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Vietnam is becoming one of Asia's important manufacturing and export hubs. From furniture and textiles to agricultural products and electronic components, more and more foreign businesses are choosing Vietnamese suppliers due to advantages in cost, production capacity, and a rapidly developing logistics network.
However, behind these trade opportunities lie a series of legal risks that many businesses only realize after disputes have arisen. In reality, many international transactions encounter problems not because of poor product quality, but because contracts are poorly drafted, lack control mechanisms, or are not compliant with Vietnamese law.
Many foreign businesses, when purchasing goods from Vietnam, often focus on price, delivery time, and production capacity. However, in actual disputes, the issue that causes the most significant losses for businesses often lies in unclear contract terms.
In some cases, contracts only briefly mention the quality of goods, lacking specific technical standards or clearly defining inspection and acceptance procedures. When goods fail to meet requirements, the two parties begin to have differing interpretations of what constitutes "correct quality."
There are also cases where businesses have paid a large portion of the order value upfront, but the contract lacks a guarantee mechanism, clearly defining responsibility for delayed delivery or handling of violations. When problems arise, recovering money or claiming compensation becomes very difficult.
This is a fairly common risk in international transactions with Vietnamese businesses. Many contracts are drawn up in both English and Vietnamese, but the two versions are not entirely identical. In some cases, the English version is written in a way that favors the buyer, while the Vietnamese version expresses it differently or omits important information.
If the contract does not clearly specify the preferred language for dispute resolution, subsequent handling can be very complicated, especially when the case is resolved in Vietnam. This is why foreign businesses should carefully review both versions instead of just checking the English version.
In reality, many commercial risks stem from contracts that stipulate payment terms too simply.
For example, a contract might only state "50% deposit, the remaining balance payable after delivery" but fail to specify what constitutes "completed delivery," who confirms the quality, or when the risk of loss of goods is transferred.
Without a clear payment mechanism, businesses may find themselves in a situation where payment has been made but the goods are unsatisfactory, or conversely, the supplier withholds the goods because they believe the buyer has not fulfilled their obligations. In international contracts, payment terms need to be designed in conjunction with the goods inspection process, delivery documents, and appropriate Incoterms conditions.
Another often overlooked risk is that foreign businesses only work via email or intermediaries without thoroughly checking the legal status of their partners. In some cases, the seller may not have the correct legal representative, the company may have ceased operations, or the registered business activities may not be suitable for exporting goods.
If a contract is signed by an unauthorized person or a business lacking the necessary legal qualifications, enforcing the contract later can be very difficult. That's why conducting a legal review of a business before signing a contract is always a crucial step in international transactions.
Many international trade contracts use generic templates from the internet or focus solely on transaction value without establishing clear mechanisms for handling breaches. When a partner delivers late, delivers insufficient goods, or delivers substandard goods, the buyer discovers that the contract lacks specific penalty clauses or contains overly vague provisions that are difficult to apply in practice. In the international trade environment, compensation clauses are not only a "legal threat" but also a tool that helps businesses control risks from the outset.
For transactions with foreign elements, especially international sales contracts, DEDICA supports businesses in reviewing contracts, conducting legal due diligence on partners, and developing mechanisms to protect their rights in accordance with Vietnamese law and the realities of cross-border trade.
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