Framework agreement in Vietnam: legal effect, drafting and how it differs from an MOU

What is a framework agreement in Vietnam, and does the law define it?

A framework agreement in Vietnam is a document that fixes the general terms of a continuing supply or cooperation relationship, so that each transaction can be closed later by a specific contract, purchase order or annex. Vietnamese businesses call it a "hop dong nguyen tac" (literally a "principle contract") or "hop dong khung". The Civil Code and the Commercial Law do not define it:

• A contract is an agreement to establish, change or end civil rights and obligations (Article 385 of the Civil Code 91/2015/QH13). Article 402 lists only the "main" types (bilateral, unilateral, principal, ancillary, for the benefit of a third party, conditional); there is no "principle contract". The Commercial Law 36/2005/QH11 (consolidated text 113/VBHN-VPQH) has none either.
• Article 398 says a contract "may" contain items such as subject matter, quantity, price and term; the parties settle content themselves.
• The phrase "economic contract", which many Vietnamese web articles use as a contrast, does not appear in the current Civil Code or Commercial Law as checked by LexData.

The nearest statutory definition is of a "framework agreement" in centralised public procurement (Article 54 of the Law on Bidding 22/2023/QH15): an agreement between a centralised procurement unit and one or more selected contractors that sets the content and conditions forming the basis for purchases under each specific contract, applying for no more than 36 months. It sits in the bidding regime and is not a general definition for commercial contracts between companies. Searches for the English term often return that procurement meaning.

The words "hop dong nguyen tac" appear in sector rules as a kind of filing document, without a definition: a project adjustment dossier for the transfer of an investment project includes "a contract or hop dong nguyen tac on the transfer" (Point c, Clause 5, Article 57 of Decree 96/2026/ND-CP). The same decree uses a different phrase, a "document of agreement in principle", in the registration dossier for a foreign investor's capital contribution or share purchase under Clause 3, Article 21 of the Law on Investment 143/2025/QH15 (Point c, Clause 3, Article 76). These are two different filing documents.

The title does not decide effect. A document that creates rights and obligations between the parties is a contract (inferred from Article 385) whatever it is called, and where the parties' common intent conflicts with the wording, the common intent is used to interpret the contract (Clause 5, Article 404).

Framework agreement in Vietnam versus preliminary agreement, MOU and purchase order

Many guides merge these into one idea ("it is also a framework contract or a memorandum of understanding"). The "reading" column below is LexData's assessment, not a rule of law.

For the second row, the Civil Code has no dedicated rule on preliminary agreements (LexData checked Articles 385 to 407), so general tools apply: the principle of good faith in establishing, performing and ending civil rights and obligations (Clause 3, Article 3); the duty to disclose information and to keep confidential information received during negotiations, with compensation for resulting loss (Article 387; see what is an NDA in Vietnam); a deposit securing the conclusion of a contract, where the depositor who refuses to sign loses it and a recipient who refuses must return it plus an equal sum unless otherwise agreed (Clause 2, Article 328); and contractual penalties (Article 418).

The law has no dedicated article on compelling a party to sign the main contract. If the promise to sign is itself an effective contract, the general rules on breach can apply, for example Clause 1, Article 358 of the Civil Code (the creditor may require the debtor to carry on performing the work it owes) and specific performance in commercial dealings (Articles 292 and 297 of the Commercial Law). LexData has not found guidance or case law showing whether a court or arbitral tribunal would compel the signing of a main contract.

Is a framework agreement in Vietnam legally binding?

Two common claims are both unsupported: "it is only a guideline with no legal value" and "once signed it must be performed". Work through two steps.

Step one: does it meet the validity conditions? A civil transaction is valid when the parties have suitable capacity, act entirely voluntarily, and the purpose and content do not breach a statutory prohibition or social ethics, with the required form where the law prescribes one (Article 117). Missing a condition makes it void unless the Code says otherwise (Article 122). A contract lawfully concluded takes effect from conclusion (Article 401).

Step two: what did the parties actually commit to? The table is LexData's reading of the signals; the law sets no bright line.

For a sale of goods or property, the law fills some gaps, so a missing price, quality standard or delivery date does not by itself void the document. Where there is no agreement or the agreement is unclear: price is the market price (Clause 2, Article 433 of the Civil Code; Article 52 of the Commercial Law); quality follows the published standard, the state regulation or the trade standard, and failing those the ordinary standard (Clause 3, Article 432); on delivery time, the buyer may demand delivery and the seller may demand acceptance at any time on reasonable notice, and the price is payable on receipt of the property or its title papers (Clauses 2 and 3, Article 434; for goods under the Commercial Law, delivery within a reasonable time, Clause 3, Article 37, and payment on delivery of the goods or documents, Clause 1, Article 55).

These rules sit in the sale provisions; for services or cooperation LexData has not checked equivalent rules, so look to sector law or the agreement. The provisions checked also do not fill the gap on what is sold and in what quantity, so a document silent on that works as a framework only if each later order can stand as a complete contract. If the framework says the price is "agreed for each order", the law does not say whether the market-price rule can step in when the parties fail to agree, so state how the price is to be fixed. If effect depends on a condition such as a licence or approval, the transaction arises when the condition occurs (Article 120; Clause 6, Article 402).

What should a framework agreement in Vietnam contain?

Items marked "practice" are LexData suggestions, not legal requirements.

What if the framework agreement and a purchase order conflict?

This point is easy to miss. The Code has a rule only for annexes: an annex clause that contradicts the contract has no effect unless otherwise agreed, but if the parties accept an annex with a contradicting clause, the clause in the contract is treated as amended (Article 403). LexData reads this as: the original contract prevails by default, but a difference takes effect where the parties knowingly accept it; the law does not say what counts as "accepting".

For a separate implementing contract or purchase order, the provisions checked contain no general order of precedence. Whoever resolves a dispute looks at the parties' intent across the whole course of dealing and at how the clauses fit together (Clauses 1, 4 and 5, Article 404). Three steps reduce the risk:

• State the order of precedence up front (practice): for example, price, quantity and delivery date from the order, everything else from the framework.
• Block pre-printed terms. An acceptance that adds conditions or changes the offer is a new offer (Article 392); acceptance means accepting the whole offer, and silence is not acceptance unless agreed or established by prior dealing (Article 393).
• If the framework is a counterparty's standard form, it must be made public, unclear terms are read against the party who supplied it, and terms that exempt that party, increase its liability or remove the other side's legitimate rights are ineffective unless otherwise agreed (Article 405; general terms of business follow a similar rule, Article 406).

Form and signatory: does a framework agreement in Vietnam need notarisation or a seal?

Form. A civil transaction may be oral, written or by conduct, and a data message under e-transaction law counts as writing (Clause 1, Article 119 of the Civil Code). Where the law requires writing, notarisation, certification or registration for that kind of transaction, it must be followed (Clause 2, Article 119); an agency contract must be in writing or an equivalent form (Article 168 of the Commercial Law). A breach of form can void the transaction, but where at least two thirds of the obligations have been performed, a court may recognise it on request (Article 129). The general civil and commercial provisions checked set no seal requirement or maximum term for this kind of document; sector exceptions on term exist (a framework agreement in centralised public procurement applies for no more than 36 months, Clause 3, Article 54 of the Law on Bidding). LexData has not checked sector laws on contract form and content (construction, banking, real estate).

Signatory. A representative may act only within the scope of representation under the charter, the power of attorney or other rules (Clause 1, Article 141). A transaction made by someone without authority creates no rights or obligations for the principal unless it ratifies the transaction, knows and does not object within a reasonable time, or is at fault (Clause 1, Article 142). See what is a legal representative in Vietnam and keep the power of attorney when the signatory is not the legal representative.

Exit, penalties and disputes under a framework agreement

Exit. A contract may be amended or cancelled only by agreement or as the law provides (Clause 2, Article 401). Unilateral termination without liability is available where the other side commits a serious breach, or the parties agreed or the law provides; termination without a basis makes the terminating party the party in breach (Clauses 1 and 5, Article 428). A long-term framework without a notice termination right is hard to leave.

Penalties. A contractual penalty applies only if agreed (Article 418). In commercial dealings it is capped at 8% of the value of the part of the obligation breached (Article 301 of the Commercial Law); the exception in Article 266 concerns only inspection services that issue a wrong result and has nothing to do with an ordinary framework agreement. If the framework states no value, say which obligations carry a penalty (minimum purchase, exclusivity, confidentiality) and on what value it is calculated; see penalty for breach of contract in Vietnam.

Disputes. An arbitration agreement must be in writing; exchanges by email and a reference to a document containing an arbitration clause, such as a contract, also count (Clause 2, Article 16 of the Law on Commercial Arbitration). It is independent of the contract (Article 19) and invalid if its maker lacked authority (Clause 2, Article 18). The article deals with form: where an order says "under framework agreement no. ...", that reference to the framework's arbitration clause counts as writing (Point d, Clause 2, Article 16), but whether the clause covers the order still depends on its wording, so state that it covers every implementing contract under the framework (practice). If you choose VIAC, its Rules in force from 1 July 2026 allow a single request covering several arbitration agreements; the President of the Centre decides where the claims arise out of related contracts or the same transaction, the questions of law or fact are similar and the arbitration agreements are compatible (Article 6). See commercial arbitration in Vietnam.

Framework agreements in Vietnam for foreign investors: governing law, CISG, translation and M&A

For foreign-invested companies (what is an FDI company in Vietnam), five points are often missed.

1. Translate by function, not by words. A master agreement, a framework agreement and heads of terms bind differently. Rendering hop dong nguyen tac as "agreement in principle" may lead a foreign counterparty to treat it as non-binding. Describe the document's function in its text and add a governing-language clause for bilingual versions (practice).
2. Governing law. The parties may choose the law governing a contract, with exceptions (Clause 1, Article 683 of the Civil Code); a civil relationship has a foreign element where at least one party is a foreign individual or legal entity (Point a, Clause 2, Article 663); a commercial transaction with a foreign element may choose foreign law if it does not breach the basic principles of Vietnamese law (Clause 2, Article 5 of the Commercial Law). The framework and each order are different contracts, so the clause should say it covers both.
3. Sale of goods to or from a party abroad: the CISG. Vietnam is a contracting state, with effect from 1 January 2017 (UNCITRAL status page). The Convention applies to contracts of sale of goods between parties whose places of business are in different States, where both are Contracting States or where private international law leads to the law of a Contracting State (Clause 1, Article 1 CISG); the parties may exclude it or vary its effect (Article 6 CISG). The Commercial Law gives priority to an international treaty Vietnam has joined where the treaty provides differently (Clause 1, Article 5). The governing-law clause should therefore say whether the CISG is excluded (practice). The UNCITRAL status page also records a declaration by Vietnam under Articles 12 and 96 of the Convention on written form; LexData has not determined its current reach, so put orders with a foreign party in writing (practice).
4. Investment and M&A. A foreign investor must complete the capital-contribution or share-purchase registration procedure before changing members or shareholders in three groups of cases under Clause 3, Article 21 of Law on Investment 143/2025/QH15, and the dossier includes a document of agreement in principle (Point c, Clause 3, Article 76 of Decree 96/2026/ND-CP). The registration text states the expected transaction value of the capital-contribution or share-purchase contract (Point a, Clause 3, Article 76), so the agreement in principle should name the parties, the subject and the value or pricing method (practice). See what is M&A in Vietnam.
5. A common law contrast. English courts have long declined to enforce a bare agreement to negotiate or to agree (for example Walford v Miles [1992] 2 AC 128 (HL)). The Civil Code has no equivalent rule: a Vietnamese court or tribunal reads the document under Articles 385 and 404, and Clause 3, Article 3 requires parties to establish and perform civil obligations in good faith and honestly. The provisions checked say nothing about the label "subject to contract", so do not rely on that label: state expressly which clauses bind.

For drafting or reviewing a framework agreement with its orders, annexes and remedies, see our service commercial contracts in Vietnam.