A Practical Guide To Contract Formation For Foreign Investors In Vietnam

In Vietnam, the specifics of offer and acceptance can determine whether you have a legally binding contract at all. The process of contract formation is governed by strict rules, and a simple oversight can mean that the parties never created the legal relations they intended. 

For any business operating here, understanding when an agreement becomes a legally enforceable contract is not just a legal formality; it is a critical pillar of operational certainty. An unenforceable agreement can jeopardize investments, disrupt services, and lead to significant financial liability.

As a Vietnam Briefing (2025) report highlights, strict compliance with formality and timing requirements is critical, as non-compliance can render a contract unenforceable. The intention of the parties alone is not enough; the statutory process must be followed for the agreement to be considered valid.

Key Takeaways:

• Timing is Everything: Contract formation occurs when the offeror receives the reply accepting to enter into the contract. For a binding contract to exist, this communication is crucial.
• Form Matters: Contracts can be made in various forms, but certain types, especially for real estate, legally require a specific notarized form to create a valid contract.
• Silence is Not Acceptance: Silence only constitutes acceptance if two or more parties have a prior agreement establishing it or regulated by governing law as such within a defined time limit.
• Evidence is Your Shield: Meticulous records of the exchange are essential to prove a legally binding agreement was formed and to define the contractual obligations.
• Foreign Templates are a Risk: Normally, a party seeking to use foreign-law contract templates must adapt them, as Vietnamese courts will invalidate terms  that in contrast with local y provisions.

Understanding The Legal Framework For Contract Formation In Vietnam

A critical insight for any business is that the basic principles of Vietnamese contract law create a unified system. The primary goal of the law is to determine if the parties intended to create legal relations. 

While concepts like consideration are a cornerstone of English law, Vietnamese law focuses more on the consensus and mutual agreement between the parties as the core of the contract. The exchange of value (such as money or services) is evidence of this intention, but the formal rules of offer and acceptance hold primary importance.

Evolution From The 2005 To The 2015 Civil Code

The 2015 Civil Code created a single, unified framework for all contracts, simplifying the legal landscape. This ensures a consistent application of rules for all parties, including those in FDI. The nature of the contractual relationship is governed by this single source of law.

Key Statutory Anchor Points

• Article 385 (2015 Civil Code): Defines a contract as an agreement between parties to establish, modify, or terminate rights and obligations.
• Article 400 (2015 Civil Code): States that the time of conclusion for a contract is the moment the offeror receives the acceptance. This is the golden rule of contract formation.
• Article 401 (2015 Civil Code): Specifies that a contract takes effect from it is entered into, unless the parties agree otherwise. From this moment, the parties are legally bound into the rights and obligations under the contract.

A Comparative Perspective With China

Both Vietnam and China have legal frameworks influenced by the CISG. According to the Vietnam Industry & Trade Review (2025), both countries adopt the "receipt theory," where acceptance is effective when communicated to the offeror. 

This shared principle helps create a more predictable legal position for determining if a binding contract has been formed.

When Is A Contract Actually Formed?

The entering of a contract hinges on a valid acceptance being communicated to the offeror. The other party must accept the initial offer on its exact specific terms. Any modification constitutes a counter offer, which legally voids the first offer and restarts the offer review and acceptance process. The process of offer and acceptance must be precise.

Written Contracts

For a written contract or written agreement, the contract formation occurs when the document is signed by the final party. An analysis by ASL Gate (2025) warns that invalidity often arises if mandatory forms, such as notarization or written format requirements based on the local regulations are ignored . In such a case, the contract can be declared invalid by a competent authority andwill not be legally bound.

Oral Agreements

The law also considers oral agreements as a form of civil contract transactions because of Article 119 of the 2015 Civil Code. An oral agreement becomes effective once both sides agree on essential terms. However, proving the existence of such contracts is difficult, as the conduct of the parties may be the only evidence it is difficult to prove that the Parties agreed to the agreement.

Tacit or Implied Acceptance (Silence)

According to Article 400 of the Civil Code, in case the parties have agreed that silence is an acceptance of the contract within a period of time, the time of contract conclusion is the last time of that period.. There are few exceptions to this rule. Implied terms may arise from the conduct of the parties, such as commencing performance.

Documenting Contract Formation To Withstand Dispute Review

In any potential disputes, evidence of when a legally binding contract was formed is the deciding factor. Robust documentation is a strategic defense to prove the contract is valid and its contractual obligations are enforceable.

Acceptable Evidentiary Forms

• Signed hard-copy original contracts with the wet signature of a competent person and stamp of the Company.
• Complete email chains showing a clear offer and acceptance.
• Authenticated electronic signatures, which provide certainty.
• The transferof money or provide services as proof of performance.

Recording Offer-Acceptance Timelines

• Maintain chronological logs to negotiate and record the exchange of communication.
• Ensure the moment acceptance is communicated is clearly marked.
• For a high-value contract, the parties should formalize the conclusion in writing and store hard copies appropriately.

Corporate Governance Controls For Foreign Direct Investment (FDI) Firms

• Internal procedures must define who has the authority to make the company legally bound.
• Ensure the representative's actions do not create an unauthorized contractual relationship.
• Ensure the content of the Contract does not contain provisions that violate domestic law as well as the policies of the Company/Group

Common Formation Pitfalls For Foreign Investors

• Assuming Foreign Templates Apply: A Vietnamese court will apply local rules for determining if a legally binding agreement was formed. The position under English law, for example, has its own unique principles of consideration and intent that may not align with Vietnamese law.
• Ignoring Notarization Requirements: Certain contracts are void without proper notarization. In such cases, the contract may be declared void.
• Misaligned Bilingual Versions: Discrepancies can be used to argue no valid agreement was reached. The party seeking to enforce the contract bears the burden of proof.
• Late or Ambiguous Acceptance: A late reply or a counter offer legally rejects the initial offer. The other party cannot later accept the original offer unless it is made again.

Practical Compliance Steps For FDI Legal Teams

Before Negotiation

• Verify if the contract type requires a specific form or registration.
• Prepare bilingual drafts to negotiate from.

During Exchange And Acceptance

• Use a formal notice of acceptance.
• Log the timestamp when the acceptance is communicated.

After Signing

• Archive all forms of the agreement.
• Schedule post-execution reviews to monitor performance and payment.

Conclusion: Turning Legal Precision Into Business Certainty

A contract in Vietnam is legally bound only when acceptance is received. Mastering the rules of contract formation is the only way to ensure your agreements are legally binding and your business interests are protected. To conclude a valid and enforceable contract, every step of the offer and acceptance process must be handled with precision. This diligence is what separates a successful business agreement from a future liability.

Frequently Asked Questions

What is the exact moment a contract is considered formed in Vietnam?

A legally binding contract is formed at the moment the offeror receives the acceptance. If Party A emails an offer and Party B emails their acceptance, the contract formation occurs the moment Party B's email arrives in Party A's server, making both parties legally bound.

What are the typical costs for notarizing a commercial contract in Vietnam?

Notarization costs for contracts vary based on the value of the agreement. For real estate contracts, fees for payment are often a percentage of the property value. Our experience shows that budgeting for these legal costs upfront prevents significant risks related to creating an enforceable agreement.

How can we ensure our Vietnamese and English contract versions are consistent?

The best practice is to include a "language prevalence" clause stating which version will govern the legal relations. In our 3,000+ projects, we always recommend a final review to confirm both parties have the same intention and understand all specific terms before they conclude the binding agreement.

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