Judgment on Website Design Contract Dispute

June 29, 2025 | Guidelines, Litigation in Vietnam

In the age of technology, as sales through e-commerce channels are booming, contracts for designing websites and mobile applications (apps) have become more prevalent than ever. However, this has been accompanied by an increase in disputes arising from these contracts. In this article, DB Legal will analyze a typical case – Judgment No. 32/2022/KDTM-PT – to provide valuable legal lessons on the rights and obligations of the parties when a contract is not executed. Let's delve into the case to draw important experiences to protect your business's interests.

1. Case Summary:

The case is a "Dispute over a software, application, and website design contract" between the Plaintiff, Company A (the Client), and the Defendant, Company B (the Developer).

a. Initial Agreement: On July 15, 2021, the two parties signed Economic Contract No. XXX/TNAPP-HĐKT/TNACV.

b. Scope of Work: Company B would design and program a complete software system (CMS, iOS/Android App, Website) for Company A.

c. Total Contract Value: 883,122,000 VND.

d. Timeline Commitment: To be completed within 208 days, of which the system for business operations had to be finished in 150 days.

e. Actual Execution: Company A paid 441,561,200 VND (equivalent to 50% of the contract value). According to the agreement, with this amount, Company B was required to complete 90% of the system. Additionally, Company A transferred an extra 94,776,000 VND for Company B to rent a server for 2 years.

2. Arguments and Demands of the Parties

A. Plaintiff's Side (Company A - The Development Client):

a. Defendant's Breach: Company B received 50% of the payment but failed to deliver any product, not even a demo, which was a serious breach of commitment.

b. Poor Capability: Despite multiple requests, Company B could not prove the progress of the work performed.

c. Lawsuit Demand: Initially, Company A requested to terminate the contract and demanded a full refund of the amount paid. However, at the first-instance court, as a gesture of goodwill, Company A only requested that Company B refund 80% of the total amount received, equivalent to 429,069,760 VND.

B. Defendant's Side (Company B - The Hired Developer):

a. Reasoning: Claimed that Company A violated the payment schedule and had sent an email requesting to "temporarily suspend the contract." Argument: The fact that Company A made payments in installments was evidence that Company B had completed the corresponding work. Demand: To dismiss all of Company A's claims.

3. The Court's Verdict:

Both the first-instance and appellate courts sided with the Plaintiff.

First-Instance Court's Findings:

- Clear Breach: The court determined that Company B had seriously breached its contractual obligations.

- No Product: During an inspection with the Department of Information and Communications, Company B could not provide any product as evidence.

- Notably, at the trial, Company B's representative admitted to having subcontracted to a third party that failed to produce the product, and Company B accepted responsibility.

- Decision: Ordered Company B to refund Company A the amount of 429,069,760 VND.

Appellate Court's Findings:

- Contradictory Testimony: Company B appealed, presenting a new argument that "the product had been accepted via email and was being used for business by the plaintiff."

- The trial panel found this testimony completely contradicted the admission of failure at the first-instance court.

- Upholding the Original Judgment: Company B's new argument lacked evidence and was rejected.

- The appellate court upheld the first-instance judgment.

- Final Decision: The appeal was not accepted; Company B was ordered to pay 429,069,760 VND and bear the court fees.

4. Conclusion from DB Legal:

From the above case, it can be seen that parties to a website design contract need to pay special attention to clearly defining their rights and obligations. This is a crucial factor in limiting complex disputes later on.

The key point lies in the nature of the work: although the final product (website, application) is tangible, the entire creative and programming process preceding it is intangible. This makes it extremely difficult to measure the volume of work performed by the service provider, especially when a dispute arises. In such cases, accurately determining the completed portion of work often requires the involvement of expert assessors, leading to high dispute resolution costs.

The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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