Vietnam Commercial Law 36/2005/QH11 in English

Full title: Commercial Law, No. 36/2005/QH11
Passed by: the 11th National Assembly, 14 June 2005
In force from: 1 January 2006
Replaced: the Commercial Law of 10 May 1997 (Article 323)
Amended by: the Law on Foreign Trade Management No. 05/2017/QH14 (from 1 January 2018); the Law on Prevention and Control of Harmful Effects of Alcoholic Beverages No. 44/2019/QH14 (from 1 January 2020); and Law No. 75/2025/QH15 amending the Law on Advertising (from 1 January 2026)
Consolidated text: No. 113/VBHN-VPQH of 27 August 2025, authenticated by the Office of the National Assembly
Status: in force. As of 14 October 2026, no law has amended the Commercial Law since Consolidated Text No. 113/VBHN-VPQH.
Official Vietnamese text: Official Gazette portal · Official Gazette Nos. 1293 and 1294, 11 September 2025

Note: this page is LexData’s own unofficial summary of the main rules for commercial contracts. It is not the full text or a translation of the Law. The Law has 9 chapters and 324 articles (some now repealed); the chapters on trade promotion, commodity exchanges, auctions, tendering, logistics, transit, inspection services, leasing of goods and sanctions are only mentioned briefly or not covered. Only the Vietnamese text has legal effect.

Scope and structure

The Law applies to commercial activities carried out in Vietnam; to commercial activities outside Vietnam where the parties choose this Law, or where a foreign law or a treaty to which Vietnam is party points to it; and to non-profit activities of a party dealing with a trader in Vietnam, if that party chooses the Law (Article 1).

A commercial activity is any activity for profit, including sale of goods, services, investment and trade promotion (Clause 1, Article 3). Goods cover all movable property, including future movables, and things attached to land (Clause 2, Article 3). A trader is a lawfully established economic organisation or an individual trading independently and regularly with business registration (Clause 1, Article 6).

Chapter	Subject	Articles
I	General provisions: scope, principles, foreign traders	1–23
II	Sale of goods, including commodity exchanges	24–73
III	Provision of services	74–87
IV	Trade promotion: sales promotions, displays, trade fairs	88–140
V	Commercial intermediaries	141–177
VI	Other specific activities: processing, auctions, tendering, logistics, transit, inspection, leasing of goods, franchising	178–291
VII	Remedies and dispute resolution	292–319
VIII	Sanctions for breaches of commercial law	320–322
IX	Implementation	323–324

Relation to the Civil Code, treaties and international practice (Articles 4 and 5)

Commercial activities follow the Commercial Law and related laws (Clause 1, Article 4). Specialised commercial activities governed by another law follow that law, and commercial advertising now follows the advertising legislation (Clause 2, Article 4, as amended by Law No. 75/2025/QH15 from 1 January 2026).
Matters not covered by the Commercial Law or other laws fall under the Civil Code (Clause 3, Article 4). General rules on formation, validity and invalidity of contracts therefore come from the Civil Code 2015.
A treaty to which Vietnam is party prevails where it provides differently (Clause 1, Article 5).
Parties to a transaction with a foreign element may choose foreign law or international commercial practice, provided it does not contradict the fundamental principles of Vietnamese law (Clause 2, Article 5).
Practices established between the parties apply by default unless otherwise agreed (Article 12); trade usage fills gaps where there is no law, agreement or established practice (Article 13).

Some differences that come up often when advising on commercial contracts:

Issue	Commercial Law 2005	Civil Code 2015
Contractual penalty	Capped at 8% of the value of the breached part of the obligation (Article 301)	As agreed, unless a related law provides otherwise (Clause 2, Article 418)
Penalty agreed, contract silent on damages	The injured party may claim both the penalty and damages (Clause 2, Article 307)	The breaching party pays only the penalty (Clause 3, Article 418)
Limitation period	2 years from when the lawful rights and interests are infringed (Article 319)	3 years from when the claimant knew or should have known of the infringement (Article 429)

Under Clause 3 of Article 4 of the Commercial Law and Clause 3 of Article 4 of the Civil Code, the Civil Code applies only where the sector law is silent (or conflicts with the basic principles in Article 3 of the Civil Code). For disputes arising from commercial activities, Clause 2 of Article 307 and Article 319 of the Commercial Law therefore apply first. As of 28 September 2026, LexData has found no resolution of the Council of Judges of the Supreme People’s Court and no case-law precedent that specifically addresses the choice between Clause 2 of Article 307 of the Commercial Law and Clause 3 of Article 418 of the Civil Code, or between Article 319 of the Commercial Law and Article 429 of the Civil Code. In practice, differences tend to arise over whether a dispute stems from a commercial activity at all, for example where one party is not a trader, so which rule governs still has to be assessed contract by contract and case by case.

Foreign traders in Vietnam (Articles 16–23)

A foreign trader is one established or registered under foreign law, or recognised by foreign law. It may open a representative office or a branch, or set up a foreign-invested enterprise, and it is responsible under Vietnamese law for everything its office or branch does (Clauses 1–3, Article 16).
A foreign-invested enterprise set up under Vietnamese law is treated as a Vietnamese trader (Clause 4, Article 16). It is set up under the Law on Investment 2025 and the Law on Enterprises 2020; its trading in goods and directly related activities are detailed in Decree 342/2026/ND-CP.
A representative office may not carry out direct profit-making activities and may not sign or amend contracts for the foreign trader, unless the chief representative holds a valid power of attorney or the matter falls under Clauses 2, 3 or 4 of Article 17 (premises, staff, bank account) (Clauses 1 and 3, Article 18).
A branch may sign contracts and trade within the scope of its licence and remit profits abroad (Clauses 3, 5 and 7, Article 19), and uses Vietnamese accounting rules unless the Ministry of Finance approves otherwise (Clause 1, Article 20).
Before leaving Vietnam, a foreign trader must settle its debts and other obligations there (Clause 2, Article 23).

Sale of goods contracts (Articles 24–62)

Form

A sale of goods contract may be oral, written or formed by conduct; where the law requires writing for a type of contract, that requirement applies (Article 24).
International sales (export, import, temporary import for re-export, temporary export for re-import, and transit trade) must be made under a written contract or an equivalent form (Article 27). Equivalent forms include telegram, telex, fax and data messages (Clause 15, Article 3).

Delivery and conformity

If the place of delivery is not agreed: goods attached to land are delivered where they are; if the contract involves carriage, to the first carrier; if the parties knew where the goods were stored, loaded or made, there; otherwise at the seller’s place of business or residence (Clause 2, Article 35). With no agreed time, delivery is due within a reasonable time (Clause 3, Article 37).
Unless the contract says otherwise, goods are non-conforming if unfit for their ordinary purpose or for a particular purpose the seller knew or should have known of, not of the quality of a sample the seller provided, or not packed and preserved adequately; the buyer may refuse delivery (Article 39).
Unless otherwise agreed, the seller is not liable for defects the buyer knew or should have known of at signing, but is liable, within the claim period, for defects existing before risk passed even if found later (Article 40). The seller must also ensure title free from third-party claims and must not sell goods infringing intellectual property rights (Articles 45 and 46).

Payment

The buyer must still pay if the goods are lost or damaged after risk has passed, unless the seller caused the loss (Clause 3, Article 50).
Unless otherwise agreed, the buyer may suspend payment on evidence of fraud by the seller, a dispute over the goods, or non-conforming goods (until cured), but must compensate the seller if its evidence proves untrue (Article 51).
With no agreed payment time, the buyer pays on delivery of the goods or documents, but not before completing an agreed inspection under Article 44 (Article 55).

Passing of risk and title

Unless otherwise agreed (in practice often through Incoterms), the risk of loss or damage passes to the buyer as follows:

Situation	Risk passes	Article
Delivery at a specified place	When the goods are handed to the buyer or its authorised person at that place	57
Carriage involved, no specified place	When the goods are handed to the first carrier	58
Goods held by a bailee who is not a carrier	When the buyer receives the document of title, or the bailee acknowledges the buyer’s right to possession	59
Goods in transit	From the time the contract is signed	60
Other cases	When the goods are at the buyer’s disposal and the buyer breaches by not taking delivery	61

Risk does not pass if the goods are not clearly identified by marks, shipping documents or notice to the buyer (Clause 2, Article 61). Title passes when the goods are handed over, unless the law or the contract provides otherwise (Article 62), so a retention of title clause needs to be written into the contract.

Services contracts (Articles 74–87)

Form rules mirror those for goods (Article 74). The Law distinguishes an obligation to achieve a result (Article 79) from one of best efforts and ability (Article 80); contracts should say which applies.
The customer bears reasonable costs of changes it requests, unless otherwise agreed (Clause 2, Article 83). With no agreement or established practice, payment is due on completion of the service (Article 87).

Intermediaries, distribution and franchising (Articles 141–177 and 284–291)

The four commercial intermediary activities are commercial representation, brokerage, commission agency (entrustment of sale or purchase) and commercial agency (Clause 11, Article 3).

Activity	Key feature	Form of contract	Point to watch
Commercial representation	The representative acts in the principal’s name (Clause 1, Article 141)	Written or equivalent (Article 142)	Confidentiality during the relationship and for 2 years after it ends (Clause 5, Article 145)
Brokerage	Intermediary for negotiating and concluding contracts (Article 150)	No specific rule in the Law	Unless otherwise agreed, the fee is earned once the parties have signed their contract (Clause 1, Article 153)
Commission agency	The commission agent buys or sells in its own name (Article 155)	Written or equivalent (Article 159)	No sub-entrustment without the principal’s written consent (Article 160)
Commercial agency	The agent buys, sells or provides services in its own name for a fee (Article 166)	Written or equivalent (Article 168)	The principal remains the owner of goods or money handed to the agent (Article 170)

Types of agency include exclusive agency (one agent in a given area) and general agency (Article 169); the agent is paid by commission or price margin (Article 171).
Ending an agency: unless otherwise agreed, the agency ends only after a reasonable time and no earlier than 60 days after one party gives written notice. If the principal terminates, the agent may claim one month’s average remuneration for each year of the agency (one month if less than a year); no compensation is due if the agent asked to end it (Article 177).
Distribution: the Law has no separate “distribution contract”. In practice distribution is structured as a sale of goods (the distributor buys and resells) or as an agency, including exclusive agency. The choice affects ownership of the goods, who sets the resale price and the compensation on termination.
Franchising: the franchisee trades using the franchisor’s business system, trademarks and know-how, under the franchisor’s control and support (Article 284). The contract must be written or in an equivalent form (Article 285). Article 291 requires a prospective franchisor to register before franchising and leaves the details to the Government. Under Decree No. 35/2006/ND-CP, as amended by Decree No. 120/2011/ND-CP and Decree No. 08/2018/ND-CP:
- Only franchises from abroad into Vietnam must be registered, including franchises from export processing zones, non-tariff zones or separate customs areas into Vietnamese territory. Registration is with the Ministry of Industry and Trade (MOIT) (Point a, Clause 1, Article 18 of Decree 35/2006/ND-CP; Circular No. 09/2006/TT-BTM, consolidated in Consolidated Text No. 14/VBHN-BCT of 21 June 2024). MOIT enters the franchise in its register within 5 working days of receiving a complete, valid file (Article 20).
- Domestic franchises and franchises from Vietnam to other countries do not need registration, but the franchisor must report to the provincial Department of Industry and Trade (Article 17a, added by Decree 120/2011/ND-CP).
- The franchisor’s business system must have operated for at least 1 year (Article 5, as amended by Decree 08/2018/ND-CP).

Remedies (Articles 292–316)

Types of remedy and fundamental breach

The Law provides six remedies: specific performance, penalty, damages, suspension, stopping and cancellation of the contract, plus other agreed measures that do not contradict the fundamental principles of Vietnamese law, Vietnam’s treaties or international commercial practice (Article 292).

A fundamental breach is one that causes the other party such loss that it cannot achieve the purpose of the contract (Clause 13, Article 3). Unless otherwise agreed, suspension, stopping and cancellation are not available for a non-fundamental breach (Article 293), so contracts should list the breaches that trigger them.

Remedy	Available when	Main effect	Articles
Specific performance	There is a breach	Deliver the shortfall, repair or replace; the injured party may buy substitutes and recover the difference. Meanwhile it may claim a penalty and damages, but not other remedies, unless otherwise agreed	297–299
Penalty	Only if the contract provides for one	Capped at 8% of the value of the breached part of the obligation	300–301
Damages	Breach, actual loss and direct causation	Actual, direct loss plus the direct profit that would have been earned	302–305
Late-payment interest	Late payment of the price, service fees or other reasonable costs	Interest on the overdue sum at the average market rate for overdue debt	306
Suspension	Fundamental breach, or a breach agreed as a ground for suspension	The contract stays in force; damages may be claimed	308–309
Stopping performance	Fundamental breach, or a breach agreed as a ground for stopping	The contract ends when the other party receives notice; damages may be claimed	310–311
Cancellation	Fundamental breach, or a breach agreed as a ground for cancellation	The contract is void from signing (except partial cancellation under Article 313); restitution; damages may be claimed	312–314

Penalty (Articles 300 and 301)

A penalty applies only if agreed in the contract, and not in the exemption cases of Article 294 (Article 300).
The penalty for one breach, or the total penalty for several breaches, is as agreed but may not exceed 8% of the value of the breached part of the obligation. The only exception is Article 266: an inspection certificate with a wrong result caused by the inspection company’s unintentional fault, where the penalty may be up to ten times the inspection fee (Article 301).
The cap is measured against the breached part of the obligation, not the total contract value, so the contract should state how the penalty is calculated.

Damages (Articles 302–305)

Damages cover the actual, direct loss and the direct profit the injured party would have earned without the breach (Clause 2, Article 302).
Liability arises when there is a breach, actual loss, and the breach is the direct cause of the loss (Article 303). The claimant must prove the loss and its amount (Article 304) and must take reasonable steps to mitigate it; otherwise the breaching party may ask for damages to be reduced by the avoidable loss (Article 305).

Late-payment interest (Article 306)

Late payment of the price, service fees or other reasonable costs entitles the other party to interest at the average market interest rate for overdue debt at the time of payment, for the period of delay, unless otherwise agreed or provided by law. In a dispute, the court sets this rate from the average overdue-debt rate of at least 3 commercial banks with a head office, branch or transaction office in the province or city where the court sits, at the time of the first-instance trial (Article 11 of Resolution No. 01/2019/NQ-HDTP of the Council of Judges of the Supreme People’s Court). As the Law fixes no figure, the contract should set the rate.

Penalty and damages together (Articles 307 and 316)

With no agreed penalty, the injured party may only claim damages; with an agreed penalty, it may claim both the penalty and damages, unless the Law provides otherwise (Article 307). Using other remedies does not waive the right to damages (Article 316).

Suspension, stopping and cancellation (Articles 308–315)

After stopping performance, a party that has performed may demand payment or counter-performance (Article 311).
For instalment deliveries, a fundamental breach in one instalment allows cancellation of that instalment; if it gives grounds to conclude that fundamental breaches will occur in later instalments, those may be cancelled within a reasonable time (Article 313). After cancellation the parties return what they received, simultaneously; clauses on post-cancellation rights and dispute resolution survive (Article 314).
A party suspending, stopping or cancelling must notify the other party immediately, and is liable for loss caused by failing to do so (Article 315).

Exemptions and force majeure (Articles 294–296)

The breaching party is exempt where an agreed exemption event occurs, in force majeure, where the breach is entirely the other party’s fault, or where it results from a decision of a competent authority that the parties could not have known of at signing. The breaching party bears the burden of proof (Article 294).
It must notify the other party immediately in writing of the exemption event and its likely consequences, and again immediately when the event ends; failing to give (or delaying) notice that the event has ended makes it liable for damages (Article 295).
In force majeure, if the parties do not agree otherwise, the deadline is extended by the duration of the event plus a reasonable time to overcome its effects, but by no more than:

Agreed delivery or service period (from signing)	Maximum extension
12 months or less	5 months
More than 12 months	8 months

Beyond these limits, either party may refuse to perform and neither may claim damages. The refusing party must give notice within 10 days after the extension period ends, before the other party starts performing. The extension rule does not apply to contracts with a fixed delivery or completion date (Article 296).

Disputes, claim periods and limitation (Articles 317–319)

Disputes are resolved by negotiation, mediation through a mediator chosen by the parties, or by arbitration or the courts under the applicable procedural rules (Article 317).
Claim periods are as agreed; failing agreement (Article 318):

Claim	Period	Starting from
Quantity of goods	3 months	Delivery
Quality of goods	6 months	Delivery
Quality of goods under warranty	3 months	Expiry of the warranty
Other breaches	9 months	The date the obligation was due, or expiry of the warranty if there is one

The limitation period for commercial disputes is 2 years from when the lawful rights and interests are infringed (Article 319).
Commercial arbitration is governed by the Law on Commercial Arbitration No. 54/2010/QH12, as amended by Law No. 81/2025/QH15 (from 1 July 2025) and consolidated in Consolidated Text No. 60/VBHN-VPQH of 15 August 2025. The limitation period for arbitration is also 2 years from when the lawful rights and interests are infringed, unless a sector law provides otherwise (Article 33 of that Law).
Logistics services have their own rules: the logistics provider is not liable if it receives no notice of claim within 14 days of delivery to the consignee, or no notice of arbitration or court proceedings within 9 months of delivery (Points dd and e, Clause 1, Article 237). These are exceptions to Articles 318 and 319.

Other points and amendments

Commercial advertising (Section 2 of Chapter IV, Articles 102–116) was repealed from 1 January 2026 by Law No. 75/2025/QH15 and now follows the advertising legislation (Clause 2, Article 4).
Law No. 44/2019/QH14 widened the ban on promotions involving alcohol: it now covers spirits and beer of 15 degrees or more, instead of spirits of 30 degrees or more (Clause 4, Article 100).
Law No. 05/2017/QH14 repealed Clause 3 of Articles 28, 29 and 30, Articles 31 and 33, and Articles 242–247 (in the section on transit of goods) from 1 January 2018.
The Law on E-commerce No. 122/2025/QH15 does not amend the Commercial Law.
Ministry names in the Law: articles that still refer to the “Ministry of Trade” (for example Articles 8, 22 and 291) now mean the Ministry of Industry and Trade, set up in 2007 by merging the Ministry of Trade and the Ministry of Industry. The authority for each specific procedure (for example licensing representative offices and branches under Article 22) follows the implementing decrees in force.
Pending amendment: the Standing Committee of the National Assembly agreed to submit a bill amending the Commercial Law, the Law on Competition, the Law on Foreign Trade Management and the Law on Consumer Protection to the National Assembly for debate and adoption at its second session (16th National Assembly, planned for 17 October to 21 November 2026). Under the first draft (1 June 2026), it repeals from 1 March 2027 a number of provisions, including Article 24, Section 2 of Chapter II (Articles 34–62), Section 2 of Chapter III (Articles 78–87) and the whole of Chapter VII (Articles 292–319, remedies and dispute settlement); the franchising articles (Articles 284–291) are untouched. As of 14 October 2026 the bill has not been passed, so this page still follows Consolidated Text No. 113/VBHN-VPQH.

For help drafting or reviewing penalty, damages and force majeure clauses, see commercial contracts in Vietnam.

Commercial Law No. 36/2005/QH11 (English summary)