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A sales contract in Vietnam, if not carefully reviewed, may expose foreign businesses to deposit losses, delivery disputes, or difficulties in recovering outstanding payments when the Vietnamese partner breaches its obligations.
In recent years, Vietnam has become an important destination for international companies involved in manufacturing and sourcing activities. Businesses from the United States, Europe, South Korea, Japan, and China are increasingly working with Vietnamese factories and suppliers to optimize costs and diversify their supply chains.
However, many companies focus mainly on pricing, production timelines, and delivery capabilities while overlooking a more critical issue: the legal structure and enforceability of the contract itself.
In practice, many serious disputes do not arise from sophisticated fraud schemes. Instead, they often result from contracts that lack proper protection mechanisms under Vietnamese law and business practices.
DEDICA Law has assisted many foreign businesses in situations where deposits were paid but goods were never delivered, products failed to meet technical specifications, deliveries were significantly delayed, or Vietnamese companies ceased operations after receiving payment. A common issue in these cases is that the contracts were not properly reviewed from the beginning.
Many international businesses assume that having a signed contract or purchase order is enough to protect their interests. However, in Vietnam, the key issue is not simply whether a contract exists, but whether the contract can effectively protect the business when a dispute arises.
One of the most common mistakes is signing contracts too quickly after only a few email exchanges or online meetings.
Many companies do not verify whether the Vietnamese company is still actively operating, whether the signatory has proper authority, or whether the company is involved in tax liabilities or ongoing disputes. In some cases, the registered address exists only on paper and is not an actual operating location.
Foreign businesses often discover these problems only after delayed deliveries, poor product quality, or sudden loss of communication with the supplier.
In Vietnam, winning a lawsuit does not necessarily mean the business will successfully recover its money. If the breaching company has ceased operations, no longer owns assets, or has transferred assets to another entity, the enforcement process can become difficult and time-consuming.
This is why conducting legal due diligence before signing a contract is far more important than trying to resolve disputes afterward.
Many foreign companies use contract templates from their headquarters or rely on standard US or EU agreements without adapting them to Vietnamese law.
As a result, some clauses may appear strong on paper but become difficult to enforce in practice.
Common examples include excessive penalty clauses, unclear compensation provisions, lack of product inspection mechanisms, or failure to specify the dispute resolution authority.
Under Vietnam’s Commercial Law 2005, contractual penalties in many commercial transactions are generally capped at 8% of the value of the breached obligation. This means that certain clauses commonly used in the US or Europe may not be fully enforceable in Vietnam.
More importantly, a professionally drafted contract does not automatically guarantee effective enforcement during an actual dispute.
Many major disputes originate from a few missing but critical provisions in the contract.
A lawyer with practical experience in commercial transactions can often identify risks that businesses may overlook during negotiations.
This is one of the most common risk areas for foreign businesses purchasing goods from Vietnam.
Many buyers pay a large portion of the contract value in advance, but the contract does not clearly regulate deposit refund conditions, delivery deadlines, or remedies for delayed performance.
In some cases, companies have paid up to 70% of the contract value without having the right to suspend payment or reject defective products.
When disputes arise, businesses are often placed in a difficult position. Litigation may be expensive and time-consuming, while terminating cooperation may mean losing a significant amount of money already transferred.
In many cases, the most important question is not:
“Can we win the case?”
but rather:
“Even if we win, can we actually recover the money?”
This is a very practical concern in commercial disputes in Vietnam.
Many disputes arise because the description of the goods is too general.
If the contract does not clearly specify technical standards, quality inspection procedures, or acceptance criteria, disagreements can easily occur after delivery.
The seller may argue that the goods comply with the contract, while the buyer may believe the products fail to meet practical requirements.
Without clear acceptance criteria, proving a contractual breach becomes significantly more difficult.
This is especially important in manufacturing and sourcing transactions, where technical specifications should be drafted in as much detail as possible to minimize future disputes.
Many contracts only mention delivery timelines without clearly defining each party’s responsibilities during transportation.
This often leads to disputes when goods are damaged, lost, or delayed in transit.
An effective sales contract should clearly define when ownership transfers, when risk transfers, insurance responsibilities, and each party’s obligations if transportation issues occur.
If these issues are not addressed from the beginning, businesses may face significant difficulties when actual losses arise.
Many foreign businesses only seek legal assistance after money has already been transferred, communication has broken down, or disputes have become serious.
At that stage, most risks have already materialized.
A properly reviewed contract from the beginning can help businesses identify risky suppliers, establish safer payment structures, and strengthen their negotiation position if breaches occur.
In practice, the cost of contract review is usually far lower than the cost of litigation, arbitration, supply chain disruption, delayed deliveries, or loss of customers.
For businesses without an in-house legal team in Vietnam, engaging external legal counsel from the beginning should be viewed as a risk management investment rather than merely a legal expense.
Before entering into a sales contract with a Vietnamese supplier or factory, businesses should carefully verify the legal status and operational capacity of the partner.
The contract should also be thoroughly reviewed with particular attention to payment terms, delivery obligations, product quality standards, liability provisions, and dispute resolution mechanisms.
In addition, companies should prepare contingency plans in case the supplier delays performance or breaches contractual obligations.
A lawyer familiar with Vietnam’s business environment can often identify risks that procurement or operations teams may not notice during the early stages of negotiation.
A sales contract in Vietnam is not merely a formality. It is an important tool for protecting businesses against real commercial risks.
Many major disputes arise because companies fail to properly verify suppliers, use unsafe payment structures, or draft contracts without clear provisions on delivery responsibilities and product quality standards.
Given the practical realities of litigation costs, dispute resolution timelines, and enforcement challenges in Vietnam, the most effective strategy is usually not “winning the lawsuit,” but minimizing legal risks from the contract negotiation stage itself.
Every transaction involves unique industry factors, supply chain structures, and enforcement considerations. Businesses should therefore seek tailored legal advice before signing contracts or handling disputes in Vietnam.
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