In the practical implementation of investment contracts, delays in capital disbursement under the agreed schedule are a common issue that may seriously affect project progress and the legitimate interests of the related parties.

I. Current situation regarding delays in capital disbursement under the agreed schedule

In practice, particularly in real estate, construction, and public-private partnership (PPP) projects, delays in capital disbursement under the agreed schedule occur quite frequently and have become one of the primary causes affecting project implementation efficiency. Many projects are prolonged, incur additional costs, and even fall into stagnation merely because capital is not disbursed as committed.

Furthermore, objective factors such as fluctuations in the financial market, changes in credit policies, or legal obstacles in disbursement procedures also contribute to increasing such situations. It not only affects project progress but also easily leads to disputes among the parties.

Accordingly, delays in capital disbursement under the agreed schedule are a common reality, posing numerous legal and financial risks in current investment activities.

II. Concept of delays in capital disbursement under the agreed schedule

1. What is a delay in capital disbursement under the agreed schedule?

A delay in capital disbursement under the agreed schedule refers to a situation where a party obliged to provide capital, contribute capital, or make capital payment fails to perform or performs beyond the time limit agreed in the contract or under the approved plan.

2. What are the common causes leading to delays in capital disbursement under the agreed schedule?

In practice, delays in disbursement may arise from various causes, including:

(i) Subjective causes from the party obliged to contribute capital

  • Financial difficulties or shortage of funds;
  • Changes in investment strategy;
  • Intentional delay for the purpose of renegotiating contractual conditions.

(ii) Causes arising from contractual mechanisms

  • Unclear provisions on the disbursement schedule and lack of sanctions;
  • Complex disbursement conditions depending on multiple factors.

(iii) Objective causes

  • Fluctuations in financial and credit markets;
  • Legal obstacles in disbursement procedures;
  • Force majeure (pandemics, natural disasters, etc.).

It can be seen that delayed disbursement is often the result of a combination of subjective and objective factors during contract performance.

3. Is a delay in capital disbursement under the agreed schedule considered a breach of contract?

Pursuant to Article 351 of the Civil Code 2015, an obligor who fails to perform or improperly performs an obligation shall be deemed to have breached the obligation.

Accordingly:

  • If the delay in disbursement has no lawful basis (not falling under force majeure or exemption from liability), it shall be determined as a breach of contract;
  • The breaching party may be subject to legal consequences such as: Contractual sanctions; compensation for damages; or even unilateral termination of the contract.

Therefore, delays in capital disbursement under the agreed schedule are generally considered breaches of contract, except where there are grounds for exemption from liability under law or by agreement between the parties.

III. Legal provisions related to delays in capital disbursement under the agreed schedule

1. In which cases is a delay in capital disbursement under the agreed schedule recognized?

Pursuant to the provisions on performance of obligations under Articles 274 and 278 of the Civil Code 2015, obligations must be performed on time, at the correct place, and by the agreed method.

Accordingly, an act shall be considered delayed disbursement when:

  • Capital is not disbursed at the time committed in the contract or plan;
  • Disbursement is incomplete under each scheduled installment;
  • The disbursement period is intentionally prolonged without lawful grounds.

Thus, delayed disbursement is determined when the obligated party fails to perform the disbursement obligation within the agreed time or as prescribed by law.

2. How does the law regulate the obligation of timely capital disbursement?

Under Article 280 of the Civil Code 2015, the obligor must perform the obligation with the correct subject matter, within the correct duration, and fully in accordance with the committed contents.

For investment contracts, the disbursement obligation is a form of payment/capital contribution obligation;

Failure to perform under schedule shall be deemed a breach of contractual obligation under Article 351 of the Civil Code 2015.

For public investment, pursuant to Article 72 of the Law on Public Investment 2024 (as amended by Points a and b, Clause 33, Article 7 of the Law amending the Law on Bidding; the Law on Investment under the Public-Private Partnership Method; the Customs Law; the Law on Value Added Tax; the Law on Export and Import Duties; the Investment Law; the Law on Public Investment; and the Law on Management and Use of Public Assets 2025), the implementation period and disbursement of annual public investment capital plans are regulated as follows:

  • (1) The implementation period and disbursement of annual public investment capital plans shall last until January 31 of the following year. In cases where ministries, central agencies, local authorities, and budget-using units under ministries, central agencies, local authorities, and commune-level People's Committees are allocated additional capital after September 30 of the planning year to implement tasks, programs, and projects, the implementation and disbursement period for such additional capital shall last until December 31 of the following year.
  • (2) The heads of ministries, central agencies, and provincial People's Councils shall decide for central budget capital, while Chairpersons of People's Committees at all levels shall decide for local budget capital under their management, allowing the extension of implementation and disbursement time for annual public investment capital plans, but not beyond December 31 of the following year.
  • (3) The heads of public non-business units that fully cover recurrent expenditures and investment expenditures shall decide on the extension of implementation and disbursement time for capital from lawful revenues allocated for investment under their management and report to their supervisory authorities.
  • (4) Heads of ministries, central agencies, and Chairpersons of People's Committees at all levels shall decide on the extension of implementation and disbursement time for capital from lawful revenues of state agencies and public non-business units allocated for investment under the management of such ministries, agencies, or People's Committees, except for public non-business units specified in item (3).

Accordingly, the law not only establishes the general principle of timely performance of obligations but also provides specific regulations on time limits and mechanisms for adjusting disbursement schedules, especially in the field of public investment, in order to ensure discipline and efficiency in the use of capital.

3. How does the law regulate late payment interest in cases of delayed capital disbursement under the agreed schedule?

Pursuant to Articles 357 and 468 of the Civil Code 2015, in cases of delayed performance of payment obligations:

  • The late-paying party must pay interest on the delayed amount;
  • Interest rate: Under the agreement of the parties; if there is no agreement, the statutory interest rate shall apply (generally not exceeding 20% per annum).

In investment contracts, this provision is often applied correspondingly to capital disbursement obligations.

4. Does the law require a mandatory contract appendix when adjusting the disbursement schedule?

Under Article 403 of the Civil Code 2015, a contract appendix is an integral part of the contract and is used to provide details or amend and supplement contractual contents.

The law does not mandatorily require the preparation of a contract appendix when adjusting the disbursement schedule; however:

  • Such adjustment must be agreed upon by the parties;
  • It should be made in writing (through a contract appendix) to ensure legal validity and serve as evidence in case of disputes.

Therefore, preparing an appendix is not a mandatory obligation, but it is a necessary solution to ensure clarity and legal safety when adjusting the disbursement schedule.

IV. Questions regarding delays in capital disbursement under the agreed schedule

1. Can the disbursement schedule be extended when one party encounters financial difficulties?

Under the principle of freedom of agreement under Articles 3 and 385 of the Civil Code 2015, the parties may agree to extend the disbursement schedule when one party encounters financial difficulties.

However: Such extension should be made in writing (contract appendix); must not seriously affect the project objectives; and must not fall into the case of a serious breach that cannot be remedied.

2. What should the affected party do to protect its rights when facing delays in capital disbursement under the agreed schedule?

Pursuant to Articles 351 and 419 of the Civil Code 2015, the affected party may:

  • Request proper performance of the disbursement obligation;
  • Claim compensation for arising damages;
  • Apply contractual penalties (if agreed);
  • Collect evidence of damages and violations;
  • Where necessary, initiate legal proceedings before a Court or arbitration.

Proactively recording violations and timely applying legal measures is extremely important for protecting legitimate interests.

3. Can contractual sanctions be applied in the case of delayed capital disbursement under the agreed schedule?

under Article 418 of the Civil Code 2015, contractual sanctions may only be applied if agreed upon in the contract.

Accordingly, if the contract contains a sanction clause for delayed disbursement, such clause may be enforced. If there is no such agreement, sanctions cannot be unilaterally imposed, but compensation for damages may still be claimed.

4. If the parties have agreed on an extension but delays in capital disbursement under the agreed schedule continue, how should it be handled?

In such a case, the breaching party shall be deemed to continue breaching contractual obligations under Article 351 of the Civil Code 2015.

The affected party may terminate the contract under Article 428 of the Civil Code 2015 if the conditions are satisfied. At the same time, it has the right to claim compensation for damages and contractual sanctions, and apply security measures or other agreed sanctions.

5. Does the affected party have the right to suspend performance of its obligations due to delayed capital disbursement under the agreed schedule?

Pursuant to Article 411 of the Civil Code 2015, a party has the right to suspend the performance of its obligations if the other party breaches its obligations and the continued performance may cause damage to itself.

However, such suspension must:

  • Have lawful grounds;
  • Be notified to the other party;
  • Not be abused in a manner causing damage.

Thus, the affected party has the right to suspend performance of its obligations, but must comply with the legal conditions and procedures.

V. Why should you seek legal consultation from NPLaw regarding delays in capital disbursement under the agreed schedule

In disputes related to delays in capital disbursement under the agreed schedule, determining breaches, calculating damages, and applying sanctions are often quite complex. NPLaw, with its team of lawyers specializing in contracts and investment, can assist in reviewing contractual provisions, advising on solutions for handling breaches, negotiating extensions or contract termination, as well as representing clients during dispute resolution proceedings. As a result, clients can minimize risks and effectively protect their legitimate rights and interests.

The above information is for reference purposes only. Should Clients require detailed consultation regarding specific cases, please contact NPLaw Firm for immediate legal assistance.