Under Vietnamese law, the rules of interpretation of contract are mostly provided under Article 404 of the Civil Code 2015. According to this provision, the order of priority in interpreting a contract seems to be (1) “mutual intention” (ý chí chung) of the parties; (2) contract wording; and (3) each party’s intention and customary practice. In particular:

• Mutual intention has priority over contract wording, and therefore the top priority in contract interpretation. This is because according to Article 404.5, in case of conflict between the “mutual intention” of the parties and the wording used in a contract, the mutual intention of the parties will be used in order to interpret the contract.

• Unlike common law principles, under the Civil Code 2015, determining “mutual intention” of the parties is a subjective exercise (as opposed to an objective exercise using reasonable person’s standard), which requires examination of the parties’ intention before and at the time of execution and performance of the contract. Therefore, it would be difficult to determine “mutual intention” of the parties without concrete evidence of the same.

• Contract wording is the second priority in interpreting a contract. In particular, Article 404.1 provides that interpretation of contract with unclear terms must be based not only on the contract wording, but also on the intentions of the parties which are expressed before and at the time of preparation and performance of the contract. The wording of Article 404.1 indicates that when interpreting a Vietnamese law contract, contract wording should be first examined before each party’s intention.

• Intentions of each party and customary practice are the lowest priority among the factors to be considered when interpreting contract. While each party’s intention is used when there are unclear terms, customary practice is taken into consideration if a contract contains a term or wording which is difficult to understand.

In addition to the order of sources used to interpret a contract as provided above, the Civil Code 2015 also provides for the following interpreting principles:

• Article 404.6 stipulates that: “Where the drafting party inserts into the contract contents which are disadvantageous to the other party, the contract shall be interpreted in a manner favoring the other party”. The rule of interpretation provided under Article 404.6 is similar to the “contra proferentem” principle under English law, which provides that where there is an ambiguous term, such term will be construed against the party who put them forward.

• Where a contract contains a term or wording which may be interpreted in different ways, such term or wording shall be interpreted in the way most appropriate to the purpose and nature of the contract.

• The terms of a contract must be interpreted in relation to each other so that the meanings of the terms conform with the entire content of the contract.

• The rules of contract interpretation under the Civil Code 2015 contains both interpretation rules and “cannons of construction” under common law principles and do not distinguish contract interpretation from construction of a contract.

This post is written by Nguyen Thuc Anh and edited by Nguyen Quang Vu.