rights and
obligations on the basis of freely and voluntarily entering into commitments and/or
agreements. Each commitment or agreement that does not violate regulations of
law and is not contrary to social ethics shall be bound by contracting parties and
must be respected by other entities.
3. Each person must establish, exercise/ fulfill, or terminate his/her civil rights and/or
obligations in the principle of goodwill and honesty.
4. The establishment, exercise and termination of civil rights and/or obligations may
not infringe national interests, pubic interests, lawful rights and interests of other
persons.
5. Each person shall be liable for his/her failure to fulfill or the incorrect fulfillment of
any such civil obligations.
4.4. Corporate Charter

7
Art. 1. Resolution No. 04/2019/NQ-HDTP of the Judicial Council of the Supreme People’s Court process
for selecting, publishing and adopting precedents.
8
Art. 3 Civil Code, 2015.
A corporate charter, also known as a "charter" or "articles of incorporation”, is a written
document filed with the Secretary of State (or registrar in Canada) by the founders of a
corporation. It details the major components of a company, such as its objectives,
structure, and planned operations. If approved by the state, the company becomes a legal
corporation. A corporate charter is also known a document filed with the Secretary of State
or registrar to establish a company as a corporation. The corporate charter must detail the
governance, structure, objectives, operations, as well as other major details of the
company.
At the most basic level, the corporate charter includes the corporation's name, its purpose,
whether the corporation is a for-profit or nonprofit institution, the location of the
corporation, the number of shares that are authorized to be issued, and the names of the
parties involved in the formation. Corporate charters are filed with the state secretary in
which the corporation is located. Typically, the state in which the company is located
charges a filing fee to process the corporate charter. Some government websites provide
templates for corporate charters. However, some businesses opt to consult and hire
business lawyers when creating and filing corporate charters to provide more legitimate
and favorable legal business documents and environments.
The corporate charter serves several important purposes, including:
1. Establishing Legal Existence: By filing a corporate charter, a company gains legal
recognition as a separate entity, distinct from its owners or shareholders. This
separation protects the personal assets of individuals involved with the company by
limiting their liability.
2. Defining Objectives and Structure: The charter outlines the objectives and
purposes of the corporation, specifying the type and scope of its operations. It also
defines the company’s organizational structure, including the rights and
responsibilities of shareholders, directors, and officers.
3. Governing the Corporation: The corporate charter provides guidelines for the
corporation’s governance. It establishes procedures for shareholder meetings, board
elections, decision-making processes, and other vital aspects of corporate
management.
Through these purposes, a corporate charter lays the groundwork for a well-structured and
legally compliant corporation, ensuring transparency, accountability, and proper
management.
Legal Requirements for a Corporate Charter: While the specific legal requirements for
a corporate charter may vary depending on the jurisdiction, there are some common
elements that must be included:
 Name: The company’s name must meet the legal requirements of the jurisdiction in
which it operates. It should be distinct and not misleading in nature.
 Purpose: The charter should clearly state the purpose for which the corporation is
formed. This could be broad, such as “to engage in any lawful business,” or specific
to a certain industry or activity.
  Capital Structure: The charter outlines the authorized capital stock, including the
number of shares, their par value, and any restrictions on their transfer or issuance.
 Registered Agent: The corporation must designate a registered agent, typically a
person or entity with a physical address in the jurisdiction, who will receive legal
and official documents on behalf of the corporation.
 Initial Directors: The charter should list the initial directors of the corporation,
providing their names and addresses.
It is crucial to consult with legal professionals or corporate law experts to ensure
compliance with the specific requirements of your jurisdiction when drafting a corporate
charter.