When enterprises and agricultural producers (farm households, cooperatives) in Vietnam enter into a business cooperation contract in the agricultural sector, both sides typically expect to share benefits: share capital, share profits, share risks. However, in reality, many cases end in disputes — causing significant financial damage to both businesses and producers.
In a market where agricultural policies, export regulations, and foreign investment conditions change rapidly, understanding the concept and identifying risks is crucial.
A Business Cooperation Contract (BCC) is an agreement between parties to jointly contribute capital, assets, labor, or share risks and profits arising from business operations. In Vietnam’s agricultural sector, such contracts are usually signed between enterprises and farmers, cooperatives, or production units to conduct cultivation, farming, harvesting, purchasing, or processing activities.
Typically, producers receive inputs such as fertilizers, seeds, and technical support, while enterprises commit to purchasing outputs and supporting market access. However, agricultural BCCs require a higher level of risk management due to the nature of agriculture: dependence on weather, fluctuating markets, and difficulty controlling product quality.
Research indicates that “long production cycles and products with short shelf life” are major causes of contractual failure in agriculture.
This means that without careful preparation, business cooperation contracts in Vietnam’s agricultural sector are highly vulnerable to disputes.
In practice, disputes often involve: products failing to meet agreed quality standards, enterprises not purchasing the committed quantities, delayed payments, or farmers refusing to deliver products as promised.
For example, legal studies on agricultural contracts note that if an enterprise “fails to purchase the full amount of agricultural products or does not purchase at the agreed time or location,” it may be subject to sanctions.
Major causes include:
Unclear contract terms, especially on quality standards, responsibilities, and payment conditions.
Market volatility, natural disasters, diseases, and export policy changes, while contracts lack hardship or force-majeure clauses.
Failure to perform commitments: businesses may not provide technical support as promised; farmers may sell products to third parties despite existing agreements.
Lack of dispute resolution procedures in the contract or ineffective use of negotiation, mediation, arbitration, or court remedies.
Without preventive measures, disputes can severely damage trust, capital, and the entire agricultural supply chain.
After identifying the issues, this section outlines practical steps for designing, implementing, and resolving contractual obligations to reduce risks and protect parties.
Before signing a BCC in agriculture, parties should ensure:
The contract is in writing, specifying capital contributions, profit-sharing, liabilities, and dispute resolution methods.
Clear product standards: quality, quantity, delivery time and location, storage responsibilities — crucial due to the sensitivity of agricultural products.
Inclusion of hardship or force majeure clauses (natural disasters, disease outbreaks, export restrictions).
Pre-agreed dispute resolution mechanism: negotiation → mediation → arbitration or court.
Verification of each party’s capacity: production capability for farmers, purchasing/processing capacity for enterprises.
A well-designed BCC helps ensure effective implementation and minimize disputes.
Risk prevention continues after signing:
Enterprises should monitor production inputs, technical support, and compliance with standards.
Producers should retain documents: receipts, supply records, contracts, delivery minutes, invoices — essential evidence in case of disputes.
Delivery should be recorded precisely: quantity, quality, timing, and conditions.
When violations arise, timely notices, reminders, or warnings should be issued to preserve legal rights.
If disputes occur, the following mechanisms are typically considered:
Low-cost and helpful in maintaining cooperation.
Suitable for export-related agricultural cooperation; proceedings are faster and confidential.
Used when there is no arbitration clause or arbitration is refused.
Agricultural BCC disputes fall under commercial disputes within the jurisdiction of Vietnamese courts.
Evidence preparation is critical: contracts, minutes, correspondence, invoices, and — for export cases — international payment and delivery records.
After resolution, parties should revise contract terms, improve procedures, and strengthen oversight to avoid recurrence.
In Vietnam’s agricultural business environment, preparing a well-structured business cooperation contract — from drafting, implementation, to dispute resolution — is essential for survival and growth.
Disputes in agricultural BCCs are not merely legal issues; they can destroy capital, credibility, and the entire production chain.
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