Domestic Sale of Goods Disputes in Vietnam: Legal Risks and Practical Solutions for Businesses.
1. Overview: Commercial Disputes Often Begin with Operational Issues
Contracts for the sale of goods underpin a wide range of business activities in Vietnam, from the supply of raw materials, machinery and components to manufacturing, distribution and retail operations. Despite the existence of a signed contract and an established commercial relationship, disputes may arise from seemingly routine matters, including product specifications, delivery schedules, acceptance procedures and payment documentation.
Not every contractual dispute results from an intentional breach. In many cases, the underlying causes are ambiguous contractual provisions, inconsistent operational procedures or inadequate records of contract performance.
For domestic sale of goods transactions governed by Vietnamese law, the Law on Commerce 2005 is a principal source of legal regulation. The Civil Code 2015 may also apply on a supplementary basis, as appropriate, together with relevant sector-specific legislation and procedural rules.
Common categories of disputes include:
- Goods that fail to meet contractual specifications, quality standards or quantity requirements.
- Late delivery, short delivery, incorrect goods or failure to deliver.
- Delayed payment, refusal to pay or disputed set-offs against outstanding balances.
- Disputes concerning contractual penalties, late payment interest and damages.
- Warranty claims, returns, rejection of goods, suspension or termination of contracts.
- Disputes concerning complaint periods, limitation periods for commencing proceedings and evidentiary requirements.
A critical point is that a party’s allegation that its counterparty has breached the contract does not automatically entitle it to suspend all of its own obligations or impose every remedy it considers appropriate. The parties’ rights and obligations must be assessed by reference to the contract, applicable law and the evidence available.
Effective contract management therefore extends beyond drafting contractual terms. It requires procedures for identifying breaches, giving notices, mitigating losses and preserving evidence throughout the contractual relationship.
2. Legal Framework Governing Sale of Goods Disputes in Vietnam
2.1. Key legal instruments
When assessing a domestic sale of goods dispute, businesses should first identify the nature of the transaction and determine which legal provisions apply.
The principal legal instruments and regulatory areas include:
- Law on Commerce No. 36/2005/QH11: Governs commercial activities, including sale of goods, contractual performance, commercial remedies, complaints and dispute resolution.
- Civil Code 2015: Provides supplementary rules on contract formation, interpretation, performance and civil liability, to the extent applicable.
- Law on Commercial Arbitration 2010: Relevant where the parties have a valid arbitration agreement and seek to resolve their dispute through commercial arbitration.
- Civil Procedure Code: Governs court jurisdiction and civil and commercial litigation procedures.
- Sector-specific legislation: May include regulations on product quality, technical standards, measurement, product safety and requirements applicable to particular categories of goods.
Businesses should verify the applicable consolidated text of the Law on Commerce and check for any amendments, implementing instruments or other relevant provisions in force at the time of the transaction and alleged breach.
2.2. Identifying the correct legal basis for a claim
Not every claim arising from a commercial contract has the same legal basis.
For example, a claim for payment of the purchase price is distinct from a claim for damages arising from defective goods. Similarly, a claim for interest on an overdue payment obligation must be distinguished from a claim for contractual penalties or damages.
Mischaracterising a claim may result in the incorrect application of legal conditions, calculation methods or relevant time limits.
For foreign-invested enterprises (FIEs), additional considerations may arise where a transaction contains foreign elements, including applicable law, dispute resolution jurisdiction, language and the recognition or enforcement of an arbitral award or court judgment.
However, foreign ownership alone does not displace the general principles applicable to domestic sale of goods transactions governed by Vietnamese law.
3. Six Common Categories of Disputes and How to Manage Them
3.1. Disputes over quality, specifications and quantity
Quality disputes commonly arise where delivered goods fail to comply with contractual specifications, approved samples or agreed quality standards. Other issues include shortages, incorrect product types, transit damage and defects discovered only after the goods have been put into use.
A frequent source of disagreement is the timing and method of inspection. Where the contract does not clearly specify sampling procedures, testing methods, acceptance criteria or the handling of non-conforming goods, the parties may disagree on whether a breach has occurred.
As a general principle, the seller must deliver goods that conform to the contract, subject to the applicable legal provisions and agreed terms. Whether the goods are non-conforming must be assessed in light of the contractual commitments, technical documentation, delivery conditions and available evidence.
Businesses should consider the following measures:
- Clearly specify the goods, product codes, technical specifications and applicable quality standards.
- Define acceptable tolerances, testing methods and acceptance criteria.
- Establish inspection periods, sampling procedures and rights to independent testing or expert assessment.
- Specify remedies for defective, short-delivered or otherwise non-conforming goods.
- Distinguish between defects discoverable upon delivery and latent defects that emerge or become apparent during use.
Delivery records, inspection reports, photographs, batch or serial number records and evidence of storage conditions may be important in substantiating a claim. Complaints made only by telephone, without written confirmation or supporting records, may be difficult to prove in subsequent proceedings.
3.2. Late delivery, short delivery or failure to deliver
Failure to deliver goods on time may disrupt manufacturing schedules, distribution operations and the buyer’s own contractual commitments to its customers. Depending on the circumstances and supporting evidence, resulting losses may include replacement procurement costs, additional storage expenses or losses caused by operational interruption.
When a dispute arises, the parties should examine:
- The agreed delivery deadline and any shipment schedule for successive batches.
- Whether the buyer has satisfied any conditions precedent to delivery.
- The allocation of responsibility for transportation, loading, unloading, storage and insurance.
- The cause of the delay and whether a statutory exemption from liability may apply.
- The availability of remedies, including specific performance, delivery of outstanding goods, contractual penalties, damages or contract cancellation.
The Law on Commerce provides for several remedies for contractual breaches. However, the legal conditions and consequences of each remedy differ. In particular, suspension, termination or cancellation must be assessed against the applicable statutory grounds or valid contractual provisions, rather than the unilateral view that a breach is sufficiently serious.
Practical recommendation: Contracts should specify delivery schedules, procedures for notifying anticipated delays, rights to procure substitute goods and responsibility for shortages. For goods essential to manufacturing operations, businesses should establish contingency supply arrangements and early-warning procedures to reduce the risk of disruption.
3.3. Payment and outstanding balance disputes
Payment disputes do not arise solely from a buyer’s failure to pay on time. The parties may also disagree over the completeness of payment documents, acceptance conditions, allocation of payments already made or the right to deduct amounts from outstanding invoices.
A common scenario involves a buyer withholding payment because it considers the goods defective, while the seller maintains that the payment obligation has fallen due and claims late payment interest.
In such circumstances, the payment obligation must be distinguished from separate claims for contractual penalties or damages. A buyer’s complaint against the seller does not automatically extinguish its payment obligation. Any deduction, set-off or withholding must be assessed under the contract and applicable law.
To reduce uncertainty, contracts should address:
- Payment due dates and the events triggering the payment obligation.
- Required supporting documents and the period for reviewing them.
- Procedures for reconciliation and confirmation of outstanding balances.
- The allocation of partial payments.
- Treatment of undisputed amounts.
- Conditions under which payment may be withheld where only part of a shipment or invoice is disputed.
For transactions involving multiple purchase orders or invoices, periodic account reconciliation and written balance confirmations can help reduce disagreements over the amount outstanding.
3.4. Warranty claims, returns and latent defects
A warranty clause that specifies only the warranty period, without establishing an implementation procedure, may be insufficient to resolve disputes when defects arise.
Contracts should address the commencement and expiry of the warranty period, covered defects, exclusions, response times, repair or replacement deadlines and the allocation of associated costs.
For latent defects, businesses should distinguish acceptance upon delivery from the later discovery of defects during operation. A delivery or acceptance record should not automatically be treated as excluding every subsequent quality claim where the contract and applicable law do not support that conclusion.
Importantly, the warranty period and the complaint periods under the Law on Commerce are related but distinct concepts. Businesses should address them separately and ensure that inspection, acceptance, warranty and complaint provisions operate consistently.
3.5. Contractual penalties and damages
Contractual penalties and damages are separate remedies subject to different legal requirements.
Under Article 300 of the Law on Commerce 2005, contractual penalties generally require an agreement between the parties, except where otherwise provided by law. Article 301 generally caps the penalty at 8% of the value of the contractual obligation breached, subject to statutory exceptions.
A provision stating that “every breach shall incur a penalty of 10% of the total contract value” may therefore create enforceability risks. The calculation base must also be properly identified: the relevant amount is generally the value of the breached contractual obligation, rather than automatically the entire contract value.
Damages are governed principally by Articles 302–305 of the Law on Commerce. The relevant considerations include the contractual breach, actual loss, the causal connection between the breach and the loss, the burden of proving damages and the obligation to mitigate loss.
Depending on the circumstances and supporting evidence, potentially recoverable losses may include:
- Costs of procuring substitute goods.
- Inspection, sorting, transportation or disposal costs associated with defective goods.
- Repair, replacement and remediation expenses.
- Losses resulting from production interruptions, where the applicable legal requirements are satisfied.
- Direct profits that would otherwise have been earned but for the breach.
Not every expense recorded internally by a business will necessarily qualify as recoverable damages. The claimant must establish the legal basis for the claim, the amount of loss and the requisite causal connection.
Under Article 307 of the Law on Commerce, the injured party may generally claim both contractual penalties and damages where a valid penalty agreement exists, subject to applicable statutory exceptions.
Practical recommendation: Penalty clauses should identify the relevant breach, calculation base and penalty amount or formula. Damages claims should be supported by itemised evidence, relevant documentation and records demonstrating causation and reasonable loss mitigation measures.
3.6. Exemptions from liability and force majeure
When delivery or payment is disrupted, a party may seek to rely on force majeure or another statutory ground for exemption from contractual liability.
However, not every unforeseen event automatically constitutes force majeure or relieves a party of liability. Financial difficulties, fluctuations in input prices or a supplier’s failure to perform do not, by themselves, necessarily exempt the affected party from its obligations to its contractual counterparty.
The assessment should consider the applicable statutory requirements, the connection between the event and the alleged breach, the possibility of mitigation and compliance with any notification obligations.
Contracts should clearly address:
- The procedure and deadline for notifying the event.
- Supporting evidence and ongoing reporting obligations.
- Measures to mitigate or remedy the impact.
- Continued performance of unaffected contractual obligations.
- The parties’ rights and obligations if the disruption continues beyond an agreed period.
4. Complaint Periods and Limitation Periods: Two Critical Time Limits
One of the principal risks in managing sale of goods disputes is failing to comply with the applicable complaint period or limitation period for commencing proceedings.
4.1. Complaint periods under Article 318 of the Law on Commerce
Under Article 318 of the Law on Commerce 2005, where the parties have not agreed otherwise, the default complaint periods for common categories of claims are generally as follows:
| Type of complaint | Default period | Starting point |
| Complaints concerning quantity | 3 months | From the date of delivery |
| Complaints concerning quality | 6 months | From the date of delivery |
| Quality complaints where a warranty applies | 3 months | From the expiry of the warranty period |
| Complaints concerning other breaches | 9 months | From the date the breaching party was required to perform its contractual obligation |
| Complaints concerning other breaches where a warranty applies |
9 months |
From the expiry of the warranty period |
These periods must be considered alongside the parties’ contractual arrangements and any statutory exceptions, including the relevant provisions concerning liability of logistics service providers where applicable.
A complaint period concerns the notification and pursuit of a claim in accordance with the applicable legal framework. It should not be confused with the limitation period for commencing legal proceedings.
For latent defects, contracts should establish notification procedures, the seller’s inspection rights and mechanisms for determining the cause of the defect. Acceptance, warranty and complaint provisions should be reviewed together to avoid inconsistencies.
4.2. Limitation period for initiating proceedings under Article 319
Under Article 319 of the Law on Commerce 2005, the limitation period for commercial disputes is generally two years from the time the lawful rights and interests of the affected party are infringed, subject to statutory exceptions.
The commencement date must be assessed in light of the specific obligation and the facts of the case. For example:
- Unpaid purchase price: Identify when payment fell due and when the right to payment was infringed.
- Late delivery: Determine the contractual delivery deadline and the relevant circumstances of non-performance.
- Non-conforming goods: Examine the specific obligation, the timing of the breach and the contractual inspection, warranty and complaint arrangements.
- Refund of an advance payment: Determine the legal basis for the refund obligation and when the relevant right was infringed.
Businesses should not assume that the limitation period always begins on the contract execution date, invoice date or date of a payment demand. The starting point depends on the nature of the claim and the supporting facts.
Nor should ongoing negotiations automatically be assumed to suspend or extend the limitation period. Once a dispute arises, businesses should identify the relevant deadlines promptly and develop an appropriate strategy to protect their rights.
5. Late Payment Interest: Legal Basis and Key Considerations
5.1. Legal basis for late payment interest
Article 306 of the Law on Commerce 2005 addresses the right to claim interest where a party delays payment for goods, service fees or other reasonable expenses.
As a general rule, interest may be claimed on the overdue amount for the period of delay at the average overdue debt interest rate prevailing in the market at the time of payment, unless the parties have agreed otherwise or applicable law provides otherwise.
Resolution No. 01/2019/NQ-HDTP is among the instruments relevant to the determination of interest and related issues in judicial proceedings. Its application should be assessed in light of the nature of the dispute, the contractual terms and the legal provisions applicable at the relevant time.
Businesses should establish the amount that has fallen due, the outstanding balance, the commencement date of the delay and the actual period of non-payment.
5.2. What amount may be subject to interest?
In general, the calculation base is the amount that has fallen due but remains unpaid. Where partial payments have been made, the outstanding balance should be adjusted accordingly for each relevant period.
Contracts should specify how payments are allocated and how disputed portions of an outstanding balance are treated. Where payment is conditional upon acceptance or receipt of complete and valid supporting documents, the parties should preserve evidence showing when those conditions were satisfied.
5.3. Can interest be charged on contractual penalties and damages?
Businesses should distinguish overdue purchase price obligations from amounts arising as contractual remedies.
As discussed in the source material, Precedent No. 09/2016/AL addresses a specific sale of goods scenario in which interest was not awarded on contractual penalties and damages. The precedent should not be interpreted as automatically determining every dispute involving these categories of payment; its factual and legal scope must be examined before application.
Accordingly, businesses should not automatically apply the same late payment interest formula to every amount claimed in a commercial dispute.
A payment demand should separately identify the purchase price, late payment interest, contractual penalties and damages, with the legal basis and calculation method specified for each category.
6. Selecting Appropriate Remedies: Termination Is Not Always the Best Option
In addition to contractual penalties, damages and late payment interest, the Law on Commerce provides for remedies including specific performance, suspension, termination and cancellation of contracts.
The appropriate remedy should reflect the commercial objective and the impact of the breach.
Where the goods remain commercially necessary and the defect can be remedied, requiring performance or delivery of the outstanding goods may be preferable to ending the relationship. Conversely, where the breach materially affects the transaction’s purpose or continued performance is no longer viable, the business should assess whether a more substantial remedy is available.
Before suspending, terminating or cancelling a contract, businesses should review:
- The statutory and contractual grounds for the proposed remedy.
- Applicable notification requirements and timing.
- The scope of the affected obligations.
- The legal consequences of termination, including any restitution obligations.
- The impact on ongoing purchase orders and other commercial relationships.
A purported cancellation or termination without a sufficient legal basis may expose the party invoking it to a claim for breach of contract.
7. Dispute Resolution: Negotiation, Mediation, Arbitration or Court Proceedings?
Article 317 of the Law on Commerce 2005 recognises negotiation, mediation, commercial arbitration and court proceedings as methods of resolving commercial disputes.
Each method has different advantages and requirements.
| Method | Advantages | Key considerations |
| Negotiation | Flexible, potentially cost-effective and conducive to preserving commercial relationships | Outcomes should be documented; negotiations must not cause the parties to overlook applicable limitation periods |
| Mediation | An independent mediator may help the parties identify a mutually acceptable solution | The applicable mediation mechanism and legal effect of the settlement should be considered |
| Commercial arbitration | Allows the parties to select an appropriate institution, procedural rules and seat of arbitration | A valid arbitration agreement is required; costs and enforceability should be assessed |
| Court proceedings | Governed by statutory procedures and supported by the applicable judgment enforcement framework | Jurisdiction, procedural requirements, time and evidentiary preparation must be considered |
The dispute resolution mechanism should ideally be agreed during contract negotiations, rather than considered only after a disagreement has escalated.
For contracts involving Vietnamese businesses and foreign-invested enterprises, the dispute resolution clause should clearly address the competent forum, seat or place of proceedings, language, governing law where foreign elements are present, and the method of serving notices.
Businesses should avoid inconsistent provisions that purport to assign jurisdiction to both arbitration and the courts without clearly defining their respective roles.
8. Contract Risk Management: Practical Measures for Businesses
Effective contract management is a continuous process, beginning with transaction approval and continuing until the parties have completed their obligations. Businesses should not limit contract management to retaining signed agreements or leave all responsibility to the legal department after a dispute has already arisen.
8.1. Before signing the contract
Businesses should:
- Verify the counterparty’s legal status, identity and signatory authority.
- Clearly define the goods, quantities, technical specifications and quality standards.
- Agree on price, taxes, transportation costs and payment terms.
- Specify the delivery location, transfer of risk and transfer of title, as appropriate.
- Establish inspection, acceptance, warranty and return procedures.
- Review provisions concerning late payment interest, contractual penalties and damages.
- Select a dispute resolution mechanism and designate authorised contacts for legal notices.
8.2. During contract performance
Relevant teams should retain purchase orders, order confirmations, amendments and delivery records.
For goods, businesses should standardise delivery receipts, acceptance reports, defect reports and inspection records. For payments, they should record invoice receipt dates, dates on which complete supporting documents are received, payment due dates and outstanding balances.
Where a breach occurs, notices should be sent through a method that allows the sender to demonstrate the content, dispatch date and receipt, where relevant. Records of remedial measures and loss mitigation should also be preserved as the events unfold.
8.3. When a dispute arises
Businesses should take the following steps:
- Identify the breached obligation and the relevant contractual provisions.
- Prepare a chronology of delivery, acceptance, payment, complaints and notices.
- Separate claims for the purchase price, late payment interest, contractual penalties and damages.
- Identify the applicable complaint periods and limitation periods for commencing proceedings.
- Preserve contracts, emails, system records, accounting documents and inspection reports.
- Assess negotiation, mediation, arbitration and litigation options.
- Develop a strategy to mitigate losses and protect the business’s lawful interests.
8.4. Internal allocation of responsibilities
A practical allocation of responsibilities may be structured as follows:
| Department | Primary responsibilities |
| Sales / Procurement | Monitor orders, delivery schedules and communications with counterparties |
| Warehouse / Production / Technical | Inspect goods, prepare reports, retain samples and document defects |
| Finance / Accounting | Monitor receivables, payment deadlines and relevant calculations |
| Legal / Compliance | Review contracts, issue breach notices, monitor deadlines and assess dispute resolution options |
| Management | Approve remediation, termination or litigation strategies within the relevant authority framework |
Foreign-invested enterprises may also need bilingual reporting procedures, group-level approval processes and document retention systems to ensure that relevant evidence can be retrieved efficiently when disputes arise.
9. Contract Review Checklist for Sale of Goods Agreements
Businesses may use the following checklist when reviewing and approving sale of goods contracts.
- Verify the legal entity, signatory and authority to represent the counterparty.
- Specify the goods, technical standards, quantities and acceptable tolerances.
- Define the price, taxes, transportation costs and payment terms.
- Specify delivery locations, delivery deadlines and transfer of risk.
- Establish inspection, acceptance and delivery documentation procedures.
- Address complaint periods, warranties, returns and latent defects.
- Define substitute procurement rights and remedies for late delivery.
- Specify late payment interest and the method for calculating overdue amounts.
- Ensure contractual penalty provisions comply with applicable legal limits.
- Address damages, evidentiary requirements and loss mitigation obligations.
- Establish force majeure, exemption from liability and notification provisions.
- Define suspension, termination, cancellation and their legal consequences.
- Select negotiation, mediation, arbitration or court proceedings as appropriate.
- Designate authorised notice recipients and methods for proving dispatch and receipt.
- Establish document retention, account reconciliation and deadline monitoring procedures.
The checklist should be adapted to the nature of the goods, the size of the transaction and the business’s operational requirements.
10. Conclusion
Domestic sale of goods disputes in Vietnam are not merely questions of which party is right or wrong. Their outcomes may also depend on the quality of the contractual provisions, the parties’ performance, the preservation of evidence and the accurate identification of legally relevant deadlines.
For Vietnamese businesses and foreign-invested enterprises, three priorities are particularly important.
First, draft clear and transaction-specific contracts. Provisions on goods, delivery, acceptance, payment, remedies and dispute resolution should reflect the actual commercial arrangement.
Second, manage deadlines and evidence proactively. Businesses should separately monitor complaint periods, limitation periods for commencing proceedings, payment due dates and the documents required to substantiate a breach.
Third, quantify claims on a properly supported legal basis. The purchase price, late payment interest, contractual penalties and damages should be distinguished and calculated in accordance with the relevant legal requirements.
Contract management should be treated as an ongoing business process, beginning before execution and continuing until the parties have fulfilled their obligations. This approach can help reduce dispute-related costs, preserve commercial relationships and strengthen a business’s ability to protect its lawful interests when disagreements arise.
Legal References
- Law on Commerce No. 36/2005/QH11 (Consolidated legal text of the Law on Commerce as Consolidated Text No. 113/VBHN-VPQH dated 27 August 2025)
- Civil Code 2015.
- Civil Procedure Code and relevant provisions governing jurisdiction and dispute resolution procedures.
- Law on Commercial Arbitration 2010.
- Resolution No. 01/2019/NQ-HDTP concerning the application of certain provisions on interest, interest rates and contractual penalties.
- Precedent No. 09/2016/AL concerning late payment interest, contractual penalties and damages in the relevant factual context.
Disclaimer: This article provides general legal information for businesses seeking to identify and manage contractual risks. The application of Vietnamese law depends on the contractual terms, the nature of the transaction, the facts of the dispute and the legislation in force at the relevant time. This publication does not constitute legal advice in relation to any specific transaction or dispute.
Contact:
For any inquiries regarding legal advice on domestic sale and purchase of goods in Vietnam under Vietnamese law, or assistance in resolving disputes arising from domestic sale and purchase transactions in Vietnam, please contact the Secretariat of BFSC Law Firm LLC in Hanoi at (+84-24) 7108 2688 (ext. 101) or by email at [email protected].
For any inquiries or comments regarding this article, please contact the author, Lawyer Phan Quang Chung | E-mail: [email protected]