A Business Cooperation Contract (BCC) is a flexible investment instrument widely used in Vietnam, allowing parties to cooperate in business activities and share profits or products without establishing a new legal entity. In practice, parties may seek to restructure their economic interests during the performance of the contract, including the assignment of contractual benefits to a third party. While Vietnamese law permits the transfer of certain contractual benefits, such transactions involve complex legal implications and must be carefully structured to ensure validity and enforceability. This analysis examines the legal nature, timing, and essential considerations relating to the assignment of benefits under a BCC.
1. How is the assignment of benefits under a Business Cooperation Contract understood?
“Benefits” refer to legitimate interests that an individual or organization is recognized and protected by law, a charter, or an agreement, allowing such party to enjoy, request, or exercise such interests within a specific social, economic, or legal relationship.
Pursuant to Clause 14, Article 3 of the Law on Investment 2020, a Business Cooperation Contract is established for the purpose of profit sharing or product sharing, indicating that such benefits constitute the core objectives pursued by the contracting parties. In addition, under Article 115 of the Civil Code 2015, benefits arising from a contract constitute property rights, classified as other proprietary rights, which are measurable in monetary value and transferable.
Furthermore, Article 415 of the Civil Code 2015 recognizes the stipulation of benefits for a third party, thereby affirming that economic benefits arising from a contract may exist independently of the obligor and may be transferred to a third party on the basis of a lawful agreement.
Accordingly, the assignment of benefits under a Business Cooperation Contract is understood as a transaction whereby one contracting party transfers to a third party the economic benefits arising from the contract. Such benefits may include the right to receive profits, the right to exploit the project, the right to share products, or other lawfully established financial rights, without transferring the contractual status of the assigning party and without altering its obligations toward the remaining contracting parties.
2. When should the parties consider assigning benefits under a Business Cooperation Contract?
The parties should consider assigning contractual benefits when a party no longer wishes or is no longer able to continue enjoying the economic benefits arising from the cooperation, but does not wish (or is unable) to terminate or assign the entire contract.
Specifically, the assignment of benefits should be considered in circumstances such as: a party seeking to recover capital, restructure its investment portfolio, or shift its business strategy; the emergence of a third party willing to receive profit or product-sharing rights under suitable economic conditions; or when increasing business risks or internal conflicts prompt a party to preserve its expected economic interests.
Accordingly, where the parties wish to flexibly adjust the allocation of economic benefits while maintaining the original contractual structure and fundamental obligations of the Business Cooperation Contract, the assignment of contractual benefits should be taken into consideration.
3. Which contractual provisions require special attention when assigning benefits under a Business Cooperation Contract?
When assigning benefits under a Business Cooperation Contract, the parties must pay particular attention to the following provisions to ensure that the transaction reflects its proper legal nature and is legally enforceable.
Firstly, the subject matter and scope of the assigned benefits must be clearly defined. Pursuant to Clause 14, Article 3 of the Law on Investment 2020, benefits under a BCC include profits, products, or other economic interests arising from the contract. Therefore, the assignment agreement must clearly specify the type of benefit, percentage or ratio, duration, and scope of entitlement.
Secondly, the conditions and form of the assignment must be addressed. The assignment transaction must be made in writing in accordance with Article 119 of the Civil Code 2015 and must comply with any contractual conditions, including requirements for consent from the remaining contracting parties, if applicable.
Thirdly, it must be clearly stipulated that the assignment of benefits does not automatically entail the transfer of obligations. Under Article 365 (assignment of claims) and Article 370 (transfer of obligations) of the Civil Code 2015, rights and obligations may only be transferred upon satisfaction of statutory conditions. Accordingly, the agreement must clearly state that the assigning party remains responsible for performing contractual obligations under the BCC, while the assignee is entitled only to the economic benefits, unless otherwise lawfully agreed by all parties.
Fourthly, the effective date of the assignment and the commencement of benefit entitlement must be clearly determined. Pursuant to Article 401 of the Civil Code 2015, identifying the exact effective date of the assignment is essential to distinguish benefits arising before and after the transfer, thereby preventing disputes during contract performance.
Finally, the parties must pay attention to provisions on financial obligations and dispute resolution. Tax obligations arising from the transfer of property rights must be clearly allocated in accordance with the Law on Tax Administration 2019. In addition, the dispute resolution mechanism should be determined in conformity with the Civil Procedure Code 2015 (as amended in 2025) or the Law on Commercial Arbitration 2010.
Accordingly, parties engaging in the assignment of contractual benefits should carefully examine the specific conditions applicable to each case to ensure that the transaction complies with the law and has full legal validity.
4. Must the assignment of benefits under a Business Cooperation Contract be made in writing?
Pursuant to Clause 1, Article 119 of the Civil Code 2015, a civil transaction may be expressed verbally, in writing, or through specific conduct, unless otherwise provided by law. However, to minimize legal risks and better protect the legitimate interests of the parties in the event of a dispute, the assignment of benefits under a Business Cooperation Contract should be made in writing.
In conclusion, the assignment of benefits under a Business Cooperation Contract is a legally permissible mechanism that allows parties to restructure economic interests without altering the contractual framework or reallocating contractual obligations. Nevertheless, such transactions require careful legal assessment, clear contractual drafting, and strict compliance with applicable civil, investment, and tax regulations. A well-structured and properly documented assignment not only ensures legal enforceability but also helps prevent disputes and safeguard the legitimate interests of all parties involved in the cooperation.
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1. Lawyer Vu Thi Phuong Thanh, Chairman of the Members’ Council, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
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Dinh Phuong Thao