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In commercial practice, unilateral termination of a contract is an important legal right, but not an absolute one. Such termination is protected by law only when all statutory grounds and procedures are strictly complied with. Otherwise, the terminating party may be deemed in breach of contract and liable for damages.
Below are the key legal conditions for lawful unilateral termination under the Law on Commerce 2005 of Vietnam.
Unilateral termination is lawful only when it falls within the cases prescribed in Articles 310 and 312 of the Law on Commerce 2005, or when such right is clearly agreed upon by the parties in the contract.
Termination without valid statutory or contractual grounds may result in contractual liability.
The terminating party must prove a fundamental breach committed by the counterparty through lawful evidence, including:
The contract and its appendices
Delivery or acceptance records
Correspondence between the parties
Inspection or assessment reports on quality, performance or obligations
Where termination is based on contractual agreement, the relevant clause must be clear, specific, and compliant with Article 292 of the Law on Commerce 2005 regarding commercial sanctions.
Pursuant to Article 315 of the Law on Commerce 2005, the terminating party must promptly notify the other party of the termination.
Failure to notify, or delayed notification causing damage, may lead to liability for compensation, even where lawful grounds exist.
Where the contract or applicable law stipulates a notice period, compliance with such period is mandatory to ensure the legal validity of the termination.
Abuse of the right to unilateral termination occurs when termination is exercised to:
Cause damage to the counterparty
Obtain unlawful benefits
Evade one’s own contractual obligations
Such conduct may result in legal liability under commercial law.
Unilateral termination must be conducted in good faith and honesty, without misrepresentation or reliance on false grounds.
This principle ensures fairness and stability in commercial relations.
Improper termination of a commercial contract may lead to serious disputes, financial losses, and unfavorable legal consequences.
GIVLAW provides:
Review of termination clauses
Legal assessment of unilateral termination grounds
Drafting of lawful termination notices
Resolution of commercial contract disputes
Contact GIVLAW for timely legal advice and effective protection of your legitimate interests.
