Common Types of Service Contract Disputes and Effective Resolution Methods in Vietnam

In business practice, service contracts are increasingly used — from maintenance agreements, marketing services, legal services, to small-scale construction services. When conflicts arise during the execution of these contracts, service contract disputes often follow. Understanding the common types of disputes and how to resolve them effectively helps businesses take control, minimize risks, and protect their interests.

1. Common Types of Service Contract Disputes

1.1. Disputes over Service Fee Payments

This is the most classic form of dispute: the service provider has fulfilled the contract (in full or in part), but the service user delays, underpays, or refuses to pay. Conversely, some clients argue the service didn’t meet expectations and demand a refund or a fee reduction.

1.2. Disputes over Quality, Timeliness, and Outcome of Service

These disputes arise when services fail to meet agreed standards (e.g., poor quality, technical errors, lack of effectiveness), are delayed, or fail to achieve expected results.

1.3. Disputes over Amendments or Additions to the Contract

During contract performance, one party may want to add or amend terms (e.g., new work items, cost adjustments, extended deadlines), while the other party disagrees, leading to conflict.

1.4. Disputes over Contract Validity

Some contracts are contested as void (partially or wholly) due to violations of legal conditions such as unlawful content, prohibited acts, lack of legal capacity to sign, or failure to meet form requirements.

1.5. Legal Service Contract Disputes

Disputes involving legal service contracts (with lawyers or law firms) often concern remuneration, professional responsibility, failure to fulfill obligations, breach of confidentiality, or conflicts of interest.

2. Effective Methods for Resolving Service Contract Disputes: From Soft to Legal Measures

Here is a suggested step-by-step approach, from softer (internal resolution) to stronger legal measures (litigation). Businesses should apply these flexibly depending on the context.

2.1. Direct Negotiation

This is the first and most cost-effective step, provided both parties remain open to discussion. The parties can review the contract, address gaps, and propose adjustments. This method saves costs and preserves business relationships if good faith remains.

2.2. Mediation (External or Court-initiated)

If negotiation fails, a mediator or neutral third party may facilitate a solution. Courts often encourage mediation during proceedings; if successful, the agreement will be recognized and enforceable.

2.3. Arbitration

If the contract includes an arbitration clause, courts will dismiss lawsuits brought outside arbitration (unless the clause is invalid). Arbitral awards are binding but may involve higher costs and longer resolution time than mediation.

2.4. Litigation in Court (Civil or Commercial Lawsuits)

If previous measures fail, or urgent protection is needed, the aggrieved party can file a lawsuit in court. The court will examine the contract, evidence, and performance to issue a judgment. For service contracts, the statute of limitations is usually three years from the date the claimant became aware of the rights violation (unless otherwise agreed or legally stipulated).

Example: In Judgment No. 104/2022/DS‑ST, the defendant was absent without reason, and the court proceeded with a trial in their absence, in accordance with civil procedure rules.

2.5. Interim Injunctions or Emergency Relief

In urgent situations (e.g., preventing further harm), courts may grant emergency measures to temporarily protect the party’s rights. Each case must be assessed individually.

3. Practical Tips for Executing and Resolving Service Contract Disputes

• Draft Clear and Detailed Contracts

A poorly written contract — lacking service quality criteria, acceptance standards, penalties, payment terms, or change mechanisms — is fertile ground for disputes. Specify work scope, standards, responsibilities, deadlines, change procedures, and acceptance criteria.

• Choose the Appropriate Dispute Resolution Forum

Agree on a dispute resolution mechanism (negotiation, mediation, arbitration, court) at the time of contract signing, and select a competent arbitration center or court with good track records and reasonable costs.

• Maintain Continuous Evidence Collection

Keep all emails, meeting minutes, acceptance records, photos, logs, and payment documents to support your case if a dispute arises.

• Send Reminders and Notices of Breach

Before initiating legal action, send a formal demand (e.g., final notice or warning letter) requiring the other party to fulfill obligations or rectify issues — these documents can be used as evidence in court.

• Assess the Cost-Benefit of Each Option

Evaluate legal fees, arbitration/court costs, and timeframes before choosing a resolution path. Sometimes litigation costs may exceed the disputed amount.

• Avoid Ambiguous or Risky Clauses

Refrain from using vague or overly broad terms. Minimize exposure to risky terms (e.g., excessive penalties, burdensome mutual obligations).

• Observe Statute of Limitations

For service contracts, the typical limitation period is three years from when the injured party becomes aware of the breach. Missing this window could forfeit your right to sue.

4. Conclusion

Service contract disputes — if unanticipated — can cause financial losses, reputational damage, and wasted time. However, by understanding common dispute types and selecting appropriate resolution strategies, you can take control of the situation and minimize risks.

• Start with a well-drafted, clear contract.

• When disputes arise, prioritize negotiation and mediation.

• Follow arbitration clauses if present; otherwise, proceed to court.

• Always prepare supporting evidence and keep proper documentation.

• Weigh the pros and cons before initiating legal action.

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