Reassessing redemption-clause transactions in Vietnam: A comparative study with French civil law

Abstract

A sale with a redemption clause is commonly used when a property owner seeks immediate liquidity for financial purposes but does not intend to permanently transfer ownership of the asset. Functionally, this arrangement may operate as a de facto secured loan in which ownership temporarily shifts to the buyer as collateral. This article examines whether such transactions are legally recognized under current Vietnamese law as true sale contracts or whether their substance suggests a security device. Using qualitative doctrinal and comparative methods, the study analyzes Vietnamese legal practice and contrasts it with the French legal framework, which has historically shaped Vietnam’s civil law tradition. The findings reveal a high incidence of disputes arising from redemption-clause transactions, largely attributable to ambiguities and gaps in statutory provisions, particularly those concerning the determination of the redemption price. These loopholes have enabled purchasers to take advantage of sellers, resulting in significant legal uncertainty. The article concludes that Vietnamese law would benefit from targeted reforms informed by comparative insights, especially from French experience, to ensure greater fairness, transparency, and legal coherence in transactions involving ownership rights used as collateral.