Enforceability of agreement on liquidated damages under Vietnamese law

Summary. Vietnamese law does not have a clear concept of liquidated damages. There are strong legal provisions supporting for the use of liquidated damages. However, due to the lack of clear legal ground for liquidated damages, it appears that in practice, relying on certain provisions on calculation of damages, some courts in Vietnam appear to have not recognised and enforced an agreement on liquidated damages.

We discuss below the arguments supporting an agreement on liquidated damages and the enforceability of such an agreement in a commercial dispute under the law of Vietnam.

Reputational damage arising from breaches of a commercial contract under Vietnamese law

In Vietnam, it is not common to see the aggrieved party claiming for damage which causes harm to its reputation (Reputational Damage) due to breaches of commercial contracts by the defaulting party. However, in principle, Reputational Damage due to breaches of a commercial contract should be claimed and recovered under Vietnamese law for the following reasons:

Under Article 419.3 and 361.3 of Civil Code 2015, an aggrieved party may claim for moral damage arising from a breach of contract, which includes, among others, moral losses caused by infringement of reputation;
Reputational Damage may be considered as “actual and direct loss” under Article 302.2 of Commercial Law 2005 if the aggrieved party has actually incurred the loss of reputation directly arising from a breach of contract by the defaulting party;

Venture North Law's Legal Guide To Merger Control In Vietnam

This guidance provides an overview of “merger control” regulations in Vietnam. It will cover regulatory framework and authority, relevant trigger events and thresholds, notification requirements, procedures and timetable, substantive test, remedies, penalties, and appeals. Many of the questions in Venture North Law’s merger control guide follow the standard questions in the International Comparative Legal Guide to Merger Control published by Global Legal Group annually.

This guidance is written by Nguyen Quang Vu, Le Minh Thuy, Ha Thanh Phuc, and Trinh Phuong Thao. The simplified version is arranged and edited by Tran Kim Chi.

A simplified version of the Venture North Law's Legal Guide To Merger Control In Vietnam could be downloaded here.

A full version with all legal citation of the guide could be downloaded here.

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Nature of “voucher” business under Vietnamese law

In Vietnam, vouchers are now not only used as a method of promotion, but also as a kind of “product” sold by many e-commerce platforms. In particular, a voucher trader could sell vouchers to its users, which could be used for certain goods or services provided by certain suppliers. The users will then use the voucher to obtain the goods or services from the suppliers usually at a discounted price. As our analysis below will show, the legal nature of voucher business under Vietnamese law is unclear, and therefore business models based on trading of voucher could give rise to certain risks.

Voucher is not a kind of good or service

Although the law is silent on this matter, Vietnam governmental authorities seem to take the view that voucher is neither goods nor service:

Vietnam Business Law