Due to the US-China trade war and the rising costs in many other countries, Vietnam is now the go-to destination for many types of businesses for foreign investors. Among them, trading is one of the most important business activities in Vietnam.
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According to the World Bank, the rising economic and booming trading market are due to these major factors: Vietnamese government’s effort for global economic integration, domestic reforms with external liberalization, lower costs of doing business, growing young population and middle-class, increasing free trade agreements, and advancement and adoption of new technologies.
The Importance of Having a Sale and Purchase Contract for International Trading Activities
A sale and purchase contract is an important document for international trade as it serves as an agreement between parties in a transaction that involves certain risks.
According to the 2005 Vietnamese Commerce Law, international sales and purchase activities of goods can only be performed via import, export, re-export with temporary import, re-import with temporary export, and border transfer. The contract not only demonstrates the contracting parties’ rights, benefits, and engagements, it also establishes parties’ obligations.
Therefore, for every sale and purchase transaction of goods, especially international trade with foreign entities, all parties must draft a contract conforming to all national laws and treaties.
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The subject of a sale and purchase contract for international trade in Vietnam can be a legal entity or an individual. All subjects in the contract must comply with the laws of their respective country of origin but not the law governing the agreement.
If either of the parties fails to clarify their nationality status or subject position in the contract, this contract will not be valid.
Commercial Law for Sale and Purchase of Goods Contract in Vietnam
According to 2005 Article 27 of Vietnam’s Commercial Law, it is a legal requirement that all purchase and sales of goods for international trade must be based on written agreements or contracts or other equivalent forms such as telex, facsimile, telegraph, data messages, or other forms approved under the law.
How to Prepare a Purchase and Sale Contract in Vietnam:
The content of a purchase and sale contract in Vietnam can vary greatly since there are certain limitations for international trades in Vietnam.
However, below are the basic information to be included in the international sale and purchase contract. All contracts must be in written form.
a. Contracting parties’ details
- Representative information if the contracting parties are organisations
b. Articles of the contract’s goods or items
- Type, quality, and quantity of goods
- Delivery method, time, and places
- Delivery agency information
c. Articles in regard to payments
- Payment method
- Contract’s total value
- Payment term and time
- Sanctions for overdue payment
d. Other articles related to the implementation of the contract:
- Contract’s validity and term
- Breach of contract
- All parties’ rights and obligations
- Dispute settlement
- Applicable law’s agreement
How Cekindo can Assist in Contract Drafting
Cekindo recognizes that trading risks are universal regardless of place, business size, sector, and project size. Our experts thus administer a strong and effective approach to negotiating and drafting contracts for our clients especially for international trade in Vietnam.
Not only do we offer approach consistency, but we also provide contract customization and timely identification of all legal risks. Over the years, Cekindo’s legal specialists have negotiated and drafted thousands of agreements for international trade in Vietnam involving countries from across the globe.
To find out more, please get in touch with our representatives. Complete the form below.