Contract Review for Foreign Companies in Vietnam

By ECOVIS Vietnam Law | Last reviewed: 13 July 2026

“A contract that was never adapted for Vietnam usually reveals itself at the worst possible moment — when a penalty clause is capped, or a foreign judgment turns out to be harder to enforce than the client assumed.” — Attorney Vu Manh Quynh, Founder & Managing Partner, ECOVIS Vietnam Law

Why This Matters for Foreign Companies

Many foreign companies use contract templates drafted for other jurisdictions and apply them to Vietnamese counterparties with only minor adjustments. In practice, provisions that work well elsewhere may be difficult to enforce in Vietnam without modification — for example, certain penalty clauses face statutory caps, and dispute resolution clauses referring to foreign courts may not always be straightforwardly enforceable. A contract that looks complete on paper may still leave a foreign company exposed if these local factors are not addressed.

For foreign suppliers, distributors and service companies operating through East Ho Chi Minh City, contract review also frequently intersects with tax and customs documentation — payment terms, invoicing practices and supporting documentation should be consistent with what Vietnamese tax authorities expect to see, or deductions and preferential treatment may be challenged later.

Key Legal and Compliance Issues

1. Payment terms and tax documentation. Payment clauses should specify currency, timing, and responsibility for withholding tax where applicable, and should be consistent with the invoicing and documentation practices Vietnamese tax authorities expect. Inconsistent documentation can affect whether expenses are deductible or whether cross-border payments proceed smoothly.

1. Scope of work and deliverables. Ambiguous or overly broad scope-of-work language is a common source of dispute, particularly in services and construction-adjacent contracts. Deliverables, acceptance criteria and change-order mechanisms should be defined with enough specificity to be enforceable.

1. Liability, indemnity and limitation of liability. Liquidated damages and penalty clauses in Vietnam are subject to statutory limitations in certain contract types, and limitation-of-liability clauses should be checked against these constraints rather than assumed to apply as drafted. Indemnity provisions should also be reviewed for practical enforceability.

1. Termination and suspension rights. Termination clauses should clearly define triggering events, notice periods, and the consequences of termination (including payment for work completed and handover obligations), as unclear termination mechanics often escalate into disputes.

1. Governing law and dispute resolution. Foreign companies should consider whether Vietnamese law or a foreign governing law is more practical given the location of assets and counterparties, and whether arbitration (domestic or international) or litigation offers a more enforceable path to a remedy in Vietnam.

1. Bilingual contract issues. Where a contract is executed in both Vietnamese and English, the parties should specify which language version prevails in case of discrepancy, and both versions should be reviewed for consistency rather than assuming the translation is exact.

1. Practical execution and signing formalities. Signing authority, company seal practices (where still used), and document execution formalities should be confirmed for the Vietnamese counterparty to reduce the risk of later challenges to contract validity.

Practical Risks for Management

• CEO: may sign contracts based on templates that do not account for Vietnam-specific enforceability limits on penalty or liability clauses.
• CFO: may face withholding tax or deductibility issues if payment and invoicing terms are inconsistent with Vietnamese tax documentation requirements.
• Sales director: may agree to scope-of-work language that is difficult to enforce or leads to disputed acceptance criteria.
• Legal manager: may rely on an English-only draft without confirming the Vietnamese version is consistent, creating risk if a dispute arises.

What Companies Should Review

• Confirm payment terms align with Vietnamese tax withholding and invoicing requirements.
• Review scope-of-work and deliverable clauses for specificity and enforceability.
• Check liquidated damages, penalty and limitation-of-liability clauses against statutory limits.
• Confirm termination and suspension clauses address notice, payment and handover obligations.
• Evaluate governing law and dispute resolution options based on asset location and enforceability.
• Confirm which language version prevails in bilingual contracts, and review both versions for consistency.
• Verify signing authority and execution formalities for the Vietnamese counterparty.
• Assess whether existing contract templates require Vietnam-specific adaptation.

How Ecovis Vietnam Law Can Support

Ecovis Vietnam Law reviews commercial contracts for foreign suppliers, distributors and service companies operating in Vietnam, focusing on payment and tax consistency, liability allocation, termination mechanics, and dispute resolution enforceability. Serving clients in Thao Dien, An Phu, Thu Thiem, Thu Duc and across East Ho Chi Minh City, our team can review both English and Vietnamese contract versions, flag clauses that may face enforceability limits, and help align contract templates with local practice before signing.

FAQ

Are penalty clauses enforceable in Vietnam?
Certain contract types are subject to statutory caps on liquidated damages or penalties, so such clauses should be reviewed against current regulations rather than assumed enforceable as drafted.

Can a contract with a Vietnamese company be governed by foreign law?
In many commercial contexts this is possible, though practical enforceability may depend on where assets are located and whether the counterparty has a meaningful connection to the foreign jurisdiction.

Should disputes be resolved through arbitration or Vietnamese courts?
This depends on the specific facts, including counterparty location, asset location and cost considerations, and should be assessed on a case-by-case basis.

What happens if the Vietnamese and English versions of a contract differ?
If the contract does not specify a prevailing language, resolving the discrepancy may itself become a point of dispute, so this should be addressed explicitly in drafting.

Do all contracts with Vietnamese companies need to be bilingual?
Not always, though certain regulatory filings or specific contract types may require a Vietnamese-language version, which should be confirmed based on the transaction.

How often should standard contract templates be reviewed for Vietnam?
Periodic review is advisable, particularly after changes to relevant regulations or after disputes reveal gaps in existing templates.