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Contract Law
The legal framework for contract law in Vietnam was completely renovated in 2005–2006 with the drafting and adoption of major revisions to the Civil Code and Commercial Law. Both came into effect on 1 January 2006. Importantly, the Civil Code repealed the prior Ordinance on Economic Contracts, reducing the number of legal documents governing contracts and eliminating much of the overlap and confusion that had previously existed. With the Civil Code and Commercial Law reforms and the introduction of other related laws, ordinances, and decrees, the statutory framework for commercial contracting in Vietnam is now comparable to that of many industrialized countries. Both judges and practitioners, however, reported that their understanding of the current set of laws pertaining to contracts (including ordinances, decrees, and other significant sources of authority) would improve if these were “packaged” more effectively—in, for example, a single volume that was regularly updated and readily accessible.
Given Vietnam’s socialist traditions, and the fact that the private sector is predominantly made up of SMEs, it is not surprising that domestic parties often view contracts as devices to “minimize the room for misunderstanding between parties,” and routinely conclude informal contracts. With the rapid integration of Vietnam into global markets, capped by Vietnam’s WTO entry in January 2007, increased contract formality should be expected to follow; the government, businesses, and the courts are more likely to view contracts, over time, as clear and enforceable commitments.
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