Deposit Contract Disputes – Case Briefing and Noteworthy Points

“Practice illustrates that there are still many different views in determining the validity of a deposit contract in the case of ensuring the conclusion of a mortgaged land use rights transfer contract. However, the deposit contract needs to be determined as a contract independent of the transaction it ensures, i.e., the transfer contract. Therefore, the fact that land use rights have yet to be eligible for transfer cannot be the cause of the deposit contract being invalid.”

“The law does not prohibit the transfer of land use rights nor sign a deposit contract to ensure the transfer of land use rights mortgaged to a third party as stipulated under Article 321.5 of Civil Code 2015. However, the transferor is eligible to conclude this type of transaction on the condition that the transferor informs the mortgagee in advance and is granted written approval from the mortgagee to proceed with the transfer. This demonstrates transparency and commitment between the parties in the transaction, helping to ensure the mortgagee’s rights in handling mortgaged assets.”

VTN would like to share some thoughts on some cases in terms of this type of dispute.