In reality, for various reasons, enterprises and individuals may have difficulties in making payments and thus fail to comply with the initially agreed deadline. Executing an agreement to extend the payment term is an effective measure that allows the parties additional time to fulfil their financial obligations without incurring severe legal or financial consequences.

I. Necessity of entering into extended payment terms agreements  

Enterprises and individuals often face challenges in meeting payment deadlines due to objective reasons such as market fluctuations, policy changes, or unstable financial conditions.

Enterprises need flexibility in adjusting payment schedules to maintain cooperative relationships, mitigate financial risks, and avoid unnecessary disputes. Accordingly, entering into an agreement to extend the payment term is essential to ensure the parties’ rights and interests in a lawful manner without breaching the original commitments.

II. Legal regulations on extended payment terms agreements

1. Definition of an extended payment terms agreement

Extended payment terms agreement is a written document concluded between the parties to adjust the timeline for performing payment obligations compared to the initial agreement. Such an agreement allows the parties additional time to fulfil financial obligations while still complying with prevailing laws. In practice, it may be executed in the form of a new contract or a contract addendum in accordance with Article 403 of the Civil Code 2015.

2. Sample addendum extended payment terms agreements 

A contract addendum typically includes information such as: Details of the contracting parties, adjusted terms, and the newly agreed timeline. The parties may refer to the sample contract addendum below prepared by NPLaw:

SOCIALIST REPUBLIC OF VIET NAM
Independence – Freedom – Happiness

CONTRACT ADDENDUM
(No.: .....................)

Pursuant to Contract No. ............ dated .......... executed between ............ Company and ............ Company.

Today, on the date ... month … year ..., we include:

PARTY A:  ................ Company

  • Enterprise Registration No.: .......
  • Address: ........
  • Legal Representative: ........

PARTY B: ................ Company

  • Enterprise Registration No.: .......
  • Address: ........
  • Legal Representative: .......

Both parties hereby agree to amend Contract No. … dated … with the following contents:

ARTICLE 1: AMENDMENT OF ARTICLE ... OF CONTRACT NO. ...

  • The parties agree to extend the payment term stipulated under Article ... of Contract No. ... as follows: ....................................................

ARTICLE 2: GENERAL PROVISIONS

  • The remaining provisions of Contract No. ............ remain unchanged and continue to be valid.
  • This Addendum takes effect from the date of signing and constitutes an integral part of the Contract previously executed between the parties.
  • Any amendments or supplements shall be made in writing and duly signed by the lawful representatives of both parties.

This Addendum consists of two pages, made in 02 (two) original copies in Vietnamese, each having the same legal validity, with each party retaining 01 (one) copy for record and implementation.

        PARTY A                                                                         PARTY B
(Signature & Seal)                                                         (Signature & Seal)

 

3. What is a reasonable extension period?

The extension for the payment term depends on the parties’ agreement in each specific case; however, it must ensure reasonableness and compliance with the law. Typically, the extension period is considered based on the actual payment capability of the obligated party, business conditions, and other objective factors such as economic fluctuations.

A reasonable extension period helps safeguard the interests of both parties, reduce the risk of legal disputes, and maintain stable cooperation.

III. Clarifications on legal issues relating to extended payment terms agreements 

1. Is the extended payment terms agreement legally effective?

Pursuant to Article 401 of the Civil Code 2015: A lawfully concluded contract shall take effect from the time of its conclusion, unless otherwise agreed by the parties or otherwise provided by relevant laws.

Accordingly, unless the parties agree otherwise or the law provides otherwise, an agreement to extend the payment term takes effect from the time it is signed.

2. Is a new contract required or is a contract addendum sufficient?

When the parties wish to extend the payment term, they may choose to enter into a new contract or a contract addendum. Article 403 of the Civil Code 2015 provides: A contract may have addenda detailing certain terms of the contract. The addenda shall have the same effect as the contract. The addenda must not contradict the contents of the contract.

Thus, when only certain terms require adjustment, executing a contract addendum is generally the preferred option instead of entering into a new contract. Using an addendum helps save time and costs, ensures continuity and consistency with the original agreement, and remains compliant with legal requirements.

3. Upon termination of a labor contract, may the parties extend the time limit for making payments related to their rights and obligations

Under Clause 1 Article 48 of the Labor Code 2019 regarding responsibilities upon termination of a labor contract: Within 14 working days from the date of termination of the labor contract, the parties must settle all amounts relating to the rights and obligations of each party, except for certain cases where such a period may be extended but shall not exceed 30 days. 

Accordingly, upon termination of a labor contract, the parties must make all payments relating to their rights and obligations within 14 working days, and may extend such a period but not beyond 30 days under the above regulation.

IV. Legal consulting services on extended payment terms agreements 

The above article provides NPLaw’s analysis regarding legal regulations on agreements to extend payment terms. With an experienced team of lawyers and legal specialists, NPLaw offers reputable and professional legal services, ensuring the best protection of clients’ lawful rights and interests. Should you require legal assistance, please contact NPLaw for further support.