May an Enterprise Sign Business Contracts Before Enterprise Registration?

The founder of an enterprise may sign contracts serving the establishment and operation of the enterprise before and during the enterprise registration process. If the Enterprise Registration Certificate is granted, the enterprise must continue performing the rights and obligations arising from the signed contracts; if not granted, the contract signatory bears responsibility for performing the contracts.

1. May an enterprise sign business contracts before enterprise registration?

To answer this question, two concepts need clarification:

What is an enterprise? Under clause 10, Article 4 of the Law on Enterprises 2020: “An enterprise is an organization with its own name, assets and transaction office, established or registered for establishment as prescribed by law for business purposes.”

What is a contract? Under Article 385 of the Civil Code 2015: “Article 385. Definition of contract — A contract is an agreement between parties on the establishment, modification or termination of civil rights and obligations.”

On signing contracts before enterprise registration, Article 18 of the Law on Enterprises 2020 provides:

Article 18. Contracts before enterprise registration

1. The founder of an enterprise may sign contracts serving the establishment and operation of the enterprise before and during the enterprise registration process.

2. Where the Enterprise Registration Certificate is granted, the enterprise must continue performing the rights and obligations arising from the contracts signed under clause 1 of this Article, and the parties must transfer contractual rights and obligations as prescribed by the Civil Code, unless the contract provides otherwise.

3. Where the enterprise is not granted the Enterprise Registration Certificate, the person signing the contract under clause 1 of this Article is responsible for performing the contract; where other persons participated in the enterprise establishment, they are jointly responsible for performing the contract.

2. Who is responsible for performing contracts signed before enterprise registration?

Responsibility is determined depending on the registration outcome:

• If the Enterprise Registration Certificate is granted: the enterprise must continue performing the rights and obligations arising from the signed contracts; the parties transfer contractual rights and obligations as prescribed by the Civil Code, unless the contract provides otherwise.
• If the Enterprise Registration Certificate is not granted: the contract signatory is responsible for performing the contract; if other persons participated in the enterprise establishment, they are jointly responsible for performing the contract.

Practical note: When signing a contract before enterprise registration, the founder should clearly state in the contract that it is signed in the capacity of the founder of an enterprise in the registration process, and clearly agree on the mechanism for transferring rights and obligations to the enterprise after the Certificate is granted, to avoid disputes.

Notes on applying current legal provisions

This article belongs to the Enterprise Knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions. Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying legal texts that have been amended, supplemented or replaced.
• Failing to clearly agree on the mechanism for transferring rights and obligations in contracts signed before registration.
• Misunderstanding the applicable conditions, procedures, time limits or competent authority.
• Signing, filing or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary. For quick advice, you may contact a lawyer at 0966.475.966.

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