Legal consequences of invalid civil transactions and declaration

1. Legal consequences of invalid civil transactions

According to Article 131 of the 2015 Civil Code, the legal consequences of invalid civil transactions are as follows:

- An invalid civil transaction does not create, change or terminate the civil rights and obligations of the parties from the time the transaction is established.

- When a civil transaction is invalid, the parties restore the original status and return to each other what they have received.

In case it is not possible to return in kind, the value in money will be returned.

- A bona fide party in receiving benefits and income does not have to return those benefits and income.

- The party at fault causing damage must compensate.

- Settlement of consequences of invalid civil transactions related to personal rights is prescribed by this Code and other relevant laws.

2. Statute of limitations for requesting the Court to declare a civil transaction invalid

According to Article 132 of the 2015 Civil Code, the statute of limitations for requesting the Court to declare a civil transaction invalid is as follows:

- The statute of limitations for requesting the Court to declare a civil transaction invalid as prescribed in Articles 125, 126, 127, 128 and 129 of this Code is 02 years, from the date:

+ The representative of a minor, a person without civil act capacity, a person with difficulty in cognition, behavior control, or a person with limited civil act capacity knows or should know that the represented person personally establishes and performs the transaction;

+ The person who was mistaken or deceived knew or should have known that the transaction was established due to mistake or deception;

+ People who threaten or coerce others to stop threatening or coercing others;

+ People who are not aware of and do not control their behavior establish transactions;

+ Civil transactions are established in cases where civil transactions do not comply with formal regulations.

- After the statute of limitations specified in Clause 1 of this Article expires without a request to declare a civil transaction invalid, the civil transaction becomes valid.

- For civil transactions specified in Articles 123 and 124 of this Code, the statute of limitations for requesting the Court to declare a civil transaction invalid is not limited.

3. Protecting the rights of bona fide third parties when civil transactions are invalid

According to Article 133 of the 2015 Civil Code, the protection of the rights of bona fide third parties when a civil transaction is invalid is stipulated as follows: 

- In case a civil transaction is invalid but the subject of the transaction is unregistered property that has been transferred to a bona fide third party, the transaction established and performed with the third party remains valid, except for the case specified in Article 167 of this Code.

- In case a civil transaction is invalid but the property has been registered with a competent state agency, then transferred by another civil transaction to a bona fide third party and this person based on that registration establishes and performs the transaction, then that transaction is not invalid.

In case the property must be registered but has not been registered with a competent state agency, the civil transaction with a third party is invalid, except in the case where the third party in good faith receives this property through an auction at a competent organization or transacts with a person who, according to the judgment or decision of a competent state agency, is the owner of the property but later this subject is not the owner of the property because the judgment or decision is annulled or amended.

- The owner has no right to reclaim the property from a bona fide third party, if the civil transaction with this person is not invalid according to the provisions of Clause 2 of this Article, but has the right to file a lawsuit, requesting the subject at fault leading to the transaction being established with the third party to refund reasonable costs and compensate.