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Import-Export Contracts in Vietnam: A Business Handbook — Get It Right from the Start

In international trade, a contract is not "paperwork" — it is the only map when things go well and the only weapon when disputes arise. A carelessly drafted import-export contract can cost a business an entire shipment, or worse, lose a case over one vague clause about the place of delivery.

This handbook covers everything Vietnamese import-export businesses need to know about international commercial contracts: the legal framework, standard contract structure, key clauses, and dispute handling.

Table of contents

Import-export contracts of Vietnamese businesses sit under several layers of law:

  • Commercial Law 2005 (36/2005/QH11): governs international sale of goods, including the written-form requirement for international sales contracts.
  • CISG — the 1980 Vienna Convention on Contracts for the International Sale of Goods: Vietnam has been a member since 01/01/2017. When buyer and seller are in different member states, the CISG applies automatically unless the parties agree to exclude it. It governs contract formation, parties' rights and obligations, and remedies — but not contract validity or property in the goods.
  • Civil Code 2015: general rules on conclusion, validity, performance and termination of contracts.
  • Incoterms 2020 (ICC): not mandatory law but international trade usage — binding only when incorporated into the contract.
  • UCP 600: applies where payment is by letter of credit.

Priority in case of conflict: clear contractual agreement comes first (within what the law allows), then international treaties Vietnam has joined (such as the CISG), then the chosen national law.

2. Form: why writing is mandatory

Under the Commercial Law 2005, international sale-of-goods contracts must be made in writing or in an equivalent form (telegrams, telex, fax, stored electronic data messages). This is far stricter than for domestic contracts.

In practice, many Vietnamese businesses trade with Chinese partners via WeChat messages and price-confirming emails, then remit money — with no complete contract. When disputes arise (substandard goods, late delivery), the business has almost no solid legal ground to claim its rights. Iron rule: no complete written contract, no money transfer.

3. Standard structure of an import-export contract

A professional import-export contract typically contains:

  1. Title and party information: full names, registered addresses, representatives, tax/enterprise codes. For Chinese partners, include the Chinese name and unified social credit code (统一社会信用代码).
  2. Definitions and interpretation.
  3. Subject matter: detailed goods description — name, type, specifications, quality standards, quantity, units.
  4. Price and trade terms: unit price, total value, payment currency, Incoterms with a specific place.
  5. Payment: method (L/C, T/T…), timing, milestones, account details.
  6. Delivery: time, place, transport mode, shipping documents.
  7. Inspection: buyer's pre-shipment inspection rights, independent surveyors (e.g. SGS, Bureau Veritas).
  8. Warranty (if any).
  9. Force majeure.
  10. Penalties and damages.
  11. Governing law and dispute resolution.
  12. Contract language (prevailing-language clause).
  13. General provisions: effectiveness, amendments, assignment, notices, entire agreement.
  14. Signatures and seals.

4. Five make-or-break clauses

4.1. Goods description and quality standards

The most common import-export disputes are about quality. Qualitative descriptions ("good quality goods") invite argument. Describe goods with measurable standards: technical parameters, international standards (ISO, ASTM…), sealed samples signed by both parties, acceptable quality limits (AQL). Add the buyer's pre-shipment inspection rights and a designated independent surveyor.

4.2. Delivery terms (Incoterms)

See section 5 — this clause allocates the point of risk transfer, freight costs, insurance and customs-clearance responsibilities.

4.3. Payment

Specify method, timing, currency, milestones (how much upfront, when the balance is due, against which documents). With new partners, prefer an irrevocable confirmed L/C, or milestone-based T/T (e.g. 30% upfront, 70% against shipping documents) — avoid high-ratio prepayment unless backed by a bank guarantee from the seller, since prepayment shifts risk onto the buyer. (See article T-391 on international payments with Chinese partners.)

4.4. Governing law and dispute resolution

Two common choices: the CISG plus a supplementary national law, or the law of a specific country. For dispute resolution, commercial arbitration is recommended for cross-border deals (confidentiality, awards enforceable abroad under the 1958 New York Convention). State clearly: arbitral institution, number of arbitrators, language, seat.

4.5. Penalties and damages

The Commercial Law 2005 allows parties to agree on penalties for breach. Levels are as agreed but capped by statutory limits for each contract type. Beyond penalties, the aggrieved party may claim damages — actual losses and lost profits — if proven.

5. Incoterms 2020: choosing the right delivery terms

Incoterms 2020 comprises 11 terms in 2 groups:

For any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU, DDP. For sea and inland waterway: FAS, FOB, CFR, CIF.

The three most common in Vietnamese import-export:

  • FOB (Free On Board): seller delivers goods on board the vessel at the port of shipment; risk passes to the buyer when the goods are placed on board the vessel (Incoterms 2020 dropped the old “ship’s rail” concept used back in Incoterms 2000). The buyer charters the vessel and buys insurance.
  • CIF (Cost, Insurance and Freight): seller bears freight and insurance to the destination port; but risk still passes to the buyer once goods are on board — a point many businesses misunderstand.
  • EXW (Ex Works): seller merely makes goods available at its premises; the buyer handles everything from there. Cheap for the seller, but the buyer bears all risks and procedures — including export clearance in the seller's country.

Key caveat: Incoterms only allocate delivery duties, risk and costs — they do not govern transfer of ownership, do not replace payment terms, and do not apply automatically unless incorporated.

6. Payment, penalties and damages

On payment, the principle is the less trust, the tighter the security: confirmed L/C for new partners, milestone T/T for familiar ones. Verify every bank-detail change through an independent channel.

On sanctions: contracts should set late delivery / late payment penalties as a percentage of the breached value per day (or week) of delay, with a cap. Separately, the aggrieved party may claim damages — but must prove actual loss and causation. So the moment a breach is detected: record it, preserve documents, and notify the breaching party in writing.

7. Governing law and dispute resolution

Governing law: if both parties are in CISG member states and have not excluded it, the CISG automatically governs most of the contract. Matters the CISG does not cover (validity, property) follow the chosen national law. Recommended wording: "This contract is governed by the CISG; matters not covered by the CISG are governed by Vietnamese law" (or another neutral law).

Dispute resolution: a three-tier ladder — negotiation → mediation → arbitration (or litigation). For high-value Vietnam–China deals, arbitration at VIAC (Vietnam), SIAC (Singapore) or HKIAC (Hong Kong) is common. Never leave a contract without a dispute resolution clause — a one-way ticket to deadlock.

8. Common mistakes by Vietnamese businesses

  1. Using downloaded templates without tailoring — generic templates never fit specific deals.
  2. No prevailing-language clause in bilingual contracts — when versions conflict, there is nothing to fall back on.
  3. Leaving dispute resolution blank or writing "resolved under the law" generically.
  4. Incoterms without a specific place ("FOB" with no named port) — inviting argument over the delivery point.
  5. No time limit for quality claims — by the time defects surface, it is too late to claim.
  6. Signing before reading carefully — or worse, letting sales staff negotiate legal terms alone.

9. Document flow in a typical CIF shipment

To see how the clauses work together, follow the documents in a standard CIF shipment from China to Vietnam:

  1. Contract signed — with CIF Haiphong (Incoterms 2020), sight L/C, and SGS pre-shipment inspection.
  2. L/C opened — the Vietnamese buyer's bank issues the credit exactly per the contract; the seller checks every term before proceeding.
  3. Production and inspection — goods are manufactured; SGS inspects against the sealed sample and issues a clean inspection certificate.
  4. Shipment — the seller books freight, loads the container, and obtains the bill of lading, commercial invoice, packing list, certificate of origin (C/O), and insurance policy for 110% of invoice value.
  5. Presentation — the seller presents the documents to its bank within the L/C's presentation period; the bank pays against complying documents.
  6. Customs clearance — the Vietnamese buyer receives the documents, clears customs at Haiphong (paying import duties and VAT), and takes delivery.
  7. Final check — the buyer inspects on arrival and must raise any quality claim within the contract's claim period, with the SGS report and arrival survey as evidence.

One missing or non-complying document can stall the whole chain — which is why the contract's document list must mirror the L/C's document list exactly.

10. Handling quality claims step by step

When goods arrive off-spec, disciplined claim handling decides whether you recover:

Step 1 — Stop and preserve. Do not use, resell or alter the goods. Photograph and video the condition on arrival, keep the container seals and shipping marks intact.

Step 2 — Independent survey. Engage a surveyor (SGS, Bureau Veritas or equivalent) immediately to inspect and issue a report comparing the goods against the contract specifications and sealed sample.

Step 3 — Written notice. Notify the seller in writing within the contract's claim period, attaching the survey report and stating the remedy sought (replacement, price reduction, or damages). Late notice can extinguish the claim.

Step 4 — Negotiate with leverage. Present the evidence package and propose a concrete settlement (e.g. a percentage price reduction per the defect rate). Most quality disputes settle here when the evidence is solid.

Step 5 — Escalate. If negotiation fails, invoke the contract's dispute resolution clause — mediation, then arbitration. File with the full evidence chain: contract, specifications, inspection certificates, survey report, correspondence.

11. Bilingual contracts: the prevailing-language clause

Most Vietnam–China deals run on bilingual contracts (Vietnamese–Chinese or English–Chinese), and translation gaps are a quiet source of disputes. Protect yourself:

  1. Always designate a prevailing language — e.g. "In case of discrepancy, the English version shall prevail." Without this, an arbitrator or court will reconstruct the parties' common intent from conflicting texts — expensive and unpredictable.
  2. Have the prevailing version drafted (not translated) by a lawyer who understands both the legal system and the commercial intent. Key terms — "penalty" vs "damages," "best efforts" vs "guarantee," Incoterms definitions — must mean the same thing in both languages.
  3. Keep terminology consistent across the contract, annexes, L/C and shipping documents. A goods description that reads differently on the bill of lading than in the contract invites documentary disputes under the L/C.
  4. Watch the chop/signature block. In Chinese practice the company seal (公章) carries decisive weight — ensure the entity named, the seal affixed and the signatory's authority all align with the business license. Where the contract is signed by an agent, keep a copy of the written authorization; disputes over "who actually signed" are depressingly common when deals sour. Finally, store the executed bilingual contract, all annexes and the sealed samples together in one deal file — five years later, when a warranty or tax question surfaces, you will be grateful you did. A well-kept deal file also shortens any future due diligence — when you sell the business or bring in investors, organized contracts answer questions before they are asked.

12. FAQ

Q: Must an import-export contract be in writing?

A: Under the Commercial Law 2005, international sale-of-goods contracts must be made in writing (or an equivalent form such as stored emails or faxes). Oral contracts in international trade are nearly impossible to prove in disputes — always sign a written contract.

Q: Should I apply the CISG to my import-export contracts?

A: Vietnam has been a member of the 1980 Vienna Convention on Contracts for the International Sale of Goods (CISG) since 01/01/2017. The CISG applies automatically when parties are in different member states unless excluded. It fills gaps when contracts are thin, but businesses should still draft detailed contracts rather than relying on the convention alone.

Q: Are Incoterms 2020 mandatory law?

A: No. Incoterms 2020 are ICC trade usages, binding only when incorporated into the contract (e.g. "FOB Hai Phong – Incoterms 2020"). Without incorporation, delivery responsibilities, risk and costs must be determined under the applicable law and agreement — inviting argument.

Q: Which clauses matter most in an import-export contract?

A: Five decisive clauses: (1) goods description and quality standards; (2) Incoterms delivery terms; (3) payment method and timing; (4) governing law and dispute resolution; (5) penalties and damages. Missing any one of these leaves a major hole.

Q: In a bilingual Vietnamese–English or Vietnamese–Chinese contract, which version prevails in a dispute?

A: It depends on the contract's language clause. If the contract designates a prevailing language, that version applies in case of conflict. Without designation, the dispute resolver will interpret the parties' common intent — very risky. Always state the prevailing language.

13. When to work with a lawyer

Work with a lawyer before signing, not after disputes erupt — because the cost curve of legal help slopes steeply upward once a dispute exists. Engage counsel: when drafting high-value contracts or dealing with new partners; when reviewing a template provided by a foreign counterparty (especially cleverly hidden exclusions); when negotiating Incoterms, payment and arbitration terms; and the moment breach signs appear (late delivery, off-spec quality) to preserve evidence and follow proper claim procedures. FLAT Law Firm supports import-export businesses from negotiation and drafting to dispute resolution — hotline 0988424851.

References

  • Commercial Law 2005 (No. 36/2005/QH11).
  • 1980 UN Convention on Contracts for the International Sale of Goods (CISG) — Vietnam a member since 01/01/2017.
  • Incoterms 2020 — International Chamber of Commerce (ICC).
  • Civil Code 2015 (No. 91/2015/QH13).
  • UCP 600 — Uniform Customs and Practice for Documentary Credits, ICC (2007).

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