Tiếng Việt🔍 Case Overview:
In one more commercial case (Judgment No. 296/2020/KDTM-PT issued on May 13, 2020, by the Ho Chi Minh City People’s Court), a dispute arose between Company A (Investor) and Company C (General Contractor) regarding a construction contract for the A&B Saigon Tower project.
Company A terminated the contract, citing delays and substandard construction quality, and demanded:
✅ Refund of overpaid advances: 4.3 billion VND
✅ Penalties for delay: 10.8 billion VND
✅ Compensation for damage: 5.1 billion VND
💰 Total liability: 20.58 billion VND (~$860,000)
The Defendant (Company C) appealed, arguing:
– The contract was mutually terminated, as Company A had no construction permit at the time.
– The delays were not significant, and they had rectified all alleged quality issues.
– The penalties imposed were unjustified.
⚖ Legal Analysis & Court Ruling
The court upheld the original judgment, emphasizing key legal points:
📌 Breach of contract: The contractor failed to meet deadlines, exceeding the contractual limit of 42 days for delays.
📌 Quality defects: Expert reports confirmed non-compliance with design standards, requiring costly remedial work.
📌 Penalty enforcement: The agreed penalty clause (8% of the unfulfilled contract value) was enforceable under Vietnamese law.
📌 Evidence burden: The contractor failed to provide counter-evidence proving compliance or mitigating factors.
📢 Key Takeaways for Businesses
💡 1. Contract Clauses Matter – Ensure your contract includes clear deadlines, penalties, and termination conditions to avoid disputes.
💡 2. Documentation is Key – Always maintain detailed records of project progress, approvals, and issue resolutions to defend against claims.
💡 3. Legal Compliance First – Proceeding without a construction permit weakens the investor’s position and may lead to mutual liability risks.
💡 4. Effective Dispute Resolution – Early mediation or arbitration can prevent costly litigation and preserve business relationships.
📢 Final Thought
This case serves as a critical lesson for both investors and contractors in the construction industry. Contractual non-compliance and project mismanagement can lead to severe financial consequences.
What are your thoughts on contract enforcement in construction projects?
Link PDF: https://drive.google.com/file/d/14qxk7SYKdqm8Ms_Qb56b726ZMfqNWeyF/view?usp=sharing
Should you need any legal support, don’t hesitate to reach out to our Lawyers & Associates. We are pleased to assist your legal need.
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