Advance payment is a common practice in commercial transactions with Vietnamese partners, especially in manufacturing, trading, sourcing, and service contracts. However, many foreign companies eventually face a difficult situation: payment has been made, but the goods are not delivered.
The supplier delays, provides excuses, partially performs, or stops responding altogether. At this point, businesses often feel stuck—unsure whether to wait, negotiate, or escalate the matter legally.
This article explains what foreign businesses should do when advance payment is made but goods are not delivered in Vietnam, and how legal strategy can significantly affect recovery outcomes.
Advance payment arrangements are frequently used in Vietnam due to:
Production financing needs
Custom manufacturing or sourcing models
Long supply chains and subcontracting
While many transactions are completed properly, disputes arise when:
Suppliers encounter financial difficulties
Production is delayed or cancelled
Goods are diverted to other buyers
The supplier lacks capacity but still accepts payment
Without early legal control, these cases can quickly turn into high-risk non-recovery situations.
Many foreign companies delay action because they hope the supplier will eventually deliver. Unfortunately, waiting too long often:
Weakens legal leverage
Allows assets to disappear
Makes enforcement more difficult
Silence or informal extensions may later be interpreted as acceptance of delay. The earlier legal assessment is made, the more options remain available.
Before taking any action, the contract must be reviewed carefully.
Key issues include:
Whether delivery deadlines are clearly defined
Whether advance payment conditions are linked to milestones
Remedies for late or non-delivery
Termination and refund provisions
Penalty or damage clauses
Governing law and dispute resolution mechanism
Many foreign companies discover too late that contracts are vague or poorly adapted to Vietnamese enforcement practice.
Not every delay automatically qualifies as a legal breach.
Under Vietnamese law, factors such as:
Grace periods
Agreed extensions
Force majeure clauses
Partial performance
may affect whether the supplier is legally in breach.
A legal assessment helps determine:
Whether formal breach has occurred
Whether notice is required
Which remedies are available
This step is critical before escalation.
Evidence is often the weakest point in non-delivery disputes.
Foreign companies frequently lack:
Formal delivery confirmations
Clear acceptance or rejection records
Structured communication history
Once disputes escalate, missing evidence can seriously undermine recovery.
Early legal guidance helps ensure:
Payment records are clearly documented
Non-delivery is formally recorded
Communications are legally safe
Repeated informal reminders rarely solve non-delivery problems.
A proper legal notice should:
Clearly state the breach
Demand performance or refund
Set a firm deadline
Preserve termination and claim rights
Poorly drafted notices—or none at all—often weaken later claims in court or arbitration.
This step alone resolves many disputes when done correctly.
Suppliers may propose:
New delivery schedules
Partial delivery
Future compensation
While negotiation can be useful, informal renegotiation may:
Reset contractual obligations
Waive original breach
Reduce refund or damage claims
Legal oversight ensures renegotiation protects, rather than sacrifices, your position.
Before filing a lawsuit or arbitration claim, businesses must assess enforcement reality.
Key questions include:
Does the supplier have assets in Vietnam?
Are those assets traceable?
Is arbitration or court the better forum?
A legal victory without enforcement often leads to zero commercial recovery.
Enforcement strategy should be considered before formal proceedings begin.
Depending on the contract, disputes may be resolved through:
Commercial arbitration
Vietnamese courts
Choosing the wrong forum can lead to dismissal, delay, and wasted cost.
Legal advice is essential to avoid jurisdictional and procedural errors.
In practice, recovery often fails because:
Legal action is taken too late
Contracts are poorly drafted
Evidence is weak or informal
Enforcement is not planned
These failures are usually preventable with early legal involvement.
Many businesses only hire lawyers after the situation becomes critical.
This reactive approach leads to:
Higher legal costs
Limited strategic options
Repeated disputes with different suppliers
Advance-payment risk is rarely a one-time issue.
Ongoing legal consultancy allows businesses to:
Structure advance payment terms safely
Monitor supplier performance
Intervene early when warning signs appear
Preserve leverage before disputes escalate
Instead of reacting to crises, businesses manage risk proactively.
Companies that regularly pay Vietnamese suppliers in advance face cumulative risk.
Without continuous legal oversight:
Small delays turn into major losses
Recovery becomes harder over time
Legal exposure grows unnoticed
Preventive legal management is essential for sustainable operations.
DEDICA provides ongoing legal consultancy services and dispute support for foreign and FDI companies facing non-delivery after advance payment.
DEDICA assists clients by:
Reviewing and structuring advance payment contracts
Assessing breach and refund options
Drafting legal notices and negotiation strategy
Representing clients in arbitration and Vietnamese courts
Advising on enforcement and asset recovery
DEDICA’s approach focuses on early intervention, enforceability, and cost control, not prolonged disputes.
Paying a Vietnamese partner in advance but not receiving goods is a serious commercial risk—but it does not have to result in total loss.
The outcome depends on:
How early legal strategy is applied
How contracts and evidence are handled
Whether enforcement is planned from the start
By engaging ongoing legal consultancy, businesses can significantly improve recovery prospects, reduce repeat risk, and protect long-term commercial interests.
📞 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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