Summary of Judgments on Disputes Arising from Sale of Goods Contracts with Foreign Elements

I. Disputes Arising from Sale of Goods Contracts via Purchase Orders: Lessons from Judgment No. 38/2025/KDTM-PT

1. Overview of the dispute:

• Judgment No.: 38/2025/KDTM-PT

• Adjudicating body: High People’s Court in Ho Chi Minh City;

• Disputed legal relationship: Dispute arising from a sale of goods contract;

• Outcome: The appeal was dismissed; the Defendant was ordered to pay the full amount of VND 2,668,203,619 together with statutory post-judgment interest for delayed judgment enforcement.

2. Contract conclusion process and origin of outstanding receivables

From October 2015 to October 2016, the two parties established a commercial relationship concerning aluminum powder, aluminum paste, and paint products:

• Form of execution: Carried out entirely through separate, individual purchase orders without executing a framework sale and purchase agreement.

• Payment terms: Deferred payment agreed within 180 days from the issuance date of the Bill of Lading.

• Delivery obligations & Debts: The Plaintiff fulfilled the delivery of 05 orders with an aggregate value of USD 160,178.40. The Defendant made partial payments of only USD 42,714, leaving a prolonged outstanding debt of USD 117,464.40.

3. Arguments and positions of the parties before the Court

• Plaintiff: Requested the Court to compel the Defendant to pay the entire principal debt of VND 2,668,203,619 (equivalent to USD 117,464.40 converted at the time of filing the lawsuit). The evidentiary foundation consisted of an unbroken paper trail: Purchase Orders, ocean bills of lading, and a written request for debt extension dated 28/12/2017 issued by the Defendant itself.

• Defendant: Denied the payment obligation, arguing that the relationship between the parties was a commission-based distribution agency rather than an outright sale-and-purchase relationship. Furthermore, the Defendant cited grounds that the goods were unsuitable for the domestic market, expired, and that the debt reconciliation statement lacked mutual signatures.

4. Court judgment and legal findings

The Trial Panel of the High People’s Court in Ho Chi Minh City dismissed the Defendant's entire appeal and upheld the first-instance judgment based on three key grounds:

• Validity of contracts concluded via purchase orders: Pursuant to Articles 24, 50, and 306 of the Commercial Law and Article 117 of the Civil Code, a sale of goods contract is legally established through an offer to enter into a contract (PO) and subsequent performance actions (delivering goods, accepting transport documents).

• Evidentiary value of the debt extension request: The document dated 28/12/2017 dispatched directly by the Defendant constituted a unilateral yet legally binding admission of the USD 117,464.40 debt, rebutting the defense that the relationship was merely a commission-based agency.

• Burden of proof: The Defendant failed to present a valid commercial agency contract, statutory commission policies, or any disposal/destruction minutes confirmed by the Plaintiff.

II. Unilateral Termination of International Equipment Sale Contracts: Lessons from Judgment No. 10/2025/KDTM-PT

1. Overview of the dispute:

• Judgment No.: 10/2025/KDTM-PT

• Adjudicating body: High People’s Court in Da Nang City;

• Disputed legal relationship: Dispute arising from a sale of goods contract;

• Outcome: The Defendant's appeal was dismissed.

2. Summary of factual background and emerging dispute

• Principle Contract: On 10/05/2021, the parties entered into Sale and Purchase Contract No. 05/2021/HDMB/PLKH-VBHC for the supply of hydropower electromechanical equipment valued at USD 2,162,400, payable via an irrevocable Letter of Credit (L/C) through Bank N1.

• Breach regarding Shipment Phase 2 (valued at USD 426,500):

  • The Plaintiff advanced 40% of the value (equivalent to USD 170,600).

  • The agreed delivery deadline was 10/01/2022; however, the Defendant delayed delivery by more than one year (delivering the goods to the border gate only on 13/02/2023).

  • The shipment lacked equipment manifests, technical design drawings, and manufacturing drawings, making it impossible for the Plaintiff to conduct acceptance inspections.

• Decision to terminate & Lawsuit: After several unsuccessful extension attempts, on 26/01/2024, the buyer served a notice of unilateral contract termination, refused Phase 2 goods, demanded the refund of USD 170,600, and requested the cancellation of the L/C. The Defendant counterclaimed, demanding the payment of the subsequent 35% of the shipment value and the maintenance of the L/C.

3. Key legal findings of the Appellate Panel

a. Unenforceable arbitration agreement and jurisdiction of the Court

The dispute resolution clause designated "Room T1" to administer arbitration under the UNCITRAL Arbitration Rules. However, upon verification, this entity possessed no legal standing as an arbitral institution. Pursuant to Article 6 of the 2010 Law on Commercial Arbitration and guidelines in Resolution No. 01/2014/NQ-HDTP, this constituted an unenforceable arbitration agreement. Consequently, jurisdiction reverted to the People’s Court under civil procedure law.

b. Legal grounds for unilateral contract termination

• Delivery obligation: Under Article 434, Clause 1 of the 2015 Civil Code, the seller must deliver the property at the agreed time. A delay exceeding 12 months constitutes a fundamental breach of contract.

• Right of termination: Under Article 428 of the 2015 Civil Code, the aggrieved party is entitled to unilaterally terminate the contract without compensation where the other party has committed a severe breach of its undertakings.

c. Condition of the goods and exemption from quality inspection obligations

On-site inspection results revealed that prolonged storage at the yard caused severe rusting, and 13 out of 32 load-bearing stiffener ribs had been cut contrary to specifications, completely rendering them unfit for installation. The Court determined that the contractual failure arose from the Defendant's delayed delivery and missing technical dossiers; therefore, formal quality appraisal requested by the seller was unnecessary.

The international letter of credit was issued on the underlying sale contract. Upon lawful termination of the underlying contract, the validity of the L/C at the issuing bank terminated accordingly.

4. Judgment of the Court:

The Court dismissed the Defendant's entire appeal and counterclaims and upheld the first-instance judgment:

• Declared the termination of Contract No. 05 and the termination of the L/C's validity.

• Compelled the Defendant to take back the entire Shipment Phase 2.

• Compelled the Defendant to refund USD 170,600 (equivalent to VND 4,151,721,600) to the Plaintiff.

III. Contract Cancellation Due to Delayed Delivery Arranged via Email and Purchase Orders: Legal Lessons from Judgment No. 25/2023/KDTM-PT

1. Overview of the dispute:

• Judgment No.: 25/2023/KDTM-PT

• Adjudicating body: High People’s Court in Ho Chi Minh City;

• Disputed legal relationship: Dispute arising from a sale of goods contract;

• Outcome: The Defendant's appeal was dismissed.

2. Contract execution and actual dispute

• Establishment of transaction: In late November 2020, the parties agreed on the purchase and sale of 32,000 boxes of Vinaglove powder-free Nitrile examination gloves through email exchanges and Purchase Order No. PO-2020/214 (INV2411). The total order value reached USD 249,600, with delivery scheduled within 10 days from the deposit payment date.

• Payment performance & Actual delivery:

  • The Plaintiff made a 100% advance payment (USD 249,600) across two bank transfers.

  • The Defendant delivered only 22,750 boxes (2,275 cartons), leaving 9,250 boxes (925 cartons) undelivered, valued at USD 72,150.

• Dispute arose: The Defendant continuously defaulted for more than five months, citing the impacts of the COVID-19 pandemic and supplier delays. On 30/04/2021, the buyer emailed formal notice canceling the undelivered portion of the purchase order and filed a lawsuit demanding a refund plus late payment interest.

3. Analysis of the Court’s key legal findings

a. Legal validity of contracts formed via Email and Purchase Orders (PO)

Although no traditional formal contract was signed, the electronic data messages (commercial emails, PO) established mutual consent regarding subject matter, quantity, unit price, payment terms, and delivery schedules. Under the Law on Electronic Transactions and the Commercial Law, this transaction was legally binding.

b. Delayed delivery constituting a "Fundamental breach of contractual obligations"

The delivery deadline was set at 10 days from deposit receipt. Delaying the remaining delivery for more than five months deprived the buyer of the contractual benefits it was legitimately entitled to expect:

• Applicable basis: Point b, Clause 4, Article 312 and Article 313 of the 2005 Commercial Law.

• Rejection of force majeure (pandemic): The Defendant failed to produce lawful evidence showing that pandemic disruptions directly prevented delivery, and the buyer never consented to an extension.

c. Grounds for contract cancellation and application of Judicial Precedent No. 09/2016/AL

The Panel affirmed that the buyer's unilateral notice of partial cancellation was fully compliant with the law. Pursuant to Precedent No. 09/2016/AL of the Council of Justices of the Supreme People’s Court:

• The parties are relieved from further performance regarding the canceled portion.

• The defaulting party is obliged to refund the payment received corresponding to the undelivered goods.

d. Acceptance of interest for delayed refund under Article 306 of the Commercial Law

The seller's delay in refunding USD 72,150 infringed upon the buyer’s right to use its capital:

• The Plaintiff claimed an interest rate of 6.85% per annum (equivalent to VND 200,000,000).

• This rate was lower than the average overdue debt interest rate collected by the Court from three local commercial banks (equivalent to VND 203,003,928); hence, it was grounded and favorable to the defaulting party, leading to its acceptance by the Court.

4. Judgment of the Appellate Court:

The Appellate Court dismissed the seller's appeal and upheld the first-instance judgment, ordering the Defendant to pay a total of VND 1,877,487,500 (comprising principal debt and accrued interest).

IV. IT Software Sale Contract Disputes: Accrual Date of Late Payment Interest from Judgment No. 288/2018/KDTM-PT

1. Overview of the dispute:

• Judgment No.: 288/2018/KDTM-PT (Corrected from the typographical numbering in the source text)

• Adjudicating body: High People’s Court in Hanoi;

• Disputed legal relationship: Dispute arising from a sale of goods contract;

• Outcome: The Defendant's appeal was dismissed.

2. Contract execution and origin of outstanding debts

• Transaction establishment: On 18/02/2013, Company C sent a PO via email to supplier Company M to procure software, digital signature authentication/encryption hardware, and related technical services for resale to the ICT Development Project Management Board (under the Ministry of Information and Communications - MIC).

• Contract value and payment conditions:

  • Total order value: USD 227,618.

  • Payment term: 100% via wire transfer immediately upon acceptance by the end-user.

• Acceptance and debt status:

  • All software, equipment, and services were fully delivered. On 27/12/2013, the Project Management Board (MIC) and the relevant entities signed the Final Acceptance Protocol, confirming complete acceptance.

  • Despite end-user sign-off, the Defendant delayed settlement, making only two small payments: USD 50,000 (16/02/2015) and USD 2,618 (05/02/2016).

  • The remaining principal debt of USD 175,000 was acknowledged multiple times by the Defendant in debt confirmation minutes, but remained unpaid.

3. Analysis of the legal findings of the Appellate Court

a. Legal effect of email purchase orders and acceptance minutes

The Court held that the PO transmitted by email manifested full commercial agreement and carried equal binding effect to a written contract. Once the supplier delivered the goods and the end-user executed the final acceptance minutes on 27/12/2013, the payment condition was triggered. The Defendant possessed no legal grounds to withhold or defer payment.

b. Determination of the accrual date for late payment interest

The focal issue lay in the Defendant’s appeal requesting that interest accrue only from 29/03/2016 (the date of signing the debt agreement) and disclaiming interest on previously paid sums. The Appellate Panel held:

• Statutory payment accrual milestone: Per original agreement, the payment obligation arose "immediately after end-user acceptance." Under applicable law, interest accrued immediately following the acceptance date (after 27/12/2013).

• Assessment of the first-instance ruling: The trial court had calculated interest starting only from 12/12/2014 (the date the seller issued the official commercial invoice demanding payment). This determination had already reduced the buyer’s interest burden to the Defendant's benefit.

• Statutory grounds: Under Article 305 of the Civil Code concerning liability for delayed monetary performance, the Defendant's appeal seeking to postpone the interest accrual date to 2016 was completely unfounded.

4. Judgment of the Appellate Court:

The Appellate Court dismissed the Defendant's entire appeal and upheld the first-instance judgment: Compelled Company C to pay the principal debt of USD 175,000 and overdue interest equivalent to VND 863,238,000.

V. Improper Power of Attorney to Appeal and the Lesson of Appellate Termination: From Judgment No. 191/2017/KDTM-PT

1. Overview of the dispute:

• Judgment No.: 191/2017/KDTM-PT

• Adjudicating body: High People’s Court in Hanoi;

• Disputed legal relationship: Dispute arising from a sale of goods contract;

• Outcome: The Defendant's appeal was dismissed / Appellate proceedings were terminated.

In commercial litigation, particularly in cases involving foreign legal entities, authorizing representatives in Vietnam to participate in legal proceedings is common practice. However, the legal threshold between "authorization to participate in proceedings" and "authorization to lodge an appeal" is strictly applied. If the power of attorney fails to explicitly state the authority to appeal, an enterprise may forfeit its right to have the judgment reviewed on appeal.

2. Contract execution and defective goods dispute

• Execution of transaction: On 08/06/2012, Company PP executed Sale Contract No. J with Company B (South Korea) for the purchase of 1,000 metric tons (+/- 10%) of waste paper at a unit price of USD 235/MT CIF Hai Phong port. The contract stipulated a maximum allowable moisture content of 12%.

• Quality breach & Actual damage:

  • The seller delivered 02 shipments (Lot 1: 20 containers; Lot 2: 24 containers).

  • Upon discharge, the paper was found severely wet. Inspection by Vinacontrol Hanoi certified that: in Lot 1, 15/20 containers exceeded moisture limits (a shortfall of 68.151 MT); in Lot 2, 23/24 containers exceeded moisture limits (a shortfall of 61.576 MT).

  • Total damages arising from net weight loss and independent inspection costs amounted to USD 32,489.69.

• First-instance judgment: The People’s Court of Hanoi accepted the Plaintiff’s claims, froze the L/C payment account, and ordered the South Korean seller to pay USD 30,485.85 in damages along with VND 41,840,000 in inspection fees. The authorized representative of the Defendant (Mr. Hoang Ngoc P) signed an appeal against the entire judgment.

3. Key legal findings of the Appellate Court

a. Requirements for authorization to appeal under the Civil Procedure Code

Examining the Powers of Attorney dated 27/01/2015 and 15/10/2015 executed by the legal representative of Company B (consularly legalized), the Appellate Panel highlighted:

• The scope of authorization was confined strictly to: participating in proceedings, submitting evidence, attending court hearings, and signing procedural minutes.

• The instruments contained no provision granting Mr. Hoang Ngoc P the specific authority to lodge an appeal against the first-instance judgment.

b. Legal provisions governing the representative’s right to appeal

Pursuant to Resolution No. 06/2012/NQ-HDTP and Article 272 of the 2015 Civil Procedure Code: An authorized representative possesses the right to appeal only if such authority is expressly and specifically recorded in the power of attorney.

A broad formulation such as "full authority to represent and resolve the case" does not automatically confer the right to file an appeal absent express empowerment. Consequently, the notice of appeal executed by Mr. P was unlawful due to lack of competence.

4. Judgment of the Appellate Court:

Pursuant to Point d, Clause 1, Article 289 of the 2015 Civil Procedure Code, the High People’s Court in Hanoi ruled:

• Terminated the appellate proceedings of the commercial case.

• First-instance Judgment No. 47/2015/KDTM-ST of the People’s Court of Hanoi took legal effect from the date of the ruling. The interim injunctive relief was released, permitting the buyer to recover the awarded compensation from the L/C.