NOTES ON SALES PROMOTIONAL SERVICES CONTRACT

1. What is promotion and business of promotional service?

Promotion is a trade promotion activity of a trader to promote the purchase and sale of goods and provision of services by giving customers certain benefits.

The business of promotional service is a commercial activity in which a trader conducts promotions for goods and services of another trader based on signing a service supply contract. Therefore, in terms of implementation form, when a trader wishes to conduct a promotion program, they have the right to hire a trader providing promotional services to perform on their behalf.

2. Sales promotional service contract

According to the provisions of Article 90 Commercial Law 2005 stipulating that a contract for business in sales promotion services must be made in writing or another form with equivalent legal validity. The contract must stipulate the rights and obligations of the parties, including traders hiring promotional services and traders providing promotional services.

The following entities are entitled to hire and sign a service provision contract with a trader providing promotional services, including Vietnamese traders, branches of Vietnamese traders, and branches of foreign traders. Accordingly, foreign traders who do not have a commercial presence in Vietnam and their representative offices are entities that are not allowed to carry out and are not allowed to hire traders providing promotional services to conduct sales promotions for its goods and service.

3. Rights and obligations of traders providing promotional services

3.1 Rights of traders providing promotional services

(i) Selection of form, time and place of promotion, goods and services used for promotion;

(ii) Specifying specific benefits that customers are entitled to in accordance with the government's regulations on the maximum limit of the value of goods and services used for promotion, the maximum discount for promotional goods and services that traders may perform in promotional activities;

(iii) Hire traders providing promotional services to conduct sales promotion for them;

(iv) Organize the implementation of sales promotion forms specified in Article 92 Commercial Law 2005.

3.2 Obligations of traders providing promotional services

(i) Fully comply with the order and procedures as prescribed by law for the implementation of promotional forms;

(ii) Publicly announce information about promotional activities to customers according to the provisions of Article 97 Commercial Law 2005;

(iii) Strictly implementing the announced promotional program and commitments with customers;

(iv) For some forms of promotion specified in Article 92.6 of this Law, traders must deduct 50% of the announced prize value into the state budget in case there is no winner (The Minister of Industry and Trade shall prescribe the specific forms of promotion under the programs of chance which must comply with this regulation);

(v) Comply with the agreements in the promotion service contract if the trader performing the promotion is a trader providing promotional services.

ADK & Co Vietnam Lawyers Law Firm