What is an MOU in Vietnam? Is a memorandum of understanding legally binding?

What is an MOU in Vietnam under Vietnamese law?

An MOU (memorandum of understanding) is a document that two or more parties sign to record what they have agreed at the outset of a project, deal or cooperation, usually before a formal contract. It is used between companies, between a company and a local authority, or with a foreign partner. As to effect, an MOU is neither automatically binding nor automatically non-binding: it depends on each clause and on the parties' intent. This entry covers MOUs between companies and their counterparties and with state bodies; government-to-government MOUs and training or recruitment MOUs are mentioned only where relevant.

The first thing to know is that Vietnamese law has no document type called an MOU. The Civil Code 91/2015/QH13 does not define a memorandum of understanding and has no 'preliminary contract' category (the Code does not use the term). The Commercial Law does not mention MOUs either. The words 'memorandum of understanding' appear in statute only in a few narrow places, and none defines it or gives it an effect:

• Article 6 of the Law on International Agreements 70/2020/QH14 lists 'memorandum of understanding' as a possible name of an international agreement.
• Clause 1, Article 2 of the Law on Treaties 108/2016/QH13 says a treaty is identified by substance whatever its name, including 'memorandum of understanding'.
• Point b, Clause 1, Article 34 of the Law on Competition 23/2018/QH14 allows a 'memorandum of understanding on the economic concentration' in the notification file.

The first two concern MOUs of state bodies and the third concerns M&A deals; both are covered in the sections below.

Is an MOU in Vietnam legally binding? Three common outcomes

A common answer in published guides is either 'an MOU has no legal value' or 'an MOU is as binding as a contract', or just 'it depends' without citing any article. The law attaches no effect to a name, so putting it absolutely either way is unsupported. Without a specific definition, an MOU is tested against the general rules of the Civil Code:

• Freedom of undertaking: undertakings and agreements that breach no prohibition and are not contrary to social morality are binding on the parties (Clause 2, Article 3). Good faith and honesty (Clause 3, Article 3) is a general principle, not a free-standing basis for damages.
• A contract is an agreement on rights and obligations (Article 385): the title does not matter; if the document is an agreement establishing, changing or ending rights and obligations, it is a contract. Conditions for validity are in Article 117.
• Contents: Clause 2, Article 398 only lists terms a contract 'may' contain, with no mandatory terms, so one cannot say with certainty that a document lacking a price or a term is not a contract.
• Interpretation: where a term is unclear, look also to the intent shown throughout the period before, at and after the agreement (Clause 1, Article 404); where the common intent conflicts with the wording, the common intent is used (Clause 5, Article 404). Article 404 assumes a contract already exists; whether a document is a contract is answered first under Article 385 and the parties' real intent.

On that basis an MOU usually falls into one of three outcomes, sorted by wording and content:

The indicators in the table are drafting practice, not criteria set by the law. A court or tribunal will look at the parties' real intent and the whole circumstances; no default rule turns on words such as 'shall' or 'expected'. Three further points:

A 'non-binding' statement is strong evidence, not an absolute shield. If the same document contains a penalty or a clear specific commitment, the parties' real intent is read from the whole document and their performance. This is LexData's reading of the interpretation principles; this entry cites no judgment on it.

A non-binding MOU may still matter later. Clause 1, Article 404 lets the intent shown before the contract was made be taken into account; on LexData's reading, an MOU can be cited to interpret an ambiguous clause of the main contract. If that is unwanted, the main contract should say it supersedes all prior understandings.

Form. An MOU need not be notarised unless the law requires it, but if the content is also a transaction for which the law requires notarisation, certification or registration, an MOU cannot be used to avoid that requirement (see the FAQ below).

How does an MOU in Vietnam differ from a letter of intent, term sheet, NDA and framework agreement?

These labels are market practice, not categories that Vietnamese law distinguishes. The table reflects common usage; the effect of each document still depends on its content.

If an LOI or term sheet counts as an offer to contract, the offeror may change or withdraw it only in the narrow cases in Article 389 and may cancel it only if it reserved that right in the offer (Article 390). The law does not distinguish an MOU from an MOA (memorandum of agreement) either; in practice an MOA is often used for a document with more specific obligations, but the effect still turns on the content, so do not infer it from the words 'understanding' or 'agreement'.

Which clauses of an MOU in Vietnam should be binding, and which should not?

The practical approach is to split two groups: 'non-binding' (project description, timetable, indicative price, structure) and 'binding', listed by number. A typical MOU layout covers: the parties; purpose and scope of cooperation; each side's role; timetable; binding clauses; confidentiality; term and termination; governing law and dispute resolution; signatures. The clauses most often placed in the binding group:

On arbitration: Article 19 of the Law on Commercial Arbitration provides that an arbitration agreement is entirely independent of the contract, so invalidity or cancellation of the contract does not remove the arbitration agreement. That does not answer the earlier question of whether the parties actually meant to arbitrate under the MOU. State that the arbitration clause is among the binding clauses, in writing (Clause 2, Article 16), to avoid an argument over jurisdiction from the outset.

Can a party walk away after signing an MOU in Vietnam without paying damages?

This is the question parties care about most. Some international law-firm guides state that in Vietnam, absent a binding agreement, there is no duty of good faith and no rule on liability for ending negotiations. That is right for a plain withdrawal that breaches no clause, but it does not take account of Clause 2, Article 386 and Article 387 of the Civil Code, which set specific duties at the contract-formation stage.

A note on scope: Article 387 speaks of the 'process of contract formation' and the law does not define when that process starts. This entry reads it as including negotiations under an MOU. That is LexData's reading and also the common one, but this entry cites no precedent on it.

For the last row the law has no specific provision. In theory the injured party could invoke the principle of good faith (Clause 3, Article 3) and the general rule on non-contractual liability (Article 584), but Article 584 requires an act infringing another person's lawful rights or interests, so that party would have to prove the right or interest infringed, the loss and causation. This entry cites no judgment applying it this way, so the outcome cannot be predicted with confidence. Where the law is silent, Article 6 allows analogy, then the basic principles, precedent and fairness, so liability cannot be ruled out entirely either.

The biggest risk is not withdrawal as such but how a party withdraws: whether it breached confidentiality, concealed material information, broke exclusivity or lost a deposit. For a plain withdrawal after the other side has spent money, the parties should agree on costs in advance.

If a dispute arises, the binding part of an MOU is handled like a contract dispute, before the court or before an arbitral tribunal if there is a valid arbitration agreement; the limitation period before the court is 3 years from the date the claimant knew or should have known its lawful rights and interests were infringed (Article 429).

MOU in Vietnam for M&A and investment: sign first, file later

In M&A, an MOU, LOI or term sheet is usually signed after the NDA and before due diligence, recording the structure, reference price, exclusivity, confidentiality and costs; the directional parts are usually non-binding, while exclusivity, confidentiality and costs are the parts the parties often want binding at once. See the overview in what is M&A in Vietnam.

Three legal points matter for larger deals:

• Economic concentration. A party that meets a threshold must file a notification before carrying out the concentration (Clause 1, Article 33 of the Law on Competition 23/2018/QH14). Point b, Clause 1, Article 34 names the 'memorandum of understanding' directly: the notification file includes a draft of the concentration agreement or a draft contract or memorandum of understanding on the concentration between the enterprises. Article 44 lists the violations, including carrying out a concentration before the preliminary assessment result (Clause 2) or the formal assessment decision (Clause 3); signing a non-binding MOU is not among them. But if the MOU binds the parties to begin implementing part of the deal, check first against economic concentration in Vietnam (depends on the facts).
• Investment procedures. Investment policy approval and the Investment Registration Certificate are separate procedures before the competent authority: projects subject to policy approval are listed in Article 24 with competence in Article 25, and projects subject to an Investment Registration Certificate in Article 26 (projects of foreign investors and of economic organisations under Clause 1, Article 20; projects of domestic investors generally need no certificate) with competence in Article 27 of the Law on Investment 143/2025/QH15. The Law has no procedure called a memorandum of understanding. An investment MOU with a provincial People's Committee or a zone management board therefore does not replace investment policy approval and, for projects that need one, does not replace the Investment Registration Certificate.
• Choice of investor. Article 23 of the Law on Investment provides that an investor to carry out a project is chosen by one of three routes: a land-use-right auction, a tender to select the investor, or investor approval in the cases the Law sets out. None rests on an MOU, so an MOU with a provincial People's Committee does not by itself create a right to be allocated land or chosen as investor; the land law side must follow the land legislation, which this entry does not review.

An MOU also does not replace the conditions of a conditional business line (Article 7 of Law 143/2025/QH15); see conditional business lines in Vietnam.

MOUs with government bodies, schools and foreign partners: are they international agreements?

An MOU between two companies is governed by civil and commercial law as above. Where a state body is involved, three groups need separating.

A company and a domestic state body is usually a cooperation arrangement or a statement of intent; it does not replace the administrative decisions the body must issue under the law (as in the investment section).

A Vietnamese state body and a foreign party. The Law on International Agreements 70/2020/QH14 defines an international agreement as a written agreement on international cooperation between a Vietnamese signatory, acting within its functions, tasks and powers, and a foreign signatory, that does not create, change or end rights and obligations of Vietnam under international law (Clause 1, Article 2). Article 6 allows an international agreement to be named a memorandum of understanding, among other names. The Law does not govern contracts under civil law (Clause 2, Article 1). If a document creates rights and obligations under international law and is signed in the name of the State or the Government, it is a treaty, and under Clause 1, Article 2 of the Law on Treaties the label 'memorandum of understanding' does not change that.

The Vietnamese signatories are the bodies listed in Clause 2, Article 2 of Law 70/2020: the Government, ministries, ministerial-level agencies and agencies under the Government, the People's Council and People's Committee at provincial level, specialised agencies of the provincial People's Committee, the People's Committee of a border commune, central and provincial bodies of certain socio-political organisations, and some other bodies. The 2020 original text also lists the district-level People's Committee; since 1 July 2025 the two-tier local government model has no district level and Decree 177/2025/ND-CP (effective 1 July 2025) adjusted the related provisions, so check the current text when signing. There is information that the Law itself is proposed for amendment.

Two procedural points to know when a foreign party signs an MOU with a state body:

• For an international agreement in the name of a provincial state body, before signing the body must send a file to obtain the written opinion of the Ministry of Foreign Affairs and the relevant bodies; if any of them disagrees, it must ask the Prime Minister for an opinion and may sign only after a written approval; after signing it must report to the Prime Minister in writing and send a copy to the Ministry of Foreign Affairs within 15 days of signing (Article 19 of Law 70/2020). A foreign party should ask the Vietnamese body whether it has completed this procedure.
• The signing of an international agreement by the bodies at points b, c, d, dd, e, g, h, i and k of Clause 2, Article 2 may not bind the State, the National Assembly, the Government or a Vietnamese body or organisation that did not sign it (Clause 5, Article 3).

Whether an investment MOU between a provincial People's Committee and a foreign company is an international agreement under this Law depends on the nature of its content (international cooperation, or an investment or business transaction); this entry does not reach a conclusion on that kind of MOU.

A company, school or other organisation and a foreign partner. On the text of Law 70/2020, companies, schools and public service units are not among the Vietnamese signatories in Clause 2, Article 2, so their MOUs with a foreign partner are not international agreements under this Law. Their effect is still read under the Civil Code and sector-specific rules, together with the supervising body's external-relations rules if any, which this entry has not reviewed. For units that belong to a listed ministry or body, check whether the unit counts as one of the listed bodies.

Checklist before signing an MOU in Vietnam, and common mistakes

The common mistakes when drafting or signing an MOU are built into the checklist below: not saying which clauses bind (a general 'this MOU is non-binding' sitting beside a penalty or exclusivity clause, which invites disputes), copying a foreign MOU, a signatory without authority, confusing an MOU with a procedure, and having no expiry date.

Some laws cited in this entry (the Commercial Law, the Law on Competition and the Law on International Agreements) have been reported as proposed for amendment; check the current text at the time of signing.

If you are preparing a deal that starts with an MOU, LexData's commercial contract drafting and review service covers separating the binding clauses, checking signing authority and designing dispute resolution. Where the MOU is the first step of a merger or acquisition, see legal due diligence.