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Remedies for the breach of contract

Under the integration of the world economy, Vietnam has joined the world trade organizations, economic relations have grown stronger, and many international goods sale and purchase contracts have been signed. Therefore, in order to limit risks in entering into a contract for the sale of goods, it is essential to learn about sanctions for breach of contract. The following article by Apolo Lawyers - Solicitors & Litigators (Hotline: (+84) 903 419 479) will provide customers with information about remedies for the breach of contract.


There are some legal issues that Clients should focus on when studying bout remedies for the breach of contract.

1. What is a breach of contract?

In our law system, the concept of breach of contract has not been specifically explained, however, many laws such as the Civil Code 2015 and the Commercial Law have used the term breach of contract with the understanding relatively consistent. Breach of contract means the failure of an obligee to perform an obligation on time, incomplete performance of an obligation or improper performance of the content of an obligation as agreed upon by the parties or in accordance with the provisions of the law.

2. Remedies for the breach of contract

According to Vietnamese law, there are the following sanctions for breach of contract:

2.1. Forced performance of obligations

According to Article 297.1 of the 2005 Commercial Law, the forced performance of a contract (obligation) means a remedy whereby the aggrieved party requests the breaching party to properly perform the contract or apply other measures to perform the contract and the breaching party shall have to bear any costs incurred.

Forced performance of obligations is applied when a party fails to perform or improperly performs the contract, only when damages are caused, compensation liability arises. And the penalty for breach of contract is imposed only if it is agreed upon in the contract.

This remedy aims to protect the parties and the contractual relation and ensures that the parties can get the benefit they wish to recap upon entering into the contract. With this remedy, the aggrieved party does not need to prove that he/she suffered damage, because the forced performance of obligations is simply a corollary of the binding effect of a contract.

2.2. Compensation for damage

Damage often is caused by the failure of the performance of a contract or the breach of obligations. According to Article 303 of Commercial Law 2005, there are three conditions for liability to pay damages:

  • Breach of the contract;
  • Material loss;
  • Act of breaching the contract is the direct cause of the loss.

The breaching party has a liability to compensate for damage except for cases of liability exemption as prescribed by law or agreed upon by parties. The value of damages covers the value of the material and direct loss suffered by the aggrieved party due to the breach of the breaching party and the direct profit which the aggrieved party would have earned if the such breach had not been committed.

2.3. Penalty for breach of contract

Penalty for breach of contract means a remedy whereby the aggrieved party requests the breaching party to pay an amount of penalty for its breach of a contract, if so agreed in the contract, except for cases of liability exemption specified in Article 294 of this Law. As we can see, the penalty for breach of contract is applicable only to a breach of a contractual obligation upon the availability of two grounds: (i) there is a breach of contract, and (ii) the penalty for breach is stated in the contract.

The fine level for a breach of a contractual obligation or the aggregate fine level for more than one breach shall be agreed upon in the contract by the parties but must not exceed 8% of the value of the breached contractual obligation portion, except for cases specified in Article 266 of this Law.


2.4. Unilateral termination of the contract

This is a new remedy for breach of contract under the 2015 Civil Code, according to Article 428.1 of the Civil Code “A party has the right to terminate unilaterally the performance of a contract without any compensation for damage when a party violates its obligations seriously if so agreed by the parties or so provided by law”

Where the performance of a contract is terminated unilaterally, it shall terminate from the time when the other party is notified of the termination. In such case, the parties are not required to continue to perform their obligations, except for an agreement on fines for violations, compensation for damage, and settlement of disputes. A party that has already performed its obligation may demand the other party to make payment for the performed obligation.

>>> Read more: Legal service on penalties for breach of contract

>>> Read more: Drafting a contract for the sale of goods

2.5. Cancellation of contract

According to Commercial Law 2005, cancellation of a contract includes cancellation of part of a contract or cancellation of the entire contract. Except for cases of liability exemption specified in Article 294 of this Law, the remedy of cancellation of contracts shall be applied in the following cases:

  1. Upon commission of a breaching act which serves as a condition for the cancellation of the contract as agreed upon by the parties;
  2. Upon a substantial breach of contractual obligations by a party.

Different from unilateral contract termination, the terms of validity of the contract and consequences of cancellation of the contract will make a canceled contract becomes null and void from the time of its entry.

3. How can Apolo Lawyers help our clients?

With a team of experienced and high qualification lawyers, Apolo Lawyers can help our clients with no limitations but including these tasks:

  • Consulting about the provisions of remedies for the breach of contract in detail;
  • Consulting to protect the legitimate interests and rights of clients when clients have breached the contract;
  • Drafting and reviewing contracts;
  • Participating in the dispute settlement about the breach of contract (if required).

There is an overview of the remedies for the breach of contract. Apolo Lawyers is proud to be a law firm with many years of experience in business consulting that will support clients with commercial contracts in general and contracts for the sale of goods in particular. In case you need advice related to commercial contracts, do not hesitate to contact us via email at or Hotline - (+84) 903 419 479 for the best advice and support.


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