A technology transfer contract pays money for the most intangible of things — operating know-how — so when the transferor breaches, the recipient often has nothing obvious to grip. This article uses the current Technology Transfer Law framework (the consolidated text after the 2025 amendment) to identify the grip points: acceptance testing, fees, and ownership of improvements.
The current legal frame and the first step on breach
From 1 April 2026, Law 115/2025/QH15 amending the Technology Transfer Law takes effect, and the working text is Consolidated Document 138/2026/VBHN-LQ-VPQH; Decree 101/2026/ND-CP replaces Decree 76/2018/ND-CP on technology transfer guidance. When the transferor breaches — incomplete technology, substandard training, missing documentation — the first step is always to fix the evidence through acceptance records for each item: a good transfer contract splits delivery into measurable acceptance milestones, and each failed milestone is a ground to withhold the matching fee portion instead of suing for the whole sum.
Substandard technology, transfer fees and improvements
If the technology misses its warranted parameters, the recipient may demand cure within the contract period, a fee reduction matching the shortfall, and termination with damages where cure is impossible — under the contract-liability mechanics of Civil Code 91/2015/QH13. Fees already paid are recoverable only in proportion to the technology not transferred or rendered useless by the transferor’s fault, not automatically in full. On improvements: improvements created during performance belong to the party that created them unless the contract agrees otherwise — a frequently missed default that surprises FDI parties when a local partner claims ownership of improvements built on the foreign side’s own base technology.
Frequently asked questions
How is a partner’s breach of a technology transfer contract handled?
Work in sequence: (1) record acceptance minutes identifying each failed item and withhold the fee portion tied to it; (2) notify the breach and demand cure within the contract period; (3) if cure fails, apply the agreed sanctions — fee reduction, penalty, termination and damages under Civil Code 91/2015/QH13; and (4) take unresolved disputes to arbitration or court as the clause provides. For technology subject to transfer registration, also check registration status under the Decree 101/2026/ND-CP framework.
What if the transferred technology does not meet the committed quality?
The recipient has three main rights: require the transferor to continue transferring/curing until the warranted parameters are met; require a fee reduction matching the shortfall in value; and, where the technology is fundamentally unusable due to the transferor’s fault, terminate, recover the corresponding fee portion and claim damages. The condition is proving the shortfall through acceptance minutes or independent expert assessment — subjective impressions are not enough.
Can the technology transfer fee be reclaimed?
The recipient can recover the fee portion matching technology not transferred, transferred below standard, or unusable due to the transferor’s fault, after deducting the value of what was received and used effectively. Full fee recovery is feasible only where the entire transfer object is worthless. This is why fees should be split by acceptance milestone: an unpaid fee for an unmet milestone never needs ‘recovering’ — it simply is not paid.
Who owns technology improvements made during the transfer process?
By default, improvements belong to the party that created them during performance of the transfer contract, unless the contract agrees otherwise. An FDI transferor wanting to keep rights in all improvements must say so expressly: all improvements, by whichever party created, belong to the transferor or are automatically licensed back. A recipient creating improvements from transferred technology should also distinguish independent improvements from parts dependent on the base technology when registering IP rights under the Intellectual Property Law (as amended by Law 131/2025/QH15).
The golden rule for technology transfer contracts: money should leave the account only after acceptance is signed. Every dispute over fees, quality and improvements becomes far simpler if the contract splits delivery into measurable milestones from the start — and very expensive if all fees were paid before the technology proved its worth.
This article has been quality-reviewed by the FLAW AI Legal Council