Chương 1 Nghị định 163/2006/NĐ-CP: Những quy định chung

Chapter I

GENERAL PROVISIONS

Article 1.- Governing scope

This Decree details the implementation of a number of articles of the Civil Code regarding the establishment and execution of security transactions to secure the performance of civil obligations and the disposal of security assets.

Article 2.- Application of law

The establishment and execution of security transactions and the disposal of security assets shall comply with the provisions of the Civil Code, this Decree and relevant legal documents.

Article 3.- Interpretation of terms

In this Decree, the terms below are construed as follows:

1. Securer means an obligor or a third party that commits to secure the performance of civil obligations, that may be a pledgor, mortgagor, depositor, escrow account depositor, collateral payer, guarantor or a grassroots socio-political organization in case of trust.

2. Securee means a right holder (obligee) in a civil relation whereby the exercise of that right is secured with one or more than one security transaction, that may be a pledgee, mortgagee, deposit receiver, escrow account receiver, guarantee or a credit institution in case of trust, or a party entitled to a payment by bank or to a damages in case of collateral.

3. Bona fide securee means a securee that is ignorant or unable to know that the securer is not entitled to use an asset to secure the performance of civil obligations.

4. Obligor means a party that is supposed to perform the secured obligation toward the obligee.

5. Secured obligation means part or the whole of a civil obligation, which may be a present obligation, a future obligation or a conditional obligation, of which the performance is secured with one or more than one security transaction.

6. Future obligation means a civil obligation arising from a civil transaction that is established after a security transaction is entered into.

7. Security asset means an asset used by the securer to secure the performance of a civil obligation toward the securee.

8. Goods circulated in the production or business process means a movable asset used for exchange, sale, purchase or lease within the scope of production or business activities of the securer.

9. Valuable papers means stocks, bonds, bills of exchange, promissory notes, deposit certificates, checks and other valuable papers that are specified by law, can be monetized and are allowed to be transacted.

10. Asset allowed to be transacted means an asset not banned from transactions under law at the time a security transaction is established.

Article 4.- Security assets

1. Security assets are agreed upon by the involved parties and owned by the obligor or by a third party that commits to use those assets to secure the performance of obligations of the obligor toward the obligee. Security assets may be current assets or future assets which are allowed to be transacted.

2. Future assets means those owned by the securer after the time the obligation is established or the security transaction is entered into. Future assets also include those formed at the time the security transaction is entered into, which, however, shall belong to the securer's ownership only after the security transaction is entered into.

3. Unless otherwise provided for by law, state enterprises are entitled to use assets under their management to secure the performance of civil obligations.

4. If a security transaction is lawfully entered into and binding on a third party, the court or a competent state agency may not distrain security assets for the performance of another obligation by the securer, unless otherwise provided for by law.

Article 5.- Value of assets used to secure the performance of many civil obligations

In case the securer uses an asset to secure the performance of many civil obligations according to Clause 1, Article 324 of the Civil Code, the involved parties may agree to use an asset of a value smaller than, equal to or larger than the total value of the secured obligations, unless otherwise provided for by law.

Article 6.- Payment priority order

1. The payment priority order upon the disposal of security assets is determined in accordance with Article 325 of the Civil Code.

2. Parties secured with the same asset may agree on the interchange of the payment priority order between them. The party succeeding the top payment priority shall be given priority to be paid within the scope of security of its predecessor.

3. If the proceeds from the disposal of the security asset is not enough to pay the securees with the same payment priority, that amount shall be paid to those parties in proportion to the values of secured obligations.

Article 7.- Selection of security transactions to secure the performance of civil obligations

When a civil obligation is secured with many security transactions but the obligor fails to perform or improperly performs that obligation when it comes due, the securee may select a security transaction to dispose of or dispose of all security transactions, unless otherwise agreed by involved parties.