Signing with a New Partner: 12 Legal Checks

Scenario: most contract disputes lawyers inherit were already lost at… signing: the wrong person signed, the penalty clause was left blank, no payment security existed. The twelve checks below are the minimum filter a practitioner with many years of experience runs before letting a client sign with a new partner — each check tied to a risk that has already become a real lawsuit somewhere.

Group 1 — The partner and the signer (checks 1–4)

1. The partner’s legal status: pull the latest enterprise registration; check operating status, business lines, charter capital, the legal representative — and red flags like tax enforcement or major pending lawsuits;
2. The signer’s authority: is the signer the legal representative; if not, is the authorisation current and in scope, and does the deal exceed thresholds requiring members’ council or shareholder approval under the charter;
3. Licences for conditional activities: does the transaction’s sector need sub-licences, practice certificates or capital conditions — a missing licence hangs an invalidity risk over the whole contract;
4. Financial capacity and assets: latest financial statements, a secured-transactions search (what has the partner already encumbered), and payment security in real assets rather than reputation.

Group 2 — Money, goods and performance risk (checks 5–8)

5. Subject matter and quality standards: describe goods/services, specifications, inspection and acceptance criteria in enough detail that a third party reading them knows what «conforming» means;
6. Price and adjustment mechanics: price in VND for domestic contracts (staying out of the FX prohibition zone), a price-adjustment clause for major swings, and a clear allocation of taxes and fees;
7. Payment and payment security: due dates, the documents triggering the payment duty, and security matched to the risk — bank guarantee, deposit, retention of title (Article 331 Civil Code), or delivery tranches matched to payment tranches;
8. Penalties, damages and liability caps: the penalty within the Commerce Law’s 8% cap for commercial contracts, how damages are computed, and which loss types are excluded — silence on penalties means no penalty.

Group 3 — Exit and disputes (checks 9–12)

9. Termination and its consequences: for-convenience termination with notice, termination for breach, and the settlement, restitution and handover mechanics — clauses only written fairly while relations are good;
10. Force majeure and changed circumstances: event definitions, notice duties, suspension rights and the threshold for renegotiation under Article 420 Civil Code when prices move extremely;
11. Dispute resolution: court or arbitration (VIAC or another centre), governing law, language and seat — a vague «competent authority» clause invites a jurisdictional fight before the money fight;
12. Form and the file: for bilingual contracts, which version prevails; number of originals; annexes as part of the contract; and filing of originals, authorisations and negotiation records — the signing file is the evidence file of any later lawsuit.

Frequently asked questions

Which check matters most with a new partner?

The signer’s authority and payment security. A signer without authority risks the contract not binding the partner company at all; missing payment security makes even a won case hard to collect. These two decide whether the contract is «real» and «collectible».

Must a lawyer review every contract?

Not every small contract on an already-standardised template. But high-value, long-term or off-template deals (counterparty-drafted clauses, bilingual texts, foreign elements) should be reviewed before signing — reviewing one contract always costs less than litigating over it.

What extra checks apply to a newly formed partner company?

Whether charter capital is actually paid in, who the representative and shareholders are, whether the operating address is real, and stronger-than-usual security: partial prepayment, a parent or shareholder guarantee, and small first delivery tranches to test performance capacity.

Which clauses are most often missing in trade contracts?

Three: a price-adjustment mechanism for swings (without it you are left with the very demanding Article 420 Civil Code), termination consequences (who keeps goods, how deposits are handled), and retention of title for credit sales — the cheapest goods-recovery tool when a customer collapses.

Reviewed by the Legal Practice Group – FLAT LAW FIRM

This legal analysis has been verified against current Vietnamese regulations and cross-border FDI transaction practices by the attorneys at FLAT LAW FIRM.

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