Advance payment is common in commercial transactions with Vietnamese partners, particularly in manufacturing, trading, and sourcing arrangements. However, one of the most serious risks foreign companies face is this scenario: the Vietnamese partner does not deliver the goods and also refuses to refund the payment.
At this stage, the issue is no longer just a delay. It becomes a legal dispute involving breach of contract and potential unlawful retention of funds. Many businesses hesitate, unsure whether they should continue negotiating, wait longer, or escalate the matter legally.
This article explains how foreign businesses should handle situations where Vietnamese partners fail to refund after non-delivery, and how legal strategy can significantly affect recovery outcomes.
When goods are not delivered and payment is not refunded, the Vietnamese partner is typically in material breach of contract, unless a valid legal justification exists.
This situation commonly occurs when:
The supplier faces financial distress
Production capacity is overstated
Funds are used for unrelated purposes
The partner attempts to delay indefinitely
From a legal perspective, refusing to refund after non-delivery significantly weakens the supplier’s position and strengthens the buyer’s right to seek remedies.
Many foreign companies continue to wait because the Vietnamese partner:
Promises future delivery
Requests additional time
Claims temporary difficulties
While patience may seem reasonable, extended tolerance can undermine legal leverage. In some cases, silence or repeated extensions may be interpreted as acceptance of delay or renegotiation of terms.
Early legal assessment helps preserve rights before leverage is lost.
Before taking action, the contract must be reviewed in detail.
Key issues include:
Whether delivery deadlines are fixed or flexible
Whether advance payment is refundable upon non-delivery
Termination and refund provisions
Penalties or damages for breach
Governing law and dispute resolution clause
Many foreign companies discover too late that contracts lack clear refund mechanisms or enforcement-friendly wording.
Not every delay automatically triggers a refund obligation. Legal assessment is required to determine:
Whether delivery obligations have definitively failed
Whether force majeure or exceptions apply
Whether formal notice is required before termination
Whether refund rights have been triggered
Once the breach is legally established, refusal to refund usually constitutes a clear violation of contractual and commercial obligations under Vietnamese law.
Evidence plays a decisive role in refund disputes.
Foreign companies often lack:
Formal confirmation of non-delivery
Clear written refund requests
Structured records of communication
Early legal guidance helps ensure:
Payment records are clearly documented
Non-delivery is formally recorded
Refund demands are legally sound
Well-prepared evidence significantly improves negotiation and enforcement outcomes.
Repeated informal reminders are rarely effective.
A formal legal demand should:
Clearly state non-delivery and breach
Cite contractual refund obligations
Set a firm refund deadline
Preserve rights to terminate and claim damages
Many disputes are resolved at this stage when the supplier realizes legal consequences are imminent.
Poorly drafted demands—or none at all—often weaken later claims in court or arbitration.
Vietnamese partners may propose:
Partial refunds
Future delivery instead of refund
Offsetting against future orders
While negotiation may be commercially attractive, unstructured renegotiation can waive refund rights.
Any settlement or amendment should be documented carefully with legal support to avoid losing enforcement options.
Before initiating legal proceedings, businesses must assess enforcement reality.
Key questions include:
Does the supplier have assets in Vietnam?
Are bank accounts, inventory, or receivables identifiable?
Is arbitration or court litigation more effective for enforcement?
Winning a judgment without enforceability often leads to no real recovery.
Depending on the contract, refund disputes may be resolved through:
Commercial arbitration
Vietnamese courts
Choosing the wrong forum can result in dismissal, delay, and unnecessary cost.
Legal advice is essential to avoid procedural and jurisdictional risks.
In practice, refund recovery often fails because:
Legal action is taken too late
Contracts are vague or poorly drafted
Evidence is incomplete or informal
Enforcement strategy is overlooked
These issues are largely preventable with early legal involvement.
Many businesses only hire lawyers once the situation becomes critical.
This reactive approach leads to:
Higher legal costs
Limited strategic options
Repeated disputes with multiple suppliers
Advance-payment risk is rarely a one-time issue.
Ongoing legal consultancy allows businesses to:
Structure advance payment and refund clauses properly
Monitor supplier performance
Act early when delivery risks arise
Preserve leverage before disputes escalate
Instead of reacting to crises, companies manage risk proactively.
Companies that regularly pay Vietnamese suppliers in advance face cumulative risk.
Without continuous legal oversight:
Small delays turn into unrecoverable losses
Refund disputes multiply over time
Legal exposure grows unnoticed
Preventive legal management is essential for sustainable operations in Vietnam.
DEDICA provides ongoing legal consultancy services and dispute support for foreign and FDI companies facing non-delivery and refund refusal by Vietnamese partners.
DEDICA assists clients by:
Reviewing and structuring advance payment and refund clauses
Assessing breach and refund rights
Drafting legal demands 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.
When a Vietnamese partner fails to deliver goods and refuses to refund payment, the situation is serious—but it does not have to result in permanent 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 refund recovery prospects, reduce repeat risk, and protect long-term commercial interests in Vietnam.
📞 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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