GENERAL PROVISIONS (PART II) 2025

GENERAL PROVISIONS (PART II) 2025 Hardship & Dispute Resolution

DRAFTING BATTLE-TESTED CONTRACTS

CHAPTER 6

GENERAL PROVISIONS

(PART II)

2. Fundamental Changes in Circumstances (Hardship)

“Fundamental changes in circumstances” refer to significant changes during contract performance that make fulfilling the contract extremely difficult. However, not all changes in circumstances are considered fundamental changes warranting contract modification or termination; they must meet specific conditions. When a contract takes effect, it is entirely the parties’ business, but certain changes in circumstances can make continued performance of the contract unjust to one party.

For instance, consider the following scenario: Company A signs a contract to purchase raw materials from Company B for production, with a contract term of 5 years. Although the contract term is 5 years, the parties agree on the quantity of goods, delivery schedule, and pricing for each year. In the third year, the market price of the goods drastically drops to one-third. Thus, if the contract continues, the buyer suffers significant losses, a situation entirely different from when the contract was signed.

This issue is stipulated in Article 420 of the 2015 Civil Code as follows:

“Article 420. Performance of the contract when circumstances change fundamentally

1. Circumstances change fundamentally when the following conditions are met:

a) The change in circumstances is due to objective reasons occurring after the contract was entered into;

b) At the time of entering into the contract, the parties could not foresee the change in circumstances;

c) The change in circumstances is so significant that if the parties had known in advance, the contract would not have been entered into or would have been entered into with entirely different content;

d) Continuing to perform the contract without changing its content would cause serious harm to one party;

e) The affected party has taken all necessary measures within its capabilities, appropriate to the nature of the contract, to prevent or minimize the impact on its interests.

2. In the case of fundamental changes in circumstances, the affected party has the right to request the other party to renegotiate the contract within a reasonable period.

3. If the parties cannot agree on amending the contract within a reasonable period, either party may request the Court to:

a) Terminate the contract at a specified time;

b) Amend the contract to balance the rights and legitimate interests of the parties due to fundamental changes in circumstances.

The Court shall only decide to amend the contract if termination of the contract would cause greater harm than the costs of performing the contract if amended.

4. During the negotiation process to amend or terminate the contract, while the Court is resolving the matter, the parties must continue to perform their obligations under the contract, unless otherwise agreed.”

Another example of fundamental changes in circumstances: Company A (the investor) signs a construction contract with Company B (the contractor) with a contract value of VND 60 billion and a term of 5 years. However, in the second year of the contract, the Government issues a decree adjusting the minimum wage increase. This decree significantly affects the contractor, as it increases worker wages, making the initial labor costs in the contract inappropriate, given that Company B mobilizes a large workforce to complete the project on schedule. In this case, it can be considered a fundamental change in circumstances, allowing the parties to renegotiate the construction unit price.

Therefore, during drafting, the parties should pay attention to this clause. The 2015 Civil Code stipulates that in the case of fundamental changes in circumstances, the affected party has the right to request the other party to renegotiate the contract within a reasonable period, but it does not specify what to negotiate (it could be to amend the contract or to terminate it).

If the parties cannot agree on amending the contract within a reasonable period, either party may request the Court to terminate the contract at a specified time or amend the contract to balance the rights and legitimate interests of the parties due to fundamental changes in circumstances. This is a special provision because when circumstances change fundamentally, this regulation allows a judicial authority to intervene in an effective contract if the parties cannot renegotiate.

Another issue for the parties to note is that during the negotiation process to amend or terminate the contract, while the Court is resolving the matter, the parties must continue to perform their obligations under the contract unless otherwise agreed. If the conditions and procedures are not applied correctly, the parties may confuse fundamental changes in circumstances with force majeure events, leading to adverse legal consequences.

THẾ GIỚI DI ĐỘNG UNILATERALLY REDUCES RENTAL FEES:

RIGHT OR WRONG?

According to media reports, Thế giới di động (TGDĐ) has proactively not paid 100% of the rental fees for non-operational stores and reduced the rental fees by 70% for operational stores during the period of Covid-19 preventive measures. They have proactively transferred the payment amounts based on these rates to the landlords’ accounts, immediately after sending a mass notification to the landlords without seeking their consent. The question is whether TGDĐ’s actions comply with the current legal regulations.

For a large-scale nationwide retail chain, the impact on TGDĐ varies greatly depending on the locality. For instance, in Ho Chi Minh City, for an extended period, TGDĐ’s stores selling phones and electronic household appliances were completely closed. In other places, operational capacity was reduced according to anti-epidemic measures, such as limiting the number of people entering stores. More importantly, due to the epidemic, consumer purchasing power significantly changed. Therefore, before discussing the legal aspect, two points must be emphasized:

– First, it must be acknowledged that TGDĐ’s difficulties are real. And the need to reduce operating costs in the context of declining revenue is a legitimate need.

– Second, TGDĐ’s rental contracts with landlords in this case are logically long-term contracts.

FORCE MAJEURE

The act of not paying 100% of the rental fees for non-operational stores and reducing the rental fees by 70% for operational stores by TGDĐ (the act) is seen as an effort to reduce operating costs. Interestingly, in the notices sent to landlords, TGDĐ only cited the impact of Covid-19 and/or the anti-epidemic measures without providing a legal basis.

At first glance, it may appear that the basis for TGDĐ’s actions in this case is a force majeure event. According to this, a force majeure event is an event that occurs objectively, is unforeseeable, and cannot be remedied despite taking all necessary and possible measures [Clause 1, Article 156 of the 2015 Civil Code].

However, upon closer examination, it becomes clear that TGDĐ’s issue is not a force majeure. The relationship between TGDĐ and the landlords is a rental relationship. TGDĐ’s obligation is to pay the rent. Therefore, to apply force majeure, TGDĐ must prove that due to Covid-19 and/or the anti-epidemic measures (such as restrictions on leaving the house, temporary closure of non-essential business establishments…), despite its best efforts, it still could not pay the rent to the landlords as agreed in the contract.

Clearly, from this perspective, TGDĐ is almost unable to prove this matter. In fact, according to TGDĐ’s recent financial reports, although there has been a decline, the company still made a profit. In other words, applying force majeure to avoid or reduce payment is entirely unfounded.

FUNDAMENTAL CHANGES IN CIRCUMSTANCES (HARDSHIP)

Fundamental changes in circumstances (hardship) are stipulated in Article 420 of the 2015 Civil Code. Although there are many seemingly similar factors, in practice, hardship differs significantly from force majeure as it requires the simultaneous fulfillment of the following criteria:

(i) The change in circumstances is due to objective reasons occurring after the contract was entered into.

(ii) At the time of entering into the contract, the parties could not foresee the change in circumstances.

(iii) The change in circumstances is so significant that if the parties had known in advance, the contract would not have been entered into or would have been entered into with entirely different content.

(iv) Continuing to perform the contract without changing its content would cause serious harm to one party.

(v) The affected party has taken all necessary measures within its capabilities, appropriate to the nature of the contract, to prevent or minimize the impact on its interests.

In simple terms, these changing circumstances cause one party to be significantly disadvantaged compared to when the contract was signed. In the context of TGDĐ’s contracts, for instance, with a term of 5 years, it is clear that the period of applying Covid-19 preventive measures can be seen as a change in circumstances compared to when the rental contract was signed.

Therefore, I believe TGDĐ has a basis to apply hardship to address the rental fee issue with the landlords. The issue is that in the case of fundamental changes in circumstances, the affected party has the right to request the other party to renegotiate the contract within a reasonable period [Clause 2, Article 420 of the 2015 Civil Code]. And if renegotiation fails, the affected party can request the court to terminate the contract or amend the contract content to balance the interests of the parties [Clause 3, Article 420 of the 2015 Civil Code].

Thus, even if hardship is applied, TGDĐ still has to negotiate with the landlords and obtain their consent; they do not have the right to unilaterally change the rental fees.

WHY DID TGDĐ ACT THIS WAY?

In March 2021, CGV also faced a situation similar to TGDĐ but handled it in a manner considered to be much more professional. First, they negotiated for a rental fee reduction. After unsuccessful negotiations, they filed a lawsuit to terminate the contract. Although seemingly aggressive, this approach was very transparent and lawful. The cunning aspect of TGDĐ’s approach lies in their notification of not paying or reducing rental fees without mentioning the legal basis. This is because the only basis they could use is hardship, which unfortunately still requires the negotiation route.

NOTE: It is essential to clearly distinguish between force majeure and fundamental changes in circumstances (hardship).

In practice, many people confuse force majeure events with fundamental changes in circumstances (“hardship”). These two concepts may seem similar, but they differ significantly in terms of basis, legal consequences, and application in contracts. This note explains the three (03) key differences.

First, the basis for determination:

– Force Majeure Events:

1. The event occurs objectively.
2. The event is unforeseeable.
3. The event occurs and cannot be remedied despite the obligor taking all necessary and possible measures (Clause 1, Article 156 of the 2015 Civil Code).

– Fundamental Changes in Circumstances:

1. The change in circumstances is due to objective reasons occurring after the contract was entered into.
2. At the time of entering into the contract, the parties could not foresee the change in circumstances.
3. The change in circumstances is so significant that if the parties had known in advance, the contract would not have been entered into or would have been entered into with entirely different content.
4. Continuing to perform the contract without changing its content would cause serious harm to one party.
5. The affected party has taken all necessary measures within its capabilities, appropriate to the nature of the contract, to prevent or minimize the impact on its interests (Article 420 of the 2015 Civil Code).

Thus, based on Clause 1, Article 156, and Article 420 of the 2015 Civil Code, although both types of events are objective and unforeseen at the time of signing the contract, there is a distinguishing feature that the Court or Arbitration will rely on to determine whether an event is a force majeure or a fundamental change in circumstances (hardship). That feature is whether the parties can continue to perform their obligations. If they cannot perform despite all efforts, it is force majeure. If they can still perform but it causes significant harm to one party, such as drastically increased costs, it is hardship.

Possible application: Difficulties can be visualized in three levels: Level 1 – difficulties where you will suffer certain losses; Level 2 – very significant difficulties, despite trying everything, you still cannot reduce the losses while continuing to perform the contract; Level 3 – insurmountable difficulties, having tried every possible way but still finding no method to fulfill your obligations. Level 1 is a business risk that you must bear. Level 2 is hardship, you may change the conditions or terminate the contract (if the following conditions are met…). Level 3 means you will not be liable for damages for failing to fulfill obligations.

Second, the legal consequences: In case of force majeure, the obligor is not liable for damages, but the consequences of hardship are slightly different. Clauses 2 and 3 of Article 420 of the 2015 Civil Code stipulate:

– In the event of fundamental changes in circumstances, the affected party has the right to request the other party to renegotiate the contract within a reasonable period.

If the parties cannot agree on amending the contract within a reasonable period, either party may request the Court to:

  + Terminate the contract at a specified time;

  + Amend the contract to balance the rights and legitimate interests of the parties due to fundamental changes in circumstances.

Unless otherwise agreed, during the negotiation process to amend or terminate the contract and while waiting for the Court to resolve the matter, the parties must continue to perform their obligations under the contract.

There was an interesting case related to Hardship that occurred in May 2021. On November 21, 2017, CGV Cinemas signed a lease contract with Lapen for premises at the Lapen shopping center (Vung Tau City, Ba Ria – Vung Tau Province) for the purpose of investing in the construction and operation of cinemas.

The lease term was 20 years. Due to the pandemic, CGV proposed adjusting the rental calculation method from December 1, 2020, to February 28, 2021, fixing the rent at 8% of box office revenue to help CGV overcome the current difficulties. After 3 months, the parties would renegotiate the rental calculation method and, if no agreement was reached, either party could unilaterally terminate the contract without compensation or penalties, including the deposit. However, the parties did not reach an agreement.

This was a clever maneuver by CGV. Look at Clause 3, Article 420 of the 2015 Civil Code:

“If the parties cannot agree on amending the contract within a reasonable period, either party may request the Court to:

a) Terminate the contract at a specified time;

b) Amend the contract to balance the rights and legitimate interests of the parties due to fundamental changes in circumstances.

The Court shall only decide to amend the contract if terminating the contract would cause greater harm than the costs of performing the contract if amended.”

When no agreement was reached, CGV had two options: (i) request to amend the contract or (ii) request to terminate the contract. They chose the rather harsh option of requesting contract termination. With this request, two possibilities could arise:

1. The lessor must choose to file a counterclaim to request contract amendment. If the lessor does not do this, the Court will consider the termination request. Although whether the contract will be terminated is uncertain, at least it is the only request the Court would consider.
2. If the landlord does not file a counterclaim, Clause 3, Article 420 of the 2015 Civil Code strictly binds that “The Court shall only decide to amend the contract if terminating the contract would cause greater harm than the costs of performing the contract if amended.”

Choosing a location to lease for 20 years, from a business perspective, CGV likely made a thoughtful decision. Compared to that location, the initial investment costs, and establishing a movie-going habit for people in the area, CGV would benefit in the long term. Therefore, resolving the issue of rent reduction during the pandemic is more favorable than terminating the contract. The cleverness of CGV was choosing the court as a way to pressure the landlord into negotiating a rent reduction when the landlord was not inclined to do so.

IV. DISPUTE RESOLUTION

When drafting contracts, parties often focus and spend considerable time on clauses such as subjects, prices, delivery deadlines, payment terms, rights and obligations of the parties, etc. In contrast, the dispute resolution clause is often overlooked or drafted in a cursory manner. At the time of signing the contract, the parties usually focus on contractual performance clauses, aiming for long-term cooperation in good faith, so they do not anticipate disputes arising or think about how to resolve them. Consequently, when disputes arise, the parties revisit this clause. If the dispute resolution clauses are not clearly articulated at the time of signing, it can lead to significant difficulties in resolving disputes.

Commercial contract disputes arise when one party (or parties) does not perform or improperly performs the contractual agreements. During contract performance, disputes and conflicts are inevitable. Therefore, it is essential to agree on dispute resolution measures that best protect the parties’ rights, minimize the impact on their relationship, and save time and money. Choosing a dispute resolution method is crucial. According to the 2005 Law on Commerce (amended in 2017, 2019), there are four methods of dispute resolution: negotiation, mediation, court, or commercial arbitration.

Negotiation is a method of dispute resolution whereby the disputing parties discuss, self-settle, and resolve arising disagreements to eliminate disputes without the intervention of any state agency or third party. Negotiation represents the freedom to contract and determine. Most dispute resolution clauses in contracts stipulate resolving disputes through negotiation in case of contractual violations. This is also the preferred method for dispute resolution as it does not require complicated procedures, minimizes costs, minimally impacts the parties’ relationship, and importantly, maintains business confidentiality.

Mediation is a method of dispute resolution involving a third party as an intermediary to support and persuade the disputing parties to find solutions to eliminate the dispute. The third party is any trusted entity by the parties, often an expert with knowledge and experience in the disputed field or issue, or the parties can use a mediator [Decree No. 22/2017/ND-CP dated February 24, 2017, of the Government on commercial mediation]. This is also a popular and often chosen method due to its convenience, speed, simplicity, flexibility, effectiveness, and cost-efficiency.

If the parties proceed with negotiation and mediation without success, they must rely on a judicial authority to resolve the dispute. For commercial business disputes, there are two judicial authorities: the people’s court or commercial arbitration.

Resolving disputes in court: Courts handle commercial disputes upon the request of the disputing parties, and the dispute must fall within the court’s jurisdiction. This resolution follows a strict process through two levels of adjudication. Court trials are public, which may not be suitable for commercial business activities due to potential impacts on reputation and disclosure of business secrets. Additionally, court judgments can be appealed, leading to prolonged disputes.

One common mistake parties make when drafting this clause is specifying the name of the competent people’s court to resolve disputes, which does not fall under the selection allowed by the Civil Procedure Code. For example, a common mistake in drafting this clause is: “In case the parties cannot resolve the dispute through negotiation or mediation, they shall bring the dispute to the Court of Province A for resolution.”

This should be avoided because the court’s jurisdiction to resolve disputes is determined by law, not by the parties’ choice. However, the parties may agree to choose a court if, according to the Civil Procedure Code, the dispute arises from a contractual relationship, the plaintiff can request the court where the contract is performed to resolve the dispute [Article 40 of the 2015 Civil Procedure Code (amended and supplemented in 2019, 2020, 2022, 2023)].

Resolving disputes through commercial arbitration: Unlike courts, arbitration is not a state agency but a non-governmental organization. To bring a case to arbitration, the parties must have an arbitration agreement either before or after the dispute arises. The arbitration procedures will depend on the Arbitration Center and the arbitration rules chosen by the parties in the arbitration agreement.

Dispute resolution procedures at commercial arbitration are flexible, allowing the parties to be proactive in terms of time and location for dispute resolution, depending on the arbitration center, while ensuring the confidentiality of the dispute. On the other hand, arbitration costs are generally higher than court costs, and both parties must have a valid and enforceable arbitration agreement. When choosing commercial arbitration, the parties should consider the following issues:

– Drafting the arbitration agreement: The arbitration agreement is an agreement between the parties to resolve by arbitration any disputes that may arise or have arisen, which can be established as an arbitration clause in the contract or as a separate agreement in writing (or another form equivalent to writing [Article 16 of the 2010 Law on Commercial Arbitration]).

This clause is independent of the contract and is one of the bases for the Commercial Arbitration’s authority to resolve disputes. When drafting this clause, clearly state: the name of the arbitration organization, the number of arbitrators, the language, and the location for dispute resolution. The best way to accurately draft the arbitration agreement is to use the sample arbitration clause from the Arbitration Center selected by the parties.

Example 1: All disputes arising from or related to this contract shall be resolved by arbitration at the Vietnam International Arbitration Center (VIAC) in accordance with its arbitration rules. Additionally, the parties may supplement:

(a) The number of arbitrators is [one or three].

(b) The place of arbitration is [city].

Example 2: All disputes arising from or related to this contract shall be resolved by arbitration at the Vietnam International Arbitration Center (VIAC) in accordance with its arbitration rules. The parties agree that the arbitration proceedings will be conducted under the expedited procedure provided in Article 37 of VIAC’s arbitration rules [https://www.viac.vn/dieu-khoan-trong-tai-mau.html].

Example 3: All disputes arising from or related to this contract shall be resolved by arbitration at the Southern Trade Arbitration Center (STAC) in accordance with its arbitration rules [https://stac.com.vn/dieu-khoan-trong-tai-mau/]. Additionally, the parties may supplement:

(a) The number of arbitrators is [one or three].

(b) The place of arbitration is [city].

It is not advisable to draft a clause that selects both arbitration and court for dispute resolution, for example: “If the parties cannot resolve the dispute through negotiation or mediation, they have the right to bring the dispute to arbitration. If it cannot be resolved by arbitration, the dispute will be resolved by the competent court.” This is an unclear arbitration agreement as the parties must choose one of the two forums for resolution. According to regulations, if the disputing parties have an arbitration agreement and one party files a lawsuit in court, the court must refuse to accept the case unless the arbitration agreement is invalid or unenforceable [Article 6 of the 2010 Law on Commercial Arbitration].

Sample Dispute Resolution Clauses:

Sample 1:

Any dispute arising out of or relating to this contract, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by the Vietnam International Arbitration Center (“VIAC”) in accordance with the Arbitration Rules of VIAC for the time being in force, which rules are deemed to be incorporated by reference into this clause.

The arbitration tribunal shall consist of three arbitrators. Each party shall appoint one arbitrator within ten (10) days of the dispute being referred to arbitration. If the parties fail to appoint an arbitrator, the appointment shall be made by the President of VIAC. The appointed arbitrators shall appoint a third arbitrator who shall act as the chairman of the arbitration tribunal. If the two appointed arbitrators fail to agree on the selection of the third arbitrator within ten (10) days of the appointment of the second arbitrator, the chairman shall be appointed by the President of VIAC upon the request of either party.

The language of the arbitration proceedings shall be Vietnamese. The place of arbitration shall be Ho Chi Minh City.

Sample 2:

The parties undertake to comply strictly with the terms of this contract. If any dispute arises, the parties shall negotiate to resolve the dispute by one party sending a written notice to the other party to conduct negotiations within 60 days.

If the parties cannot reach an agreement within 60 days, either party has the right to refer the unresolved dispute to arbitration in Vietnam at the Vietnam International Arbitration Center (“VIAC”) before an arbitration tribunal consisting of three arbitrators (each party shall select one arbitrator, and the two selected arbitrators shall choose the third arbitrator) in accordance with VIAC’s arbitration rules in effect at the time of the dispute. The Vietnamese language shall be used in the arbitration proceedings. The arbitrators’ decision shall be final and binding on the parties.

Sample 3:

This contract shall be interpreted and governed by the laws of Vietnam. The parties agree to resolve any disputes arising in connection with this contract through mediation, negotiation, or submit the dispute to the competent court in Ho Chi Minh City.

V. OTHER CONTENT

Additional content that can be drafted in this section includes:

– Governing Law and Language

– Independence of Clauses

– Assignment of Contract:

– Amendment of Contract

– Waiver of Rights

– Number of Copies of the Contract

– Costs

– …

1. Governing Law and Language

According to the provisions of the 2005 Law on Commerce (amended in 2017, 2019), commercial activities must comply with the Law on Commerce and related laws. The Law on Commerce is applied to:

– Commercial activities conducted within the territory of Vietnam;

– Commercial activities conducted outside the territory of Vietnam if the parties agree to apply this Law or foreign laws, international treaties to which the Socialist Republic of Vietnam is a member and stipulate the application of this Law.

Thus, for commercial contracts signed between Vietnamese companies, the applicable law will be Vietnamese law.

Regarding language, the 2015 Civil Code and the 2005 Law on Commerce (amended in 2017, 2019) do not stipulate the language of the contract. This means the parties can choose the contract language themselves, except in cases where specialized laws have specific regulations on contract language. Therefore, commercial contracts signed between Vietnamese companies will use the Vietnamese language, because:

– For court proceedings: Vietnamese is mandatory. Article 20 of the 2015 Civil Procedure Code (amended and supplemented in 2019, 2020, 2022, 2023) stipulates: “The language and script used in civil proceedings are Vietnamese.”

– For commercial arbitration language, Article 10 of the 2010 Law on Commercial Arbitration stipulates: “For disputes without foreign elements, the language used in arbitration proceedings is Vietnamese, unless the dispute involves at least one foreign-invested enterprise.”

The clause can be agreed upon as follows: “This contract shall be interpreted and governed by Vietnamese law. The language of the contract is Vietnamese.”

2. Independence of Clauses

Here are some sample drafts you can refer to:

– Option 1: The clauses in this contract are relatively independent of each other; the invalidity of one clause does not invalidate the remaining clauses.

– Option 2: Each clause and each part of a clause provided in this contract shall have separate and independent effect from other clauses. If any clause is found to be invalid, illegal, or unenforceable under the applicable laws, the validity, legality, and enforceability of the remaining clauses of this contract shall not be impaired or otherwise adversely affected.

– Option 3: If any provision of this contract becomes invalid, illegal, or unenforceable, such invalid, illegal, or unenforceable provision shall not affect the remaining provisions of this contract. The parties shall negotiate in good faith to replace the invalid provisions with valid provisions that are enforceable and reflect the initial intent of the parties.

Entire Agreement: In many cases, parties have multiple rounds of negotiations on the terms before signing a contract, potentially in various forms. Not all agreements and commitments may be compiled comprehensively. Therefore, the purpose of this clause is: This contract records all agreements between the parties and will replace all prior exchanges, communications, and negotiations in writing or any other form.

3. Assignment of Contract

The transfer of obligations in a contract to a third party needs to be agreed upon in the contract as it requires the consent of the other party. Here are some examples of drafting this clause:

Example 1: “A party may not assign any part or all of this contract in any manner to a third party without the prior written consent of the other party. If one party proceeds with the assignment without prior agreement, the other party may refuse to perform the contract with the assignee or the assignor or both, in which case all the rights of the other party will be reserved.”

Example 2: “No party shall be permitted to assign or transfer any or all of its rights, duties, or obligations under this contract to any person or entity without the prior written consent of the other party, and the other party shall not unreasonably withhold such consent.”

Example 3: “No right or obligation of either party under this contract may be assigned or delegated to any third party without the prior written consent of the other party.”

4. Amendment

During the performance of the contract, the parties can still agree to amend or supplement the contract; this can be done multiple times, at various points; and it can involve amending one or multiple agreed-upon terms in the contract. These amendments are binding on the parties, so it is necessary to clearly stipulate the binding effect of such amendments. The amendment agreement can be in the form of a specific contract, an appendix to the contract, or an independent agreement between the contracting parties.

Example 1: “This contract shall supersede any and all prior agreements, documents, or other instruments concerning the matters addressed in this contract. Any adjustment or amendment to this contract, and any waiver of any terms and conditions of this contract, or the granting of any consent as provided for in this contract, shall not be effective unless made in writing and signed by the party for whom the adjustment, amendment, waiver, or consent is intended to benefit.”

Example 2: “Any amendments or supplements to this contract shall be made in the form of an Appendix and signed by the parties. The Appendix shall have the same effect as the contract and shall be an inseparable part of the contract.”

5. Waiver of Rights

The act of one party not exercising or delaying the exercise of any right, power, or privilege under this contract or any other contract or agreement related to this contract shall not be considered a waiver of such right, power, or privilege, nor shall the exercise in whole or in part of any right, power, or privilege preclude further exercise thereof in the future. The rights and remedies provided in this contract are cumulative and do not exclude any rights or remedies provided by law.

Example:

“The failure or delay by any party to exercise any right, power, or privilege under this contract or any other contract or agreement related to this contract shall not be construed as a waiver of such right, power, or privilege, nor shall any single or partial exercise of any right, power, or privilege preclude any further exercise thereof in the future. The rights and remedies provided in this contract are cumulative and do not exclude any other rights or remedies provided by law.”

6. Number of Copies of the Contract

Clearly state the number of copies of the contract, the number of copies each party will hold, and the legal value of the copies.

Example:

“This contract is made in 04 (four) copies, each of equal legal value, effective from the date of signing mentioned above. Each party retains 02 (two) original copies.”

“The contract and its attached appendices are made in four (04) original copies in Vietnamese, each of equal legal value, with each party retaining two (02) original copies.”

7. Costs

The parties should clearly agree on who will bear the costs related to the drafting of the contract, as there may be cases where the parties use legal contract drafting services from law firms or legal companies (which incur costs). Here are some sample clauses:

Example 1:

“Each party shall bear its own costs related to the transactions contemplated by this contract, including the drafting, negotiation, and execution of the transaction documents.”

Example 2:

“Each party shall bear its own legal and other costs directly or indirectly related to the drafting and the performance of its obligations under this contract, except as otherwise specified in this contract.”

SUMMARY OF CHAPTER 6

General agreements, usually found at the end of the contract, can include the following contents:

1. Notices

   General requirements for these notices are that they should be concise and clear, and sent to authorized recipients. A notice should include the following basic contents:

   – Form of the notice

   – Recipient

   – When the notice is considered received

2. Confidentiality

   Depending on the type of contract, the drafter should design the confidentiality clause appropriately, clarifying the following issues:

   – Subject and information to be kept confidential

   – Who will maintain confidentiality

   – Confidentiality period

   – Responsibilities for breaching the confidentiality clause

   – Exclusions from confidentiality responsibilities

3. Risk Allocation

   The parties should anticipate arising situations to include in the contract for risk allocation. Common situations that hinder contract performance include:

   – Force majeure

   – Fundamental changes in circumstances during contract performance

4. Dispute Resolution

   The parties need to agree on dispute resolution measures that best protect their rights, minimize impact on their relationship, and save time and money. Choosing a dispute resolution method is crucial. According to commercial law, there are four methods of dispute resolution:

   – Negotiation

   – Mediation

   – People’s court

   – Commercial arbitration

5. Other Contents

   Additional contents that can be drafted in this section include:

   – Governing law and language

   – Independence of clauses

   – Assignment of contract

   – Amendment of contract

   – Waiver of rights

   – Number of copies of the contract

   – Costs

   – …

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