Causes and Solutions for International Sale of Goods Contract Disputes in Vietnam
1. Why are international sale of goods contract disputes more likely to occur in Vietnam?
You may be facing an international sale of goods contract – seemingly straightforward but full of hidden risks. In Vietnam, most businesses tend to prioritize short-term profits, often lacking sufficient understanding of international law and trade customs, which easily leads to unforeseen disputes. This article shares key causes and practical solutions to help you draft secure contracts and handle disputes effectively.
2. Common causes of disputes in international sale of goods contracts
2.1. Subjective causes
Lack of understanding of law and international practices: Vietnamese businesses often do not fully understand international legal regulations and trade practices, leading to loosely drafted contracts and high risks.
Lack of transparency and focus on profit only: Many companies prioritize immediate benefits over legal clarity and commitment, which easily leads to disputes.
Unverified authority and legal status: Disputes may arise if the signatory lacks legal authority or is not a legally competent entity under Vietnamese or foreign laws.
2.2. Objective causes
Market fluctuations: Changes in price, exchange rates, and supply-demand between countries can alter the interests of the parties, leading to conflict.
Force majeure events: Natural disasters, storms, epidemics, etc., may occur unexpectedly and are often not covered by initial liability exemption clauses.
Differences in language and trade practices: Misunderstandings due to translation errors or discrepancies in trade customs between countries easily result in disputes.
Differences in legal systems or policy changes: International contracts may be subject to different legal frameworks, and policy changes can be difficult to foresee.
3. Common forms of disputes faced by Vietnamese businesses
Failure to fulfill obligations: This includes delivering the wrong product quality or quantity, late delivery, delayed payment, or refusal to accept goods.
Violations causing serious damage: Such as rejecting goods and claiming high compensation, increasing legal and arbitration costs.
4. Effective solutions to prevent and resolve disputes in Vietnam
4.1. Prevention before contract signing
Draft clear and detailed contracts: Clearly define the subject matter, quality, quantity, units, and penalties for breach of contract.
Verify legal capacity and authorization: Check business registration and confirm whether the contract signatory is authorized.
Specify dispute resolution clauses: Include dispute settlement method (arbitration or court), applicable law, and language – based on the principle of “freedom of contract” under Vietnamese and international law.
Include a comprehensive force majeure clause: Helps avoid disputes in case of natural disasters, pandemics, etc., that are beyond the parties' control.
4.2. Solutions when a dispute arises
Prioritize internal negotiation: If the relationship remains cordial, the parties can resolve the issue amicably without legal conflict.
Choose arbitration: A fast, professional method suitable for international nature, commonly preferred by Vietnamese businesses.
Proceed with litigation in Vietnamese courts: If arbitration fails or is not accepted, parties may initiate lawsuits at provincial-level economic courts, which have jurisdiction over foreign-related disputes.
Apply the CISG (Vienna Convention 1980): If the contract applies CISG, the aggrieved party has the right to sue and claim full damages under Article 30 of the Convention.
5. Conclusion
Truthfully, many risks can be avoided with careful preparation before signing an international contract. Just by drafting clear terms, thoroughly checking legal status, and carefully choosing dispute resolution mechanisms, you are already equipping your business with a solid legal “armor.”
Don’t let short-term gains lead to long-term losses. If a dispute arises, prompt action, solid reasoning, and sufficient evidence will help you safeguard your company’s interests and reputation.
DEDICA Law Firm is committed to supporting Vietnamese businesses, especially in international sale of goods contracts. We provide contract drafting, legal risk assessment, dispute clause development, and effective litigation support. If you're dealing with a complex international contract or facing a dispute, contact us now for timely and strategic legal advice.
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