The Civil Code 2015 – Risks for the party who prepares the first draft of a contract in Vietnam

Article 404.6 of the Civil Code 2015 provides that where the drafting party in a contract inserts into the contract contents which are disadvantageous to the other party, the contract will be interpreted in a manner favouring the other party. This provision not only applies to consumer contracts but also to commercial contracts between two commercially-sophisticated parties. Accordingly, the party who prepares the first draft of a commercial agreement may be subject to the risk of adverse interpretation in future disputes. In addition, parties, when negotiating a contract, may now need to keep track of who drafting which provision in the contract.

It is difficult to understand the logic of Article 404.6 of the Civil Code 2015. When a party inserts a clause in a contract, that party is acting to protect its interest in the contract which, in many cases, may be adverse to the other party. This is why the parties need to negotiate with each other to reach a compromised position. And the final compromised position may be the result of a complicated give-and-take position. A party may accept a clause which is adverse to it because such party is able to get a more advantageous clause in another part of the contract. If the law now requires the courts or arbitration to interpret a clause put forward by a party in favour of the other party, then it can disturb the agreement reached by the parties in the contract. This is because no party will be certain that the contents of the contract will be interpreted according to the intention of the parties.   

A standard boilerplate clause which provides that a contract will not be interpreted against a party on the ground that the Party drafts this Agreement or any part of it may help to mitigate the risk arising from Article 404.6 of the Civil Code 2015. However, parties to a contract governed by Vietnamese law may consider adding an express acknowledgement that the contract has been drafted by all contracting parties and therefore Article 404.6 of the Civil Code 2015 does not apply to the interpretation of the contract.