ABSTRACT:
This paper provided a general overview of security measures and vao w88 interactions ofloan contractand security agreement in vao w88 credit activities of banks. Additionally, this paper also pointed out some typical examples and remarks about them to explain related regulations.
Keywords: law, loan contract, security agreemen, credit activity.
1. Introduction
For a long time, vao w88 legal system of Vietnam has been regulating vao w88 types of security for vao w88 performance of obligations in loan contracts. Furthermore, nowadays, these regulations are increasingly becoming more complete than before. vao w88 measures were undertaken based on many elements, including checking vao w88 extent and effectiveness of loans, among others. vao w88 article supplies some legal issues about guarantee measures, vao w88 relationship between loan contract and security agreement, and vao w88 author also points out some typical examples and remarks about them to analyse and explain for regulations.
2. vao w88 security measures for loans in vao w88 banking sector
According to vao w88 Civil Code 2015, there are nine types of security for vao w88 performance of obligations; however, in vao w88 activities of banks, usually not all methods are undertaken, and credit institutions typically arrange these measures into two types: loan security by prestige and loan security by property.
2.1. Loan security by prestige
vao w88 regulation about prestige lending became law in vao w88 banking sector, but nowadays, it does not have rules about vao w88 practical process, including legal responsibilities arising with credit organizations. vao w88 law allows credit institutions to organize and undertake based on effective principles, but it also pushes risks onto decision-makers.
Obviously, this measure will create convenience for borrowers, and vao w88 bank does not need to focus on vao w88 property of vao w88 customer. Certainly, it is very risky in instances where vao w88 customer loses their funds and solvency. For example, banks may not be able to recover vao w88 loan amount. With these restrictions, vao w88 law needs to build a legal policy about prestige lending instead of ignoring and not being interested in vao w88 consequences, such as difficulties in vao w88 operations of credit organizations, or even being prosecuted for criminal liability.
In my opinion, vao w88 lawmakers need to provide allowable conditions for prestige lending, solutions for contract violations, and clarity on vao w88 responsibilities of credit institutions to avoid anxiety in lending.
2.2. Loan security by property
We can say that it is a popular method in vao w88 credit activities of banks. vao w88 most commonly used measure for banks is vao w88 measure of accepting accepted assets. vao w88 regulations on mortgage measures have almost been completed, but in this measure vao w88 biggest difficulty is identifying collateral. Normally, vao w88 bank divides property into two types: immovable property and movable property. vao w88 Civil Code 2015 states that immovable property includes: land; houses and constructions attached to land; other property attached to land, houses, and constructions; other property as prescribed by law; while movable property is property that is not immovable property.
Real estate (for example: land, buildings, houses, etc.) is an asset that can be easily managed and valued, but its prices always fluctuate, making it especially difficult to handle as collateral. Meanwhile, movable property (for instance: cars, motorcycles, airplanes, ships, etc.) is extremely difficult to control because it is easy to transfer ownership and carries significant risk of damage such as burning, explosion, or accidents. In fact, most credit organizations prefer to accept immovable property over movable property.
Addtionally, collateral assets include property rights such as vao w88 right to collect debts, receivables, vao w88 right to request payment, or property rights formed in vao w88 future, which are also approved by law to lend. However, legal regulations on how to handle these assets are not clear, so very few banks like this type of asset.
Another approach, some international banks arrange collateral to become two types. vao w88 first is called inside collateral, in which vao w88 borrower uses an asset in vao w88 project to be financed as collateral; if there is a default, vao w88 lender takes possession of vao w88 project. vao w88 second type is called outside collateral: assets not used in vao w88 project are posted as collateral.
In conclusion, although vao w88 law has many assets that can become collateral, with their risk appetite, banks are often very careful when choosing vao w88 types of assets to receive collateral. One of those important barriers is unclear legal regulations.
3. vao w88 legal relationship between loan contract and security agreement
Obviously, it is important to understand that security agreement is a portion of vao w88 loan contract. Therefore, vao w88 terms of security must be mentioned in vao w88 content of vao w88 loan contract or be designed to become a separate contract. Both contracts must show a close relationship about vao w88 legal side.
According to Article 29 of Decree No.21/2021/ND-CP states:
“1. Security agreements that are nullified, annulled or unilaterally terminated shall not terminate contracts with secured obligations.
2. In case contracts with secured obligations are nullified, annulled or terminated, proceed as follows:
a) terminate security agreements in case parties have not executed contracts with secured obligations;
b) do not terminate security agreements when parties have executed parts or all of contracts with secured obligations. Secured parties have vao w88 right to realize collateral to pay for repayment obligations with parties which they have obligations to.”
This regulation clearly explains vao w88 legal relationship between vao w88 loan contract and vao w88 security agreement. Specifically:
Firstly, vao w88 laws assert vao w88 independent nature of security measures for vao w88 performance of obligations, which are based on vao w88 legal form of vao w88 security agreement. Some scientific researchers, including myself, view vao w88 relationship between these two types of contracts as that of a main contract and a subsidiary contract, because based on vao w88 codified obligations of vao w88 contracts, vao w88 security agreement can be considered a subsidiary contract to vao w88 loan contract. Nevertheless, unlike vao w88 typical relationship between a main contract and a subsidiary contract, if vao w88 loan contract is deemed invalid, vao w88security agreementremains independent and valid.
For example: Company A applied for a loan of 1 million USD from SB Bank to restructure its loans. vao w88 collateral is a housing development project in Ho Chi Minh City. According to vao w88 bank's internal regulations, before signing a loan contract, SB Bank - Ho Chi Minh City branch must appraise vao w88 collateral and submit it to SB Bank's Credit Committee for approval. And after vao w88 loan contract is signed, vao w88 bank can disburse vao w88 loan to vao w88 customer.
However, due to subjectivity, SB Bank - Ho Chi Minh City branch did not wait for vao w88 approval results from vao w88 bank's Credit Committee but immediately signed vao w88 contract and disbursed vao w88 loan.
vao w88 incident was discovered when company A failed to fulfill its payment obligations and vao w88 bank sued to request settlement.
After reviewing vao w88 entire case file, vao w88 court found that although vao w88 loan contract between vao w88 bank and Company A was determined to be invalid because vao w88 contracting entity exceeded its authorized powers (i.e., vao w88 authority of vao w88 Branch Manager to sign loan contracts is only valid when approved by vao w88 Credit Committee). However, in practice, vao w88 bank had disbursed funds to Company A, and vao w88 authorization content does not limit vao w88 authority of vao w88 HCM Branch Director to sign security agreements. Therefore, based on Article 405 of vao w88 Civil Code 2015 and Article 29 of Decree No.21/2021/ND-CP, it is decided to allow SB Bank to handle vao w88 collateral to recover vao w88 loan.
Obviously, although vao w88 relationship between vao w88 loan and vao w88 security agreement has vao w88 same nature as that of a main contract and a sub-contract, unlike other transactions where vao w88 invalidity of vao w88 main contract leads to vao w88 invalidity of vao w88 sub-contract, here even though vao w88 loan contract is invalid, vao w88 security agreement is still recognized. This shows that vao w88 nature of vao w88 borrowing relationship requires full repayment and ensures that vao w88 lender, vao w88 bank, is able to recover vao w88 loan.
Secondly, vao w88 invalidity of security trading does not lead to vao w88 invalidity of vao w88 loan contract. vao w88 legal system of Vietnam clearly regulates vao w88 conditions of guarantee properties and vao w88 content of security agreements. For example, in vao w88 case of asset mortgage measures: vao w88 mortgaged property must belong to vao w88 ownership of vao w88 mortgagor; vao w88 mortgaged property can be described in general terms, but it must be located; vao w88 property must be visible or formed in vao w88 future; vao w88 value of vao w88 guarantee property can be higher, equal to, or lower than vao w88 secured obligations. However, in practice, there are still many contentious instances related to security measures, including vao w88 invalidity of security agreements. Although this issue does not affect vao w88 validity of vao w88 loan contract, it does significantly impact vao w88 handling of guarantee property.
For example: Joint Stock Company A borrowed capital from VB Bank under Credit Contract No. 111 dated 16/07/2011. As of 2/3/2020, vao w88 total debt obligation of vao w88 Company was 4,651,530,209 VND (including principal debt, interest bearing debt, and overdue interest), classified as Group five debt.
vao w88 collateral for vao w88 loan consists of four properties, of which three propertis do not have any issues requiring advice (hence, they are not mentioned), and one property has an issue:
- Collateral has an issue: 154 square meters of residential land in village X, commune Y, Chuong My district, Ha Tay province (now Ha Noi city) according to vao w88 land use rights certificate No. U455103 issued by vao w88 People's Committee of Chuong My district, Ha Tay province on 21/06/2002 to vao w88 family of Mr. Trinh Van C.
- vao w88 mortgage contract was signed by Mr. Trinh Van C and his wife Mrs. Nguyen Thi B with VB Bank, notarized on 14/07/2011, and registered on 15/07/2011.
- At vao w88 time of signing vao w88 mortgage contract, vao w88 family residence book of Mr. Trinh Van C listed vao w88 following members: Trinh Van C (born in 1969, head of household); Nguyen Thi B (born in 1975, wife of Trinh Van C); Trinh Van H (born on 18/08/1995, child); Trinh Thi H (born on 10/01/1998, child).
VB Bank filed a lawsuit requesting Company A to repay vao w88 total debt amount (including principal and interest), and allowing VB Bank to handle vao w88 collateral to recover vao w88 loan in case Company A fails to fulfill its obligations. vao w88 Primary Court issued a judgment decision:
- Partially accepting VB Bank's lawsuit request, thereby requiring Company A to repay vao w88 total debt amount (including principal and interest);
- Allowing VB Bank to handle vao w88 three remaining collateral properties and declaring vao w88 mortgage contract related to vao w88 land use rights certificate No. U455103 to be invalid due to violations of Articles 109 and 208 of vao w88 2005 Civil Code.
VB Bank appealed, and vao w88 Appellate Court decided: To amend part of vao w88 primary judgment by declaring vao w88 mortgage contract related to vao w88 land use rights certificate No. U455103 to be partially invalid of Trinh Van H based on vao w88 provisions in Clause 2 Article 109 of vao w88 2005 Civil Code, Clause 2 Article 146 of Decree No.181/2004/ND-CP, Article 15 of vao w88 Land Law 2003, Articles 135, 216, Clause 1 Article 223 of vao w88 Civil Code 2005, and Article 212 of vao w88 Civil Code 2015.
From this example, we can see that when vao w88 Court trials credit contract conflict cases, it also examines related issues such as security agreements. In addition, even if vao w88 security agreement is declared completely or partially invalid, vao w88 loan obligation is always recorded and is not affected based on vao w88 loan contract. However, in these instances, vao w88 banks will face difficulties in recovering vao w88 loan amount if they were careless in evaluating vao w88 security property, because a fraction of vao w88 security property had been invalidated.
Finally, we can be certain that vao w88 legal relationship between a loan contract and a security agreement is extremely profound. vao w88 security agreement can be considered a subsidiary contract to vao w88 loan contract, and it helps credit institutions avoid risks in instances where vao w88 customer loses their funds and solvency. Additionally, it allows banks to recover vao w88 loan amount by utilizing vao w88 security property solutions.
4. Conclution
vao w88 relationship between security agreements and loan contracts is built on vao w88 principle of safety, ensuring vao w88 rights of credit institutions. vao w88 maintenance of vao w88 regulation that an invalid loan contract does not affect vao w88 validity of vao w88 security agreement also aims to protect these rights. However, due to vao w88 diversity of lending methods, extended time periods, and vao w88 complexity of collateral, ensuring vao w88 legal connection and binding between these contracts has not yet been thoroughly addressed in practical law. Violations in vao w88 application of vao w88 law frequently occur, causing significant damage to credit institutions and creating anxiety among credit officers and staff who are liable for losses. This paper aims to clarify vao w88 legal provisions concerning vao w88 relationship between loan contracts and security agreements to help individuals and organizations implement and apply vao w88 law effectively and accurately.
REFERENCE:
1. National Assembly (2015). Civil Code 2015.
2. Decree No.21/2021/ND-CP dated March 19, 2021 of Government on elaborating to vao w88 Civil Code regarding security for fulfillment of obligations.
3. Joseph Atta-Mensah (2015). vao w88 Role of Collateral in Credit Markets. Journal of Mathematical Finance, 5, 315-327.
4. Luong Khai An (2023). Loan contracts in vao w88 field of banking credit, theory and practical application. Truth National Political Publishing House.
5. Nguyen Hoang Giang (2024). Some legal issues about mortgaged assets are vao w88 right to collect debts, receivable accounts, and right to request payment. Thanh Dong University Journal of Sience and Technology, 12, 53-60.
CÁC BIỆN PHÁP BẢO ĐẢM VÀ MỐI QUAN HỆ GIỮA HỢP ĐỒNG VAY VÀ HỢP ĐỒNG BẢO ĐẢM TRONG HOẠT ĐỘNG TÍN DỤNG CỦA NGÂN HÀNG
ThS. NGUYỄN HOÀNG GIANG1
ThS. NGUYỄN THỊ VIỆT HÀ1
1Khoa Luật, Trường Đại học Thành Đông
TÓM TẮT:
Bài viết cung cấp cái nhìn tổng quát về các biện pháp bảo đảm và mối quan hệ giữa hợp đồng vay và hợp đồng bảo đảm trong hoạt động tín dụng của ngân hàng. Ngoài ra, bài viết cũng chỉ ra một số ví dụ điển hình và nhận xét về chúng để giải thích cho các quy định pháp luật.
Từ khoá: pháp luật, hợp đồng vay vốn, hợp đồng bảo đảm, hoạt động tín dụng.