Intermediaries Transfer Contracts to Other Parties

Intermediaries Transfer Contracts to Other Parties is a legal issue that frequently arises in the practice of concluding and performing commercial intermediary contracts, especially when the intermediary changes its organization or capacity. Transferring a contract without complying with legal regulations and agreements between parties can give rise to dispute risks, directly affecting the legitimate rights and interests of the principal. The following article by Long Phan Consulting Company will analyze the relevant legal bases and clarify the conditions and limits for transferring contracts in intermediary relationships.

Commercial intermediary activities

Based on Clause 11, Article 3 of the Commercial Law 2005, commercial intermediary activities are activities of traders to perform commercial transactions for one or several determined traders. These forms include:

1. Representation of traders.
2. Commercial brokerage.
3. Purchase and sale of goods by mandate.
4. Commercial agency.

The nature of this activity is the relative independence of the intermediary from the service hirer. The intermediary acts in its own name or in the name of the principal to establish transactions with a third party.

This classification directly affects determining whether an intermediary can transfer the contract to another party. Each type of intermediary has distinct legal characteristics regarding subject status and liability limits. Therefore, transferring obligations in these contracts requires careful consideration based on the nature of each specific intermediary service.

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Is it possible to transfer the contract to another party?

Based on Clause 2, Article 517 of the Civil Code 2015 regarding obligations of service providers, the law requires that the provider must not assign another person to perform the work without the consent of the service user.

Thus, the law does not strictly prohibit transferring service contract performance to a third party. However, if transferring, there must be the consent of the service user. Without this approval, any act of transferring obligations to a third party is considered a breach of contract.

Unauthorized contract transfer not only violates the obligation to perform work but also poses a risk of leaking confidential customer information to an unauthorized third party. Therefore, a written agreement allowing transfer is the best legal tool to protect the parties.

Cases of unilateral termination of contract

During the performance of intermediary service contracts, parties have the right to unilaterally terminate the contract if legal grounds arise. Clients need to master these conditions to exercise the right to terminate legally.

Based on Article 520 of the Civil Code 2015, service contract performance is terminated when:

1. Service User’s Right: If continuing to perform the work is not beneficial to the service user, they have the right to unilaterally terminate, but must notify the provider a reasonable time in advance; pay wages for the part of service performed and compensate for damages.
2. Service Provider’s Right: If the service user seriously violates obligations, the provider has the right to unilaterally terminate and request compensation for damages.

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Consulting services on service contract transfer at Long Phan Consulting Company

Long Phan Consulting Company provides comprehensive legal solutions to ensure legal safety for commercial intermediary transactions. Our team of experts focuses on risk analysis and building strict contract structures. The goal is to optimize benefits and minimize disputes for clients during the obligation transfer process. We structure our support into the following key areas:

• Advise on and draft contract terms regarding the transfer of rights, transfer conditions, and the requirement for written consent from the other party.
• Review existing intermediary contracts to assess the legality of the transfer and its compliance with legal regulations.
• Participate in negotiations with stakeholders to agree on the scope of work to be transferred, legal responsibilities, and risk-sharing mechanisms after the transfer.
• Draft a memorandum of understanding for the transfer of the contract or a tripartite agreement, clarifying the rights, obligations, and joint responsibilities of the participating parties.

Frequently Asked Questions About Intermediaries Transfer Contracts to Other Parties

Below are some frequently asked questions regarding intermediaries transfer contracts to other parties; please refer to them:

If the intermediary unilaterally transfers the contract without prior notice, does the service user have the right to cancel the contract?

Yes. The act of subcontracting work to someone else without the consent of the service user constitutes a serious breach of the service provider’s obligations. In such cases, the service user has the right to unilaterally terminate the contract and claim compensation for damages.

(Legal basis: Clause 2, Article 517 and Clause 2, Article 520 of the 2015 Civil Code.)

Is the intermediary liable if the third party (the client) performs the work to a substandard standard?

Yes, unless otherwise agreed. In principle, if the transfer is merely a “re-delegation/outsourcing” rather than a complete termination of the original intermediary’s obligations, the original intermediary remains responsible to the service user for the third party’s work results.

(Legal basis: Clause 2, Article 517 of the 2015 Civil Code.)

Does the transferee automatically inherit all the rights and obligations of the former intermediary?

This is not a given. The scope of rights and obligations transferred depends on the tripartite agreement (Service User – Former Intermediary – Transferee). The parties need to clarify whether the transferee is liable for any breaches that occurred prior to the transfer.

In case of force majeure (natural disaster, epidemic), can the intermediary unilaterally transfer the contract to ensure the project’s progress?

Even in cases of force majeure, the intermediary must still notify and obtain the consent of the service user before assigning the work to a third party. However, force majeure may be a mitigating circumstance in determining liability for compensation if delays or breaches occur.

(Legal basis: Clause 2, Article 517 of the 2015 Civil Code.)

Can a commercial brokerage firm transfer customer information to another brokerage firm?

No, not without consent. Brokerage services are based on personal reputation and confidential information. Unauthorized transfer of client information to other brokers not only violates the service contract but may also violate data protection regulations and constitute unfair competition.

(Legal basis: Clause 11, Article 3 of the 2005 Commercial Law and Clause 5, Article 517 of the 2015 Civil Code.)

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Conclusion

Determining whether an intermediary can transfer a contract depends entirely on the agreement and consent of the service user according to the law. Clients need to be cautious in drafting and implementing transfer clauses to protect legitimate rights.

Contact Long Phan Consulting Company  immediately via Hotline 1900636389 for in-depth support on contract drafting and intermediaries transfer contracts to other parties.