Agreement on “liquidated damages” - perspective from contract negotiation to practice of judgement in Vietnam and other countries

Abstract

“Liquidated Damages” is fix in advance a sum of money to be paid by the defaulting party to the innocent party in the event of a breach of contract. Although such concept is not new in Vietnam, there is no specific provision governing liquidated damages and it causes many difficulties during contract negotiation process and inadequacies in dispute settlement related to the terms of this agreement. In this article, the author would illustrate three contents including 1) liquidated damages under Vietnamese laws, foreign laws and international treaties; 2) the practice of application of “Liquidated Damages” in civil contracts and 3) the legality of “Liquidated Damages” and orientation of amending Vietnamese laws on the basis of comparison with foreign laws.