SUMMARY OF JUDGMENT NO. 225/2022/KDTM-PT A LOAN AGREEMENT “DISGUISED” AS A CAPITAL CONTRIBUTION AGREEMENT

Judgment No. 225/2022/KDTM-PT issued a significant determination regarding the essential nature of the contract between CMS Company and FCC Company. The People's Court of Hanoi ascertained that this was not a business cooperation contract; instead, it constituted a loan agreement.

The pivotal point in this matter is the court's meticulous scrutiny of the contractual terms between CMS Company and FCC Company, encompassing specifics on interest rates, capital contribution duration, and other critical contract elements. The court resolved that this contract bore a specific interest rate of 16.5% per annum and a specific term of 24 months.

Conversely, in a business cooperation agreement, parties typically engage in collaborative efforts within a business project and share in the resulting profits or losses without necessarily being bound to refund the capital contribution along with interest.

The court diligently examined the contract terms, concluding that they comprised fundamental components of a loan agreement, including a specified interest rate and a timeframe for the repayment of the capital contribution. This conclusion led to the court's decision that this was, indeed, a loan agreement, and CMS Company was obliged to fulfill the responsibility of repaying the capital and interest in accordance with the contract's provisions.

This matter underscores the critical importance of a comprehensive analysis of contractual terms in order to determine the nature and rights of the parties involved, particularly in financial dispute cases such as this.

See the Document here

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