Many businesses believe that contract risks only arise when disputes go to court. In reality, serious business losses often originate from just one poorly drafted or overlooked contract clause—long before any dispute becomes visible.
In Vietnam, contracts are central to almost every business activity: sales, distribution, services, employment, partnerships, and cross-border transactions. Yet many companies continue to use outdated templates, copy clauses from the internet, or sign agreements under commercial pressure without proper legal review.
This article explains how a single incorrect contract clause can cause financial, operational, and legal damage, why businesses frequently underestimate contract risks, and how ongoing legal consultancy helps prevent costly mistakes before they happen.
When a contract is signed, problems rarely appear immediately. Payments may be made on time, cooperation may run smoothly, and the relationship may seem stable. However, contract risks are dormant by nature. They emerge only when something goes wrong—late payment, termination, regulatory changes, or disputes.
At that stage, businesses often discover that:
The contract does not protect their interests
Key rights are missing or unclear
Obligations are broader than expected
Liability is unreasonably high
By then, the damage is already done.
One of the most common contract mistakes is an unclear or poorly defined scope of work.
When deliverables, timelines, or responsibilities are not clearly stated:
Clients may demand additional work without extra payment
Disputes arise over whether obligations were fulfilled
Businesses struggle to enforce payment
In service contracts, this often leads to scope creep, where companies deliver more than they are paid for—simply because the contract allows it.
Payment terms are often treated as a commercial detail rather than a legal risk. However, a poorly drafted payment clause can severely impact cash flow.
Common issues include:
No clear payment deadlines
Ambiguous payment conditions
Weak penalties for late payment
No right to suspend services when payment is overdue
When disputes arise, businesses may find they have no legal leverage to recover unpaid amounts quickly.
Many businesses sign contracts without paying close attention to liability provisions. This is one of the most dangerous mistakes.
A single clause may:
Expose the business to unlimited damages
Hold the business liable for indirect or unforeseeable losses
Transfer risks that should belong to the other party
In Vietnam, courts often rely strictly on the written contract. If liability is not properly limited, businesses may face compensation claims far exceeding the value of the contract itself.
Termination clauses determine how and when a business can exit a contract. Poorly drafted termination provisions can lock companies into unfavorable relationships.
Typical risks include:
No clear right to terminate for breach
Excessively long notice periods
High termination penalties
One-sided termination rights favoring the counterparty
In practice, businesses may be forced to continue loss-making contracts—or pay heavily just to exit.
Cross-border contracts often include governing law and dispute resolution clauses that are copied without understanding their impact.
As a result, businesses may face:
Disputes governed by foreign law
Litigation in unfamiliar jurisdictions
High legal and procedural costs
Difficulty enforcing judgments
What seemed like a minor clause can turn a manageable dispute into a costly international legal battle.
Even commercially reasonable agreements can fail if they conflict with mandatory provisions of Vietnamese law.
Examples include:
Contracts that violate labor regulations
Agreements exceeding licensed business scope
Clauses restricting rights protected by law
If a clause is deemed invalid, courts may refuse to enforce it—leaving the business without legal protection despite having a signed contract.
Many companies reuse old templates without updating them to reflect current law or business reality. What worked years ago may now be outdated or non-compliant.
Sales teams often prioritize closing deals over legal review. Contracts are signed quickly to meet targets, with risks postponed for later.
Without regular legal support, contracts are reviewed inconsistently—or not at all. Legal risks accumulate silently across multiple agreements.
The impact of a single faulty clause can include:
Financial losses from unpaid fees or compensation claims
Business disruption due to disputes or termination restrictions
Reputational damage with partners and clients
Management time diverted to conflict resolution
Legal costs far exceeding the contract value
In many cases, the cost of fixing the problem is far higher than the cost of preventing it.
Some businesses only consult lawyers when disputes arise or for “important” contracts. This approach leaves gaps in everyday agreements that later cause major problems.
Ad-hoc legal review is:
Reactive rather than preventive
Limited to specific transactions
Inconsistent across departments
Contract risk management requires continuous legal oversight, not occasional intervention.
With ongoing legal consultancy, contract review becomes part of daily operations.
Ongoing legal support helps businesses:
Standardize contract templates
Review contracts before signing
Identify and limit legal risks
Align contracts with Vietnamese law
Adjust agreements when laws or business models change
Instead of fixing problems after losses occur, businesses prevent them at the drafting stage.
FDI companies face additional contract risks due to:
Language differences
Use of foreign templates incompatible with Vietnamese law
Cross-border dispute resolution issues
Misalignment between group policies and local regulations
Ongoing local legal support ensures contracts are enforceable and commercially viable in Vietnam.
DEDICA provides ongoing legal consultancy services designed to help businesses manage contract risks proactively.
As an outsourced legal department, DEDICA supports clients by:
Reviewing and drafting commercial contracts regularly
Identifying hidden legal risks in contract clauses
Updating templates to reflect current law
Supporting negotiations with partners and clients
Ensuring contracts protect business interests effectively
DEDICA’s approach is practical, business-focused, and prevention-oriented, helping clients avoid losses caused by poorly drafted contracts.
A single incorrect contract clause can lead to serious financial and operational damage—often long after the contract is signed. Most contract-related losses are preventable with proper legal oversight.
For businesses operating in Vietnam, ongoing legal consultancy is the most effective way to ensure contracts support growth rather than create hidden risks.
📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)
🕒 Working Hours: Monday – Friday (8:30 – 18:00)
Contact us today for a free initial consultation with our experienced lawyers!
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