No table of contents available
Without a thorough understanding of Vietnamese law and practices, even a single poorly worded clause can lead to the loss of your deposit, a lack of control over your partner, and difficulties in resolving disputes.
Many foreign businesses only discover problems after signing the contract or transferring the money. At that point, dispute resolution costs are often high, time-consuming, and may not yield the desired results. Therefore, reviewing contracts before signing is not just a procedural step, but a strategic decision.
When working with partners in Vietnam, many businesses use international contract templates or rely on trust in the initial stages. However, the legal environment and business practices in Vietnam have unique characteristics that, if not fully understood, can lead to risks inherent in the contract's content.
Under the 2015 Civil Code, a contract is considered valid when it satisfies the requirements regarding parties, content, and voluntary intent. However, in practice, a “valid” contract does not necessarily mean that you can easily enforce obligations or recover damages from your counterparty.
The key lies in how the terms are structured. If the contract does not clearly define obligations, performance standards, or mechanisms for handling breaches, you may face significant difficulties in a dispute—even if you are, in principle in the right.
Many foreign businesses have encountered situations such as:
The common issue in these cases is that the contract was not thoroughly reviewed before signing.
Contract review is not just about reading the content—it requires a comprehensive assessment of the counterparty, the terms, and the practical enforceability.
Before reviewing the contract content, you need to clearly confirm:
This is a basic but critical step. In practice, there have been many cases where contracts were signed with unauthorized individuals or companies about to cease operations, leading to serious risks in performance and enforcement.
One of the most important aspects of a contract is the payment structure and the ability to control cash flow. Businesses need to clarify whether payments are made in stages or upfront, the conditions for each payment milestone, and whether part of the payment is retained to ensure performance.
If a contract requires early payment without proper control mechanisms, the risk can be substantial.
In addition, safeguard measures such as performance guarantees, refund clauses in case of breach, or the right to suspend payment should also be considered. These mechanisms help businesses maintain control even after funds have been transferred.
A common mistake is that contracts describe obligations too vaguely, such as “deliver goods of proper quality” without clearly defining what “quality” means.
To avoid risks, businesses should ensure that:
Without these elements, proving a breach in case of dispute becomes very difficult.
Under Vietnamese law, penalty levels in certain cases may be subject to limitations. Therefore, these clauses must be carefully structured to ensure compliance while still effectively protecting your interests.
Businesses should combine penalty clauses with damages provisions and clearly define how damages are calculated to avoid unrealistic expectations in case of breach.
This is often overlooked but can have a major impact when disputes arise. Businesses need to clearly define the dispute resolution body (court or arbitration), location, governing law, and language.
An unclear clause may cause you to lose your advantage from the outset or face difficulties when initiating legal proceedings.
DEDICA has experience working with many international businesses across sectors such as manufacturing, trading, and services in Vietnam. Its approach goes beyond contract review and focuses on solving practical issues.
DEDICA provides support in:
With a practical, clear, and easy-to-understand approach, DEDICA helps foreign businesses operate with greater confidence in Vietnam.
A vague clause today can become a major problem tomorrow if your partner fails to fulfill their commitments. When a dispute arises, you will face a difficult balance between litigation costs, time, and actual recovery. Therefore, instead of relying entirely on trust or standard templates, businesses should proactively review and control risks from the very beginning.
If you are preparing to sign a contract with a partner in Vietnam or are unsure whether your current contract is sufficiently secure, contact DEDICA Law for tailored advice and support.
📞 Hotline: (+84) 39 969 0012 (Support available via WhatsApp, WeChat, and Zalo)
🕒 Opening hours: Monday – Friday (8:30 AM – 6:00 PM)
Contact us today for a free initial consultation with our team of professional lawyers!
Select a platform to view details
