What is a framework agreement in Vietnam?

00:45, 12/07/2024

During the transaction process, all changes are adjusted by a framework agreement, and the framework agreement serves as the basis for the parties to enter into an official economic contract.

Latest framework agreement templates in Vietnam

The framework agreement is a type of contract that demonstrates the agreement between parties regarding the sale of goods or the provision of any service. However, the signing of a framework agreement is merely directional and can evolve.

The framework agreement basically shares similarities with an economic contract, but the two can be differentiated based on the following criteria:

Comparison	Criteria	Framework agreement	Economic Contract
Similarities	Legal value	Both have legal value in commercial, corporate, civil transactions, etc.
	Content	The agreement of the parties regarding rights and obligations, work content,... on a voluntary and equal basis, complying with legal regulations.
	Form	In writing. Signed and sealed by the parties.
Differences	Purpose	Defines only general matters and is often seen as a framework agreement or a memorandum of understanding between the parties.	Defines more specific and detailed matters that the parties are obligated to perform.
	Naming	Principle Agreement; Sales framework agreement; Agency framework agreement, etc.	Purchase Agreement, Goods Sale Contract, Loan Agreement, Power of Attorney, etc.
	Agreement in the contract	Signing a framework agreement is directional, with further detailed issues to be discussed by the parties later. Hence, based on the framework agreement, the parties can proceed to sign an official economic contract or just add annexes to the framework agreement.	Signing an economic contract is compulsory, with clearer binding and benefits for the parties.
	Dispute resolution capability	The framework agreement covers only general issues, so in case of a dispute, it is very difficult to resolve, especially when the parties fail to fulfill their rights and obligations.	The economic contract is more clearly defined, making dispute resolution easier.
	Signing time	Generally fixed at the beginning of each year. If changes occur in subsequent years, the parties only need to sign an annex. The framework agreement is valid over time and is not dependent on the number of transactions/orders arising during its effective period.	Arises when there is a need for transactions between the parties; the duration of the economic contract is thus shorter; the economic contract terminates with each transaction/order upon the fulfillment of responsibilities and/or signing of a contract liquidation record by the parties.
	Applicable subjects	Companies geographically distant in the same region/nation; companies with frequent, continuous transactions.	Companies with infrequent transactions; high-value transactions; specific transactions requiring detailed responsibilities of the parties.

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- This translation is generated by OpenAI's GPT-4o model;
- The legal regulations in this article are according to Vietnamese Law;
- This English translation is for reference purposes only and not a definitive translation of the original Vietnamese texts;
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