Under Vietnamese law, force majeure is an event that occurs objectively, could not have been foreseen and could not be overcome despite taking all necessary and permissible measures; a party prevented from performing by such an event is generally exempt from liability for the failure. A separate rule on fundamentally changed circumstances lets a party ask to renegotiate when performance becomes excessively burdensome, even if it is not impossible.
Floods, typhoons, epidemics, port closures and sudden regulatory changes have tested these rules repeatedly in recent years. This guide explains what each concept requires, what you must do when an event hits, and how to draft a clause that gives you more certainty than the default law.
The legal test for force majeure
The Civil Code defines force majeure through three cumulative conditions. The event must be objective, meaning it arises outside the will of the party relying on it. It must be unforeseeable at the time the contract was made. And its consequences must be impossible to overcome even though the party took all necessary and permissible measures. All three must be shown; failing any one means the event is not force majeure in the legal sense.
Natural disasters, fires not caused by the party, epidemics and some acts of state commonly satisfy the objective test. Unforeseeability is where many claims fail. A typhoon in the central provinces during the rainy season may be foreseeable in general terms, and a party who signed a contract knowing a regulation was about to change may struggle to argue surprise. The test is applied to the specific contract and the specific obligation, not to the event in the abstract.
The third limb, inability to overcome, asks whether the party did everything reasonable. A supplier whose factory flooded but who could have sourced from another factory at somewhat higher cost may not be excused. Courts and tribunals look closely at what alternatives existed and whether the party tried them.
The Commercial Law adds that force majeure is one of the grounds for exemption from liability in commercial contracts, along with cases agreed by the parties, fault of the other party and compliance with a decision of a competent authority the parties could not have known about when contracting.
Force majeure versus changed circumstances
The two concepts are often confused. They lead to different consequences and require different proof.
| Aspect | Force majeure | Fundamentally changed circumstances |
|---|---|---|
| Effect on performance | Performance prevented or made impossible for a period | Performance still possible but would cause serious loss to one party |
| Main consequence | Exemption from liability for the failure; often suspension or termination under the contract | Right to request renegotiation within a reasonable time |
| If talks fail | Contract terms on prolonged force majeure apply, often termination | Either party may ask a court to terminate or amend the contract to balance interests |
| Duty during the event | Notify, take measures to limit damage, keep evidence | Continue performing while negotiating, unless agreed otherwise |
| Typical examples | Typhoon destroying a warehouse, government ordering a total closure of a facility | Sudden, unforeseeable and extreme change in input costs or market conditions |
The changed circumstances rule was introduced in the 2015 Civil Code and is applied cautiously. Ordinary price fluctuations or a deal simply becoming less profitable are not enough; the change must be fundamental, unforeseeable and of a kind that would have led the parties to contract on very different terms.
What to do when an event hits
The legal position is decided as much by your conduct in the first weeks as by the event itself. A practical sequence:
- Identify exactly which obligations are affected and which can still be performed. Force majeure rarely excuses everything.
- Read the contract clause on force majeure and hardship, especially notice periods, required evidence and consequences.
- Send written notice to the other party promptly, describing the event, the obligations affected, the expected duration and what you are doing about it.
- Gather evidence: official announcements, weather service reports, government decisions, insurance assessments, photos, and confirmations from authorities where available.
- Take reasonable steps to limit the impact, such as alternative sourcing, rerouting shipments or partial deliveries, and record those efforts.
- Keep the other party updated at regular intervals and notify them promptly when the event ends.
- If performance becomes excessively burdensome rather than impossible, request renegotiation under the changed circumstances rule or the contract's hardship clause.
Late or vague notice is one of the most common reasons a force majeure defence fails. Even if the contract does not set a deadline, notify without delay; silence followed by a claim months later looks like an afterthought.
Epidemics, government orders and supply chains
Recent years taught businesses in Vietnam that public health measures, border closures and local lockdown orders can stop performance overnight. Whether such events count as force majeure depends on the timing and the contract. For contracts signed before an epidemic emerged, the event was usually unforeseeable. For contracts signed after authorities had already announced measures, the argument is much weaker because the risk was known.
Government orders raise a related point. A decision by a competent authority that prevents performance can be a ground for exemption, particularly if the parties could not have known about it when contracting. But a general tightening of regulations, an increase in taxes or a slower licensing process rarely qualifies. Those are ordinary business risks unless the contract allocates them differently.
Supply chain disruption sits in the middle. If your own supplier is hit by force majeure, you are not automatically excused towards your customer. You need to show that you could not reasonably source elsewhere. Contracts for critical inputs increasingly include clauses dealing specifically with supplier failure, allocation of limited stock among customers, and the right to substitute equivalent goods.
Drafting a force majeure clause that helps
The default rules are general. A well-drafted clause turns them into a procedure both sides understand in advance. Elements worth including:
- A definition that keeps the statutory test but adds a non-exhaustive list of events relevant to your business, such as typhoons, floods, epidemics, port closures and specific government actions.
- Clear exclusions, for example that lack of funds, ordinary price increases or labour disputes limited to one party's workforce do not count.
- A notice period, the method of notice and the evidence required, such as certification from a chamber of commerce or official announcements.
- A duty to mitigate and to keep the other party updated.
- Consequences: suspension of affected obligations, extension of deadlines, and a right to terminate if the event continues beyond a set period.
- A separate hardship clause for situations where performance is possible but has become excessively burdensome, with a renegotiation process and a fallback if talks fail.
- Treatment of payment obligations; many contracts state that force majeure does not excuse payment for goods already delivered.
Keep the clause consistent in both language versions. The Vietnamese terms for force majeure (su kien bat kha khang) and changed circumstances (hoan canh thay doi co ban) are well established; use them rather than inventing translations.
A hypothetical case from start to finish
Hypothetical example: a garment factory in Hung Yen has a contract to deliver 50,000 jackets to a European buyer by a fixed date. Two weeks before shipment, a severe flood damages the factory's ground floor, destroying finished goods and halting production for a month. The contract was signed in early spring, months before the rainy season, and the factory had flood protection that met local practice.
The factory sends a notice to the buyer within days, attaching photos, an assessment from its insurer and local authority announcements about the flooding. It explains that about 40% of the order was lost, proposes delivering the surviving 60% on time and the rest five weeks late, and offers to subcontract part of the work to a partner factory in another province to shorten the delay.
On these facts, the factory has a reasonable case that the flood was objective and that it took necessary measures, and its prompt notice and mitigation plan strengthen its position. The buyer, for its part, cannot simply impose the full late-delivery penalty for the flood-related delay, but it can insist on delivery of the unaffected goods and reserve its rights while the factory proves its efforts. If the delay threatened the buyer's selling season so badly that the contract's purpose failed, the buyer might look to the termination clause. Most parties in this position negotiate a revised schedule, documented in a signed amendment.
How tribunals tend to look at force majeure claims
Vietnamese courts and arbitral tribunals apply the force majeure test strictly. The party relying on it bears the burden of proof for each element. Tribunals look at the specific obligation, the timing of the event against the contract signing date, the steps taken to overcome it and the quality of the notice. General statements that "the market was difficult" or that a "crisis" occurred do not carry weight without concrete evidence linking the event to the failure.
Tribunals also check whether the event actually caused the failure. A supplier that was already late before a typhoon cannot use the typhoon to excuse earlier delays. Similarly, if a party could have performed part of its obligations, it may be expected to do so and only the impossible part will be excused.
Certificates of force majeure issued by chambers of commerce or similar bodies can support a claim, but they do not bind the tribunal. They are evidence that an event occurred, not proof that the legal test is met for your contract.
When you need a Vietnamese lawyer
Call a licensed Vietnamese lawyer as soon as an event looks likely to disrupt a significant contract, before you send your first notice. The wording of that notice can lock in or lose your position. A lawyer can check whether your facts meet the statutory test, which contract provisions apply, what evidence you should collect now and whether the changed circumstances route might suit you better than force majeure.
If you are on the receiving end of a force majeure notice, the same applies. A lawyer can help you test whether the claim is genuine, reserve your rights, propose interim arrangements and avoid accidentally accepting an extension you did not intend to grant. Many disputes in this area end in a negotiated amendment rather than a hearing, and a well-advised party negotiates from a stronger base. You can also ask a lawyer on AI Co Van for a quick first reading of the notice you received.
The rules on force majeure are stable in principle, but their application to new kinds of events keeps developing. Check the current rules and recent practice with a licensed lawyer before relying on general guidance.
Frequently asked questions
Is a typhoon automatically force majeure in Vietnam?
No. It must be objective, unforeseeable when the contract was signed and impossible to overcome despite all necessary measures. Typhoons are common in some regions and seasons, so whether one is unforeseeable depends on the contract and the circumstances.
Does force majeure excuse payment obligations?
Rarely. Force majeure excuses failures caused by the event. A lack of funds is generally not force majeure, and many contracts state that payment for goods already delivered remains due. Read your clause carefully.
What is the difference between force majeure and hardship?
Force majeure prevents performance; hardship, called fundamentally changed circumstances in Vietnamese law, makes performance excessively burdensome. Hardship gives a right to request renegotiation and, if talks fail, to ask a court to terminate or amend the contract.
How quickly must I notify the other party?
Follow the deadline in your contract. If there is none, notify promptly, because delay can undermine your claim and may make you liable for losses that earlier notice would have avoided. Put the notice in writing and keep proof of delivery.
Is a chamber of commerce certificate enough to prove force majeure?
It helps as evidence that an event occurred, but it does not bind a court or tribunal. You still need to show that the event meets the legal test for your specific obligation and that you took reasonable steps to overcome it.
Can I terminate a contract if force majeure lasts a long time?
If the contract allows termination after a set period of force majeure, yes. If it is silent, the position is less clear and may depend on whether the purpose of the contract can still be achieved. Draft a long-stop period into future contracts.