Draft and Review Contracts – A Lawyer’s View

In Vietnam, certain type of contract has to follow forms requested by laws as such client is recommended to seek help from professional contract lawyers in Vietnam to help draft or review.

Contract is an agreement enforced by law In Vietnam, contract is a civil transaction which parties enter into voluntarily, each of whom intends to create, change, or terminate one or more rights or obligations between them according to Vietnam Civil Code. Contract plays an important roles in business transaction. Written contract provide individuals and businesses a legal document reflecting agreement, expectation and mechanism to resolve potential disagreement or disputes.

The lawyers in Vietnam drafting or reviewing contracts under Vietnam laws will need to initially review the legal resources in relevant to the transactions, research related documents and the parties involved to provide legal opinions, make suggestions and propose an optimal solution to the client for negotiation and contract finalization.

Basic terms and conditions of the contracts being rights and obligations of parties to the contracts, and other terms in regard to duration, quality, payment, dispute handling procedures, applicable law and/or jurisdiction, confidentiality, force majeure, intellectual property clauses…among others have to be carefully taken into considerations.

Further, a contract should ensure the following points to be covered:

-Use right legal terms or terminology;

-Foresee the future scenarios;

-Describe the specific matters;

-Clearly mention obligations;

-Obtain a balance between parties involved.

There are specific contracts in Vietnam for various transactions being:

-Joint venture contract;

-Share purchase contract;

-Sales contract;

-Business cooperation contract;

-Licensing contract;

-Investment contract;

-Labour contract;

-Lease contract;

-Distribution contract;

-Construction contract;

-Prenuptial agreement.

Each business transaction is different as such a contract is not a compilation of standard terms and conditions. Professional contract lawyers in Vietnam would consider the purpose of the contract, transaction type, significance of the deal, industry, Vietnam legal requirements and expectation of the client to prepare a legally enforceable contract for the client, to avoid misunderstanding and protect the client against legal disputes.

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Construction Contract in Vietnam

In Vietnam, like other countries companies seeking to build an office building or industrial facility work with the contractor through a construction contract.

There are several types of construction contract used in the construction industry depending on the level of control from parties involved in terms of investment, responsibilities and duration.

Construction lawyers inVietnam

Fixed price is a type of construction contract that offer a total fixed priced for all construction related activities. This contract type could include incentives or benefits for early termination, or can also have penalties, called liquidated damages, for a late termination. This contract type is preferred when a clear scope and a defined schedule has been reviewed and agreed upon.

Cost plus contract is a type of construction contract involves payment of the actual costs, purchases or other expenses generated directly from the construction activity. This type of contract must contain specific information about certain pre-negotiated amount (some percentage of the material and labor cost) covering contractor’s overhead and profit. Costs must be detailed and should be classified as direct or indirect costs.

Time and material contract is usually preferred if the project scope is not clear, or has not been defined. The owner and the contractor must establish an agreed hourly or daily rate, including additional expenses that could arise in the construction process. The costs must be classified as: direct, indirect, mark-up, and overhead. Sometimes the owner might want to establish a cap or specific project duration to the contractor that must be met, in order to have the owner’s risk minimized.

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Licensing for Foreign Contractor

Under the provisions of the Vietnam law for operations of foreign contractors in Vietnam in the fields: investment and construction consulting, supply of materials and technology equipment together with technical services related to the construction works, construction of work, foreign contractors must apply for a contractor license.

Conditions for obtaining permits for foreign contractor in Vietnam:

Case for bidding packages that are subject to compulsory application in accordance with the bidding law of Vietnam: Won the bid or select the bid.

– Had won the bid or can select the bid.

– Had forwarding bid contract.

Case for bidding packages that are not subject to compulsory application in accordance with the bidding law of Vietnam:

– Had won the bid or can select the bid.

– Had forwarding bid contract.

Meeting all the conditions and capability that are consistent with contracted works prescribed by the law of Vietnam.

In all cases that foreign contractors are assigned the bid (due to win the bid through bidding or select the bid), foreign contractors have to codeshare with Vietnam contractors or have to use Vietnam sub-contractors (except the cases that are allowed by Prime Minister or prescribed by the law of Vietnam).

Foreign contractors have to commit to fully implement the provisions of the law of Vietnam relating to contracting activities in Vietnam.

How ANT Lawyers Could Help Your Business?

Please click here to learn more about ANT Lawyers Foreign Investment Practice or contact our Law firms in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529

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