Summary of 05 Judgments on Distribution/Agency Contract Disputes (2)

1) Judgment No. 04/2022/KDTM-PT regarding the "dispute over a goods distribution contract" dated July 26, 2022, issued by the People's Court of Bac Lieu Province

(i) Case Content

• Disputing Parties:

  • Plaintiff: G Company Limited (Vietnam);

  • Defendant: Mr. Trieu The A (Owner of T1 Business Household).

• Factual Background: In 2020 and 2021, G Company and Mr. The A signed a distribution contract for shrimp feed, in which Mr. The A acted as a Tier-1 distributor. According to the debt reconciliation statement dated March 31, 2021, Mr. The A confirmed an outstanding debt to G Company totaling VND 851,607,000 but subsequently failed to make the payment.

• Petition Claims: G Company initiated a lawsuit requesting Mr. The A to pay the principal debt of VND 851,607,000, late payment interest of VND 111,618,846, and a contract breach penalty of VND 68,128,560.

• Defendant's Arguments: Mr. The A admitted the debt amount but refused to pay, reasoning that G Company breached its delivery obligations, failed to deduct trade discounts from the liabilities, and directly sold products to his lower-tier agents, causing damages.

(ii) Decision of the First-Instance Court

Under First-Instance Commercial Judgment No. 02/2022/KDTM-ST dated January 25, 2022, the People's Court of B City, Bac Lieu Province decided to:

• Partially accept the petition claims: Compel Mr. Trieu The A to pay G Company a total amount of VND 963,225,846 (including VND 851,607,000 in principal debt and VND 111,618,846 in late payment interest).

• Dismiss the penalty claim: Reject G Company's claim for a contract breach penalty amounting to VND 68,128,560.

(iv) Assessment of the Appellate Court (People's Court of Bac Lieu Province)

Following the first-instance judgment, both G Company (claiming additional penalties) and Mr. The A (claiming discount deductions, refusing to pay interest, etc.) filed appeals. The Appellate Trial Panel assessed that:

• Regarding G Company's penalty claim: The parties confirmed that Mr. The A only breached the obligation by delaying payment, and the Company suffered no damages. The payment terms of the contract did not contain any agreement stating that late payment would incur a penalty. Furthermore, the debt reconciliation statement dated March 31, 2021, did not record any breach penalty. Therefore, the first-instance court's dismissal of the penalty claim is fully grounded.

• Regarding Mr. The A's discount deduction claim: The debt reconciliation statement finalized on March 31, 2021, already factored in the discount deductions. At the trial, Mr. The A failed to provide evidence proving that G Company still owed outstanding discount amounts. Thus, there are no grounds to accept the defendant's appeal.

• Regarding other appeal claims of the defendant: Since Mr. The A voluntarily withdrew them during the legal proceedings, the Court terminated the trial for these parts.

(iii) Decision of the Appellate Court (People's Court of Bac Lieu Province)

Based on the aforementioned assessments, the People's Court of Bac Lieu Province decided to:

• Terminate the appellate trial for the appeal claims withdrawn by Mr. Trieu The A.

• Dismiss the appeals of both the plaintiff (G Company) and the defendant (Mr. Trieu The A).

• Uphold First-Instance Commercial Judgment No. 02/2022/KDTM-ST dated January 25, 2022, of the People's Court of B City, Bac Lieu Province. Mr. The A remains obligated to pay G Company a total amount of VND 963,225,846, and G Company's contract breach penalty claim continues to be dismissed.

2) Judgment No. 52/2022/KDTM-PT regarding the "dispute over an exclusive music product exploitation contract" dated April 19, 2022 (former date was November 12, 2021, amended under Decision No. 10/2022/QD-SCBSBA), issued by the People's Court of Hanoi City

(i) Case Content

• Disputing Parties:

  • Plaintiff: VNG Joint Stock Company (ZING);

  • Defendant: Hong An Media and Entertainment Joint Stock Company (Hong An Company).

• Factual Background:

  • In 2018, the two companies signed an Exclusive Music Product Exploitation Contract. On December 10, 2019, the parties signed subsequent addenda, under which Hong An granted ZING exclusive rights to exploit the audio recording of the song "Vi sao anh co giau" (performed by singer Huong Tram) for a 1-year term; in return, ZING supported Hong An with a promotional sponsorship package valued at VND 550 million. However, ZING discovered that this recording was being released on other platforms such as Spotify, Apple Music, and Nhaccuatui via authorization from Hong An Company, violating the exclusivity agreement between the two parties.

  • Petition Claims: ZING filed a lawsuit requesting Hong An to properly perform the contract and return the entire promotional sponsorship package of VND 550,000,000.

  • Defendant's Arguments & Counterclaims: Hong An Company argued that prior to signing the addendum, it had notified ZING that Spotify was exploiting the track and that they were requesting an IP block in Vietnam, which ZING implicitly understood and accepted. Concurrently, Hong An filed a counterclaim requesting ZING to reconcile and pay revenue-sharing amounts arising from ZING’s exploitation of this recording on Zing MP3.

(ii) Decision of the First-Instance Court

Under First-Instance Commercial Judgment No. 20/2021/KDTM-ST dated October 28, 2021, the People's Court of Hoan Kiếm District decided to:

• Accept ZING's petition claims: Compel Hong An Company to properly perform the signed contract and return the entire promotional sponsorship package of VND 550,000,000 to ZING.

• Accept Hong An's counterclaims: Compel ZING to conduct revenue reconciliation and pay revenue-sharing amounts to Hong An for exploiting the recording on Zing MP3 during the period from December 10, 2019, to November 18, 2020.

(iv) Assessment of the Appellate Court (People's Court of Hanoi City)

Following Hong An Company's appeal, the Appellate Trial Panel assessed that:

• Regarding the exclusivity breach: Hong An Company breached the agreement by failing to guarantee exclusive exploitation rights for ZING and allowing third parties to distribute the recording instead. Hong An's argument that ZING had implicitly accepted Spotify's distribution is groundless, as neither the contract nor its addenda contained any clause indicating such acceptance.

• Regarding the request to apply the 8% penalty cap: The contract addendum clearly stipulated: if Hong An commits a breach, it is responsible for returning the entire corresponding sponsorship package of VND 550,000,000. This is an obligation to return property due to a contract breach (under the Civil Code), not a contractual breach penalty mechanism. Since the two parties had no agreement on a "breach penalty," Hong An's appeal requesting the application of a penalty cap not exceeding 8% under the Commercial Law is groundless.

(iii) Decision of the Appellate Court (People's Court of Hanoi City)

Based on the assessments above, the People's Court of Hanoi City decided to:

• Dismiss the appeal of Hong An Company.

• Uphold First-Instance Commercial Judgment No. 20/2021/KDTM-ST dated October 28, 2021, of the People's Court of Hoan Kiem District, Hanoi City. Specifically, Hong An Company must still return VND 550,000,000 to ZING, and ZING must still fulfill its revenue-sharing obligations for the exploitation of the recording to Hong An.

3) Judgment No. 510/2019/KDTM-PT regarding the "dispute over a distribution contract" dated June 3, 2019 (former date was November 12, 2021, amended under Decision No. 10/2022/QD-SCBSBA), issued by the People's Court of Ho Chi Minh City

(i) Case Content

• Disputing Parties: The Plaintiff is TKXD 6 Company Limited (Company No. 6) and the Defendant is TUV Trading Manufacturing Joint Stock Company (TUV Company).

• Factual Background: On March 30, 2016, the two parties signed a Distribution Contract, whereby Company No. 6 acted as the distributor of TUV Company's milk products in Ca Mau Province, with an inventory target equal to at least 50% of monthly sales. On September 1, 2016, TUV Company issued a notice to unilaterally liquidate the contract, claiming that Company No. 6 failed to meet the inventory requirement (holding only 15.3 cartons in stock).

• Arising Dispute: Upon receiving the notice, Company No. 6 recalled unsold milk stock from retail shops (retail agents) back to its warehouse and sent official dispatches 5 times requesting TUV Company to finalize the inventory quantity (totaling 146.46 cartons) to reclaim the goods, but TUV Company neither responded nor cooperated.

• Petition Claims: Company No. 6 sued to demand TUV Company to pay 1 month of remuneration (VND 10,879,332), compel TUV Company to take back 71.83 cartons of milk (a reduced quantity compared to the initial figure), and refund the equivalent amount of VND 209,617,271. TUV Company refused to take back the goods collected from retail shops, claiming it was unrelated to them, and only agreed to pay the remuneration amount.

(ii) Decision of the First-Instance Court

Under First-Instance Judgment No. 67/2018/KDTM-ST dated November 2, 2018, the People's Court of Binh Tan District decided to:

• Partially accept the petition claims of Company No. 6.

• Compel TUV Company to pay 1 month of remuneration amounting to VND 10,879,332.

• Compel TUV Company to take back 15.3 cartons of milk and refund Company No. 6 the amount of VND 48,109,696.

(iv) Assessment of the Appellate Court (People's Court of Ho Chi Minh City)

After the first-instance judgment was appealed by both parties, the Appellate Trial Panel assessed that:

• Regarding the unilateral contract termination: The contract did not stipulate a minimum monthly purchase volume. TUV Company's arbitrary reliance on the 15.3 cartons to claim that Company No. 6 breached the inventory target and subsequently terminate the contract unilaterally was groundless, violating both the agreement and legal regulations. The first-instance court's order for TUV to pay 1 month of remuneration was correct.

• Regarding the return of unsold inventory: TUV Company received 5 official dispatches requesting an inventory finalization but failed to respond or cooperate in the liquidation. The first-instance court's decision to only compel the defendant to take back 15.3 cartons (which was merely the quantity locked in the warehouse prior to liquidation, excluding the milk collected back from retail shops) was improper and disadvantageous to the plaintiff. Since TUV Company was the at-fault party in unilaterally terminating the contract, the Appellate Court found grounds to compel the defendant to take back all 71.83 cartons of milk (consisting of 15.3 cartons at the warehouse and 56.53 cartons recalled from retail shops).

(iii) Decision of the Appellate Court (People's Court of Ho Chi Minh City)

Based on the aforementioned assessments, the People's Court of Ho Chi Minh City decided to:

• Accept the appeal of the plaintiff (Company No. 6) and dismiss the appeal of the defendant (TUV Company). Partially amend the first-instance judgment.

• Compel TUV Company to pay 1 month of remuneration of VND 10,879,332 to Company No. 6.

• Compel TUV Company to take back 71.83 cartons of milk from Company No. 6 and refund the equivalent amount of VND 209,617,000.

4) Judgment No. 29/KDTM-ST regarding the "dispute over an agency contract" dated October 25, 2018, issued by the People's Court of Hai Chau District, Da Nang City

(i) Case Content

• Disputing Parties: The Plaintiff is T Company Limited and the Defendant is Mr. Ho Van X (Owner of Ho Van X Business Household).

• Factual Background: On March 1, 2017, T Company and Mr. X signed an Agency Contract, whereby Mr. X acted as a distribution agent for T Company's products. According to a working minutes dated April 12, 2017, as of April 10, 2017, Mr. X owed T Company an amount of VND 965,855,503. T Company accommodated Mr. X by allowing him to continue selling goods to gradually repay the debt, but Mr. X failed to meet sales targets and did not settle the debt as committed. Consequently, on August 1, 2017, T Company notified him of the termination of the agency contract. On September 6, 2017, both parties finalized the outstanding liabilities as of August 31, 2017, at VND 944,924,936.

• Petition Claims: T Company filed a lawsuit to compel Mr. X to pay the principal debt of VND 944,924,936 and interest accrued up to the trial date (October 25, 2018) of VND 108,731,088. The total requested payment amount is VND 1,053,656,024.

• Defendant's Arguments: Mr. X admitted the aforementioned principal debt and confirmed the liability finalization with T Company. However, he stated that the reason for such a large debt was that his sub-buyers purchased the goods but refused to pay him. Due to financial hardship, Mr. X requested to make monthly installment payments of VND 3,000,000 until the debt is cleared.

(ii) Assessment of the Court (First-Instance)

• Regarding the principal debt: Based on Mr. X's admission and the "liability confirmation statement dated September 6, 2017" provided by T Company, the Court determined there are sufficient grounds to affirm that Mr. X owes the money. T Company's claim to recover the principal debt is well-founded, compliant with Clause 4 of Article 172 and Clause 4 of Article 175 of the Commercial Law, and is therefore accepted by the Court.

• Regarding the interest claim: T Company's request to compel interest payment (VND 108,731,088) complies with Article 306 of the Commercial Law and is also accepted by the Court.

(iii) Decision of the Court (First-Instance)

From the above assessments, the People's Court of Hai Chau District decided to:

• Accept the petition claims regarding the agency contract dispute filed by T Company Limited.

• Compel Mr. Ho Van X to pay T Company Limited a total amount of VND 1,053,656,024 (which includes VND 944,924,936 in principal debt and VND 108,731,088 in interest).

• From the date T Company submits an application for judgment enforcement, if Mr. X fails to pay, he will be subject to additional overdue interest on a monthly basis.

• Mr. Ho Van X must bear the first-instance commercial court fee of VND 43,609,680.

5) Judgment No. 27/2026/KDTM-PT regarding the "dispute over a distribution contract" dated January 19, 2026, issued by the People's Court of Ho Chi Minh City

(i) Case Content

• Disputing Parties: The Plaintiff is X Company Limited and the Defendant is C Company Limited.

• Factual Background: The two parties entered into an Appointed Distributor Agreement in 2016 (subsequently extended to 2021) and a Distributor Agreement in 2021. On January 1, 2023, C Company sent a notice to X Company’s customers stating that X Company was no longer the distribution representative for the brand's Infection Control product line (sterilizers, medical supplies, etc.). On August 1, 2023, C Company notified the termination of all contracts with X Company, effective from December 31, 2023.

• Petition Claims: X Company sued to demand C Company to take back 09 equipment systems (GS8-1D, GS8-2D) that were left in stock and unsellable, and to refund the purchase amount of VND 15,231,630,388 (value adjusted at the first-instance trial). Additionally, X Company requested damages for contract breach amounting to VND 1,667,931,031.

• Defendant's Arguments: C Company rejected all claims, arguing that the nature of the contract was a contract for the sale of goods (outright purchase and sale). Once X Company completed the purchase, ownership title was transferred; therefore, C Company had no obligation to take back unsold inventory or refund money.

(ii) Decision of the First-Instance Court

Under First-Instance Civil Judgment No. 10/2025/KDTM-ST dated August 15, 2025, the Regional 6 People's Court - Ho Chi Minh City decided to:

• Partially accept the petition claims: Compel C Company to take back 09 equipment systems and refund X Company the amount of VND 15,231,630,388.

• Dismiss the claim compelling C Company to pay damages of VND 1,667,931,031.

• Terminate the claim regarding taking back 01 auxiliary machine 50AN.

(iv) Assessment of the Appellate Court (People's Court of Ho Chi Minh City)

Following a protest from the Procuracy and an appeal from the defendant, the Appellate Trial Panel assessed that:

• Regarding the nature of the contract: The contract between the two parties was inherently a conditional goods sale contract rather than a commercial agency contract. The Appellate Court accepted the arguments in the appeal and protest regarding this matter, holding that the first-instance court's identification of the dispute relationship as a "distribution contract" was inaccurate.

• Regarding the request to return unsold inventory: The 09 equipment systems are medical equipment exclusively manufactured by C Company, falling under conditional business goods and cannot be widely consumed on the market. When the contract was terminated, X Company ceased to be the distribution representative, leading to the inability to continue trading this inventory due to failing to meet the constraints specified in the contract. Therefore, the first-instance court's order compelling the defendant (C Company) to take back the machines and refund the money was fully grounded and legally compliant.

(iii) Decision of the Appellate Court (People's Court of Ho Chi Minh City)

Based on the aforementioned assessments, the People's Court of Ho Chi Minh City decided to:

1. Partially accept the protest of the Regional 6 People's Procuracy and a part of C Company's appeal regarding re-identifying the dispute relationship as a goods sale contract.

2. Uphold First-Instance Civil Judgment No. 10/2025/KDTM-ST dated August 15, 2025.

3. Specifically, compel C Company to take back 09 equipment systems and refund VND 15,231,630,388 to X Company; Reject the claim for damages of VND 1,667,931,031; Terminate the claim regarding 01 auxiliary machine 50AN.