Vietnam force majeure clause: what contracts should say

Vietnam force majeure clause wording matters because Vietnamese law lets a party escape liability for a late or missed delivery only when a true force majeure event caused it, and the party must prove it. A good clause turns that vague test into clear terms before trouble starts. Many firms are reading their contracts again this spring, as the coronavirus outbreak and travel limits disrupt orders. This note explains the legal test and how to draft around it.

What counts as force majeure under Vietnamese law

The Civil Code (Law 91/2015/QH13, in force from 1 January 2017) deals with this in Article 156. It calls force majeure an event that happens objectively, that nobody could foresee, and that cannot be fixed even when the party takes every necessary step within its ability. Three tests sit in that wording: the event is outside your control, it was not foreseeable, and you could not overcome it.

Article 351 of the same Code sets the link to liability. A party that breaches a duty normally owes compensation. It does not owe it when the breach came from force majeure, unless the parties agreed otherwise or the law says otherwise. So the default rule already protects a party, but only when the facts meet all three tests.

Sources: Civil Code 91/2015/QH13, Articles 156 and 351. We could not open the full text online on the day of writing, so check the exact wording in the official gazette.

The rule for commercial deals

Most business contracts for goods and services also fall under the Commercial Law (Law 36/2005/QH11). Article 294 lists the cases where a party is not liable for a breach. There are four. The parties agreed in advance on an exemption event. A force majeure event happened. The other side caused the breach. Or the breach came from following an order of a state authority that the party could not have known about when it signed.

The same article puts the burden on the party that breached. If you want relief, you must prove the ground. A bare claim that "the virus stopped us" is not proof. You need facts and papers that tie the event to the missed duty.

This is why the first item on the list matters most for drafters. Because the parties may agree their own exemption events, a clause can name the events both sides accept. That makes the later argument shorter.

Sources: Commercial Law 36/2005/QH11, Article 294 (grounds for exemption and the duty to prove them). Full text not reachable for direct reading on the day of writing, so confirm with counsel.

Notice and proof

Article 295 of the Commercial Law adds a duty that many people miss. A party that claims exemption must tell the other side in writing, promptly, about the event and how far it affects performance. A party that gives no notice, or gives it late, can be liable for the extra loss that follows. The right to relief can be fine on the facts and still be weakened by silence.

In practice, keep a file. Save the dates, the official announcements, the supplier letters, the shipping or border notices and the emails that show what you did to cope. If your contract allows it, ask a trade body or an authority for a written confirmation of the event. Such a paper helps as evidence. It does not by itself decide the case.

Sources: Commercial Law 36/2005/QH11, Article 295 (notice of an exemption event). Article numbers should be checked against the official gazette.

How to draft the clause

Write the clause so a stranger could apply it. Use short, plain terms.

1. Define the term. Repeat the three tests from Article 156, or state that the legal meaning applies.
2. List example events. Natural disasters, fire, war, riots, strikes outside the party, epidemics and government orders are common. Say whether each one is included.
3. Say what is excluded. Higher costs, a weaker currency or a late supplier are usually not force majeure. Say so in the text.
4. Set the notice duty. Name a time limit, such as a number of days, the form (written, by email and courier) and the contact person.
5. State the proof needed. Ask for papers that show the event and its link to the delay.
6. Require effort to limit the harm. The affected party should keep working on a way around the event.

What happens when the event lasts

A clause should not stop at "no liability." Say what happens next. Most clauses first suspend the duty for as long as the event lasts. Then they set a cut-off, for example 60 or 90 days, after which either side may end the contract by written notice without paying damages. State who bears costs already spent and how prepaid sums are returned.

Also think about events that make a deal harder but not impossible. The Civil Code has a separate rule in Article 420 for a basic change of circumstances. It is narrower and works through talks first, then a court. Do not assume it replaces a clear force majeure clause. Spell out in the contract whether the parties will renegotiate when costs jump.

Sources: Civil Code 91/2015/QH13, Articles 156 and 420; Commercial Law 36/2005/QH11, Articles 294 and 295. Not opened in full on the day of writing, so confirm article numbers with counsel.

A short checklist before you sign

• Is the definition clear, and does it match Article 156?
• Do the listed events fit your business and your supply chain?
• Is the notice duty simple enough to follow under stress?
• Is there a cut-off date for ending the contract?
• Does the Vietnamese version say the same as the English one?

This article is general information, not legal advice. Contract rules differ by deal type and can change, so ask a licensed Vietnamese lawyer to review your own contract.

Sources: Civil Code 91/2015/QH13; Commercial Law 36/2005/QH11.