International sale of goods contracts play a crucial role in cross-border trade transactions. However, many businesses still question whether Vietnamese law prescribes mandatory clauses for such contracts.
1. Are There Mandatory Clauses Under Vietnamese Law?
The short answer is: No specific list of mandatory clauses is prescribed.
Under the Law on Commerce 2005, Vietnamese law does not stipulate compulsory contractual terms for international sale of goods contracts. Instead, it only imposes a requirement regarding the form of the contract.
Specifically, such contracts must be:
- Made in writing, or
- Established in another form having equivalent legal validity (e.g., electronic data messages, telex, fax)
Therefore, the only mandatory requirement explicitly provided by law relates to the form, not the content of the contract.
2. Principle of Freedom of Contract
According to the Civil Code 2015, contracting parties are entitled to:
- Freely agree on contractual terms
- Provided that such agreements do not violate prohibitions of law
- And are not contrary to social ethics
In practice, contracts may typically include the following provisions:
- Subject matter of the contract
- Quantity and quality of goods
- Price and method of payment
- Time, place, and method of performance
- Rights and obligations of the parties
- Liability for breach of contract
- Dispute resolution mechanisms
This reflects the fundamental principle of freedom of contract, particularly in international commercial transactions.
3. Delivery Obligations and Related Documentation
Although there is no fixed list of mandatory clauses, Vietnamese law still imposes certain substantive obligations.
Pursuant to the Law on Commerce 2005, the seller is obligated to:
- Deliver goods in conformity with agreed quantity and quality
- Ensure proper packaging and preservation
- Provide all relevant documents as stipulated in the contract
Accordingly, contractual provisions on delivery and documentation should be clearly defined to avoid potential disputes.
4. Essential Clauses Recommended in Practice
While not legally mandatory, a well-drafted international sale of goods contract should include the following key clauses:
4.1. Parties’ Information
Clearly specify:
- Legal name of the parties
- Registered address
- Tax identification number or business registration number
- Authorized representatives
4.2. Description of Goods
This is a core provision and should include:
- Name of goods
- HS code
- Technical specifications
- Quality standards
4.3. Delivery Terms (Incoterms)
It is advisable to incorporate Incoterms to clearly define:
- Transfer of risk
- Allocation of costs
- Responsibilities for customs clearance
Common terms include FOB, CIF, CFR, etc.
4.4. Price and Payment Terms
Clearly stipulate:
- Unit price and total contract value
- Currency of payment
- Payment method (e.g., L/C, T/T, D/P)
4.5. Timeframe and Performance Schedule
Include:
- Delivery deadlines
- Payment timelines
- Contract validity period
4.6. Insurance and Risk Allocation
Specify:
- Which party is responsible for insurance
- The point at which risk transfers
- Liability in case of loss or damage
4.7. Dispute Resolution
This clause is critical and should determine:
- Governing law
- Competent dispute resolution body (court or arbitration)
Parties may also consider applying the CISG (United Nations Convention on Contracts for the International Sale of Goods) to harmonize the legal framework.
5. Practical Considerations for Contract Drafting
To mitigate legal risks, businesses should:
- Use standard contract templates issued by the International Chamber of Commerce
- Refer to the latest version of Incoterms
- Include clear provisions on penalties and damages
- Conduct due diligence on foreign counterparties
- Seek professional legal advice for high-value or complex transactions
6. Conclusion
Vietnamese law does not prescribe a mandatory list of clauses for international sale of goods contracts, but it does require such contracts to be made in writing.
Nevertheless, given the principle of contractual freedom, parties are strongly advised to draft comprehensive and precise agreements. Incorporating essential clauses is critical to minimizing disputes and safeguarding the legitimate rights and interests of all parties involved in international trade.
CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Ha Noi Bar Association
Email: tmle@tlalaw.vn
Nguyen Thuy Duong