Analysis of disputes arising from ambiguous contractual terms, methods of identification, applicable legal frameworks, and solutions for safeguarding the legitimate interests of relevant parties.

I. Current situation of disputes arising from ambiguous contractual terms

In today’s business market, disputes arising from ambiguous contractual terms have become increasingly common. Many contracts include vague terminology, insufficient definitions, or lack implementation guidelines, leading the parties to misinterpret or apply the terms inconsistently.

Such situations hinder commercial activities, delays contract performance, and increases the risk of litigation. Particularly in complex contracts, such as service agreements, international contracts, or investment contracts, ambiguous terms often become the primary source of legal conflicts.

II. Understanding disputes arising from ambiguous contractual terms 

A thorough understanding of the nature, causes, and types of disputes helps businesses, organizations, and individuals proactively mitigate risks and determine appropriate solutions when conflicts arise.

1. In what circumstances do disputes arising from ambiguous contractual terms commonly occur?

Such disputes typically arise from contracts containing vague or insufficiently defined content, making it difficult to determine the rights and obligations of the parties, as follows:

  • Provisions regarding pricing, payment methods, duration, quality standards, or termination rights. 
  • Provisions on damage compensation or sanctions for breach that are drafted inconsistently also often lead to disputes.
  • Factors such as force majeure, changes in law, or objective circumstances that may further contribute to disagreements.

Accordingly, drafting clear and accurate provisions is an essential solution for minimizing risks and protecting the interests of the parties.

2. What types of disputes may arise from ambiguous contractual terms?

Disputes arising from ambiguous contractual terms may take various forms depending on the nature of the contract and the parties’ relationship:

  • Disputes over contractual performance: Occurring when the parties interpret their rights and obligations differently due to vague wording, such as delivery deadlines, quality standards, or payment methods.
  • Disputes over damage compensation: Arising when a party claims losses due to improper performance, yet the contractual clause fails to clearly determine the scope of liability.
  • Disputes over contract termination: Ambiguous provisions on unilateral termination or termination conditions often result in disagreements.
  • Disputes in international contracts: Vague terms relating to governing law or dispute resolution mechanisms may lead to conflicts of laws between nations. 

These categories underscore the importance of drafting clear and detailed contractual terms to limit legal risks and protect the parties’ legitimate interests.

3. How can determine whether a contractual provision is ambiguous?

Determining ambiguous provisions is under specific indicators and legal basis: 

  • Vague or multi-interpretational wording: The clause is explained in an ambiguous way that can be understood in multiple ways, leading to conflicting interpretations about rights and obligations.
  • Inability to identify rights and obligations: When the clause fails to clearly express the parties’ respective rights and duties.

Pursuant to Article 121 of the Civil Code 2015, unclear civil transactions must be interpreted based on:

  • The true intention of the parties at the time the transaction was formed;
  • Meanings consistent with the transaction’s purpose;
  • Local customs where the transaction was established.

A clause is considered ambiguous if it causes difficulty in identifying rights and obligations, allows multiple understanding, or contradicts the parties’ common intention. Applying statutory interpretation principles reduces disputes and ensures the parties’ lawful rights are protected.

III. Relevant legal provisions governing disputes arising from ambiguous contractual terms

Understanding these provisions helps the parties minimize risks, determine responsibilities, and resolve disputes lawfully and effectively.

1. Can a dispute involving ambiguous contractual terms lead to suspension of contract performance?

Under Article 308 of the Law on Commerce 2005, a party in a commercial contract may suspend contract performance if the other party breaches the agreement and the contract contains a clause permitting such suspension.

However, suspension cannot be exercised arbitrarily; the contract must clearly provide the rights and conditions for suspension. Where the performance clause itself is ambiguous and leads to disagreement, suspension should be carefully considered until both parties reach agreement.

2. How long does it normally take to resolve disputes arising from ambiguous contractual terms?

Resolution often takes 12 months or longer, depending on the complexity of the contract, the dispute resolution method, and procedural steps. Under the Civil Procedure Code 2015:

  • Article 203 governs jurisdiction over contractual disputes;
  • Article 286 sets a maximum appellate period of five months.

In theory, the combined duration of first-instance and appellate proceedings may be around 10 months (≈300 days) under optimal procedural conditions.

In practice, disputes in Vietnam take approximately 400 days (over 13 months) to resolve. If submitted to arbitration or court, the duration may be extended, especially when appeals arise or complex evidentiary assessment is required.

3. Can a party claim damages in disputes arising from ambiguous contractual terms?

A claim for damages is viable if the injured party can prove the necessary elements. First, actual loss must be shown to arise from a failure to perform or improper performance of contractual obligations. Next, it must be demonstrated that the ambiguous clause directly caused the loss.

Legal grounds include Article 419 of the Civil Code 2015 concerning damages for contractual breach, along with relevant provisions of the Law on Commerce 2005 and the Law on Consumer Protection 2023 (where applicable).

To protect their interests, the injured party must prove causation between the ambiguous clause and the resulting damage, enabling competent authorities to determine suitable compensation. 

IV. Questions on disputes arising from ambiguous contractual terms 

When entering into a contract, Parties often encounter issues involving interpretation, affected rights, and procedural matters. Clarifying these questions helps prepare suitable solutions when disputes arise.

1. What conditions are necessary for effective resolution of disputes arising from ambiguous contractual terms?

Effective resolution requires:

  • Complete documents and information: The parties need to fully collect the contract, appendices, minutes, emails, and all communications relevant to the disputed clause.
  • Clear identification of rights and responsibilities: It is necessary to analyze the ambiguous clause to determine the parties’ actual rights and obligations.
  • Transparent legal grounds: The parties have to comply with Article 121 (Interpretation of Civil Transactions) and Article 404 (Interpretation of Contracts) of the Civil Code 2015.
  • Agreed dispute-resolution mechanism: The parties should comply with the dispute-resolution mechanism agreed in the contract, such as negotiation, mediation, arbitration, or litigation.

Only with full information, clear legal grounds, and a defined mechanism, the dispute can be resolved effectively without unnecessary prolongation. 

2. How will the rights and interests of the parties be affected if a dispute arising from ambiguous contractual terms is prolonged?

When a dispute regarding ambiguous contractual terms is prolonged, the rights and interests of the parties may be seriously affected:

  • Interruption of contract performance: Delays in determining rights and obligations may result in suspension of the supply of goods, provision of services, or payment, thereby directly impacting business operations.
  • Financial risks: The parties may incur additional expenses such as penalty interest, legal costs, or damages, causing economic harm.
  • Loss of reputation and partnership relations: A prolonged dispute may undermine trust and adversely affect relationships with customers, suppliers, or business partners.
  • Legal difficulties: When the dispute has not yet been resolved, the parties may encounter obstacles in initiating litigation, exercising rights related to the contract, or addressing other disputes arising from the same contract.

Prolonged disputes over ambiguous terms not only disrupt operations but also cause economic and legal damages; therefore, such matters must be handled promptly and in accordance with proper legal procedures.

3. What laws apply when disputes arising from ambiguous contractual terms arise in international contracts?

Under Article 664 of the Civil Code 2015 regarding the determination of the governing law for civil relations involving foreign elements, the following principles apply:

  • Priority application of international treaties: First of all, the parties shall prevail to apply with international treaties in which Vietnam is a member because it is a basic legal ground for foreign disputes. 
  • Parties’ choice of law: Where permissible, the parties may agree to the governing law, provided that such choice does not contravene international treaties or the fundamental principles of Vietnamese law.
  • Closest connection: If the governing law cannot be determined on the above criteria, the law of the jurisdiction having the closest connection to such civil relationships shall be applied (e.g., the place of signing the contract , the principal place of performance, or the resident registration of the parties).

Accurate determination of the applicable law is essential to ensure transparency and the lawful protection of the parties’ interests.

4. What steps should be taken when a dispute arises from ambiguous contractual terms?

When a dispute arises concerning an ambiguous term in a contract, enterprises and relevant parties may undertake the following steps to resolve the matter effectively:

  • Identification of the issue and collection of information:
  • Reviewing the contract carefully and identifying the clause giving rise to the dispute.
  • Collecting all evidence, including emails, minutes of meetings, and relevant notes.
  • Assessment of the legality of the clause:
  • Comparing the clause with statutory provisions, commercial practices, and the purpose of the contract.
  • Determining whether the clause may be interpreted in favor of the weaker party (pursuant to Article 404 of the Civil Code 2015).
  • Direct negotiation between the parties:
  • Contacting the partner to discuss, clarify, and propose a negotiation solution.
  • Preparing a written record of the negotiation results if an agreement is reached.
  • Use of mediation/conciliation mechanisms:
  • If negotiation is unsuccessful, the parties may seek assistance from arbitration, mediation, or independent legal advice to identify a solution.
  • Initiation of litigation or arbitration:
  • Where the preceding steps fail to resolve the dispute, the parties may refer the matter to the court or arbitration in accordance with the contractual agreement or statutory provisions.
  • Preparing documents, evidence, and well-reasoned legal arguments to safeguard their rights and interests.
  • Implementation of the dispute resolution outcome:
  • Complying with the award, judgment, or agreement reached.
  • Amending the contract if necessary to prevent similar disputes in the future.

Following these steps in sequence ensures that disputes relating to ambiguous contractual terms are resolved transparently, minimizes legal risks, and maintains stable business relationships.

5. Which organizations may provide support in resolving disputes arising from ambiguous contractual terms between the parties?

When a dispute arises regarding an ambiguous contractual term, the parties may seek assistance from various professional organizations to ensure prompt and effective resolution:

  • People’s Courts: These courts have jurisdiction to resolve civil and commercial disputes when the parties are unable to reach an agreement. They are the official legal authority responsible for protecting the lawful rights and interests of the parties.
  • Commercial Arbitration: For contracts containing arbitration clauses, the parties may submit the dispute to the Vietnam International Arbitration Centre (VIAC) or other arbitration centers for a swift, confidential, and professional resolution.
  • Mediation bodies or independent intermediaries: Organizations providing mediation and legal consulting services, such as business associations or legal consulting centers, assist the parties in negotiating and reaching a settlement.
  • Reputable law firms: They provide legal advice, draft documents, develop legal arguments, and represent the parties in negotiation, mediation, or litigation.

Selecting the appropriate supporting organization not only facilitates the prompt resolution of disputes concerning ambiguous contractual terms but also minimizes legal risks and optimally safeguards the parties’ interests.

V. Are you seeking a reputable law firm to assist with issues relating to disputes arising from ambiguous contractual terms?

Are you looking for a reputable law firm to support you in resolving disputes concerning ambiguous contractual terms? Contact NPLaw – a team of highly experienced legal professionals in commercial matters and contract dispute resolution. We will accompany you from clause analysis, negotiation, and settlement discussions to filing complaints, initiating litigation, or conducting arbitration, helping to protect your lawful rights with swift, effective, and strategic solutions.