Conditions for signing contract in Vietnam

Conditions for signing contract in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Type of contract with contractor in Vietnam

Types of contracts with contractors in Vietnam according to Article 62 of the Law on Bidding 2013 are as follows:

(1) Lump-sum contract:

- Lump-sum contract means contract with fixed price during performance for all work contents in contract. Payment for lump-sum contract shall be performed many times during implementation or once upon finishing contract. Total amounts paid to contractor until finishing obligations under contract shall be equal to the price stated in contract;

- When applying the lump-sum contract, prices of packages as the basis for consideration for recommendation as the winning bidder must include expenses associated with risk elements which may happen during the course of implementation of contract, reserve expenses associated with slippage in price.

Bid Price must include all expenses associated with risk elements and expenses associated with slippage in price which may happen during the course of implementation of contract;

- Lump-sum contract is type of basic contract. When deciding on application of contract types defined at Clause 2 and Clause 3 of this Article, the person approving the plan on bidder selection must ensure that such contract types are more appropriate than lump-sum contract.

For packages of simple consulting service provision, and non-consulting service provision; packages for goods procurement, works, mixed packages with small scale must apply form of lump-sum contract;

- For packages of works, during the course of negotiating and finalizing contract, the relevant parties need review the table of work volume under the approved design;

If the bidder or the Procuring Entity detects that the tables of work quantity and volume are not exact in comparison with design, the Procuring Entity shall report to the investor for consideration to decide on adjustment of the work volume in order to ensure the conformity with design;

- When applying the lump-sum contract, the investor for project, the Procuring Entity for recurrent procurement, the centralized procurement units or units with need of procurement for the centralized procurement shall be responsible for the accuracy of work quantity and volume.

In case of using consulting bidder to make dossier of design, Bid, Request for Proposals, in contract between investor, Procuring Entity, centralized procurement unit or unit which has need of procurement with the consulting bidder must have provisions on responsibilities of parties in handling or compensation in case of calculating wrongly the work quantity and volume.

(2) Unit price contract:

Unit price contract means contract with unit price not changeable during performance of all work contents in contract. The contractor will be paid according to the practical work quantity and volume which are tested for acceptance as prescribed on the basis of the fixed unit price in contract.

(3) Adjustable unit rate contract:

Adjustable unit rate contract means contract with changeable unit price based on agreements in contract for all work contents in contract. The contractor will be paid according to the practical work quantity and volume which are tested for acceptance as prescribed on the basis of the unit price in contract or the modified unit price.

(4) Time-based contract:

Time-based contract means contract which is applied to packages providing consulting service. The Contract Price is calculated on the basis of working time according to month, week, day, hour and costs other than remuneration.

The contractor will be paid according to the practical working time on the basis of remuneration corresponding to the title and work stated in contract.

2. Conditions for signing contract in Vietnam

Conditions for signing contract in Vietnam under Article 64 of the Law on Bidding 2013 are as follows:

- At time of signing, the Bid or Proposal of the selected bidder is still valid.

- At time of signing, the selected bidder must ensure to meet requirements on technical and financial capability for implementation of the package.

In necessary case, the investor for a project, the Procuring Entity for recurrent procurement, the centralized procurement unit or unit with need of procurement for the centralized procurement may conduct verification of information on capability of bidder, if the bidder still satisfies requirements for performance of package, parties will sign contract.

- The investor for a project, the Procuring Entity for recurrent procurement, the centralized procurement unit or unit with need of procurement for the centralized procurement must ensure conditions on funding for advance payment, payment funding, ground for implementation and other necessary conditions for carrying out the package on the schedule.

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