The situation where a contractor changes materials compared to those specified in the contract is not uncommon, particularly in the context of supply chain fluctuations and project schedule pressures. However, such conduct not only directly affects the quality of works and projects but also entails significant legal risks for both project owners and contractors. The article below provides a comprehensive analysis of the legal aspects, practical implications, and main issues that enterprises should pay close attention to.

I. Impacts of contractors changing materials compared to the contract

A contractor’s replacement of materials specified in a contract is not merely a technical deviation but may directly affect the quality, functionality, and life of a work or project, particularly in procurement packages involving stringent technical requirements. If the substituted materials fail to provide equivalent quality or performance, the project owner may face operational risks, additional repair costs, and property-related losses.

The act of a contractor changing materials compared to those agreed in the contract also undermines transparency and fairness in procurement and bidding activities, as the originally evaluated criteria regarding product type, origin, and technical specifications are altered. It may affect the contractor selection outcome and the legitimate interests of relevant stakeholders. Furthermore, such changes may create difficulties in inspection, acceptance, payment, and final settlement procedures, thereby prolonging project implementation and increasing the likelihood of disputes.

II. Understanding the issue of contractors changing materials compared to the contract

1. What constitutes a contractor’s change of materials compared to the contract?

A contractor is considered to have changed materials compared to the contract when it substitutes or modifies materials specified in the contract, including changes relating to product type, origin, brand, technical specifications, quality standards, or product model.

Such changes may take various forms, including:

  • Delivering materials with a model different from the one offered during the bidding process;
  • Changing the country of origin (Certificate of Origin – CO);
  • Using materials with lower standards;
  • Replacing contracted materials with products claimed to be “equivalent”.

Accordingly, a contractor changing materials compared to the contract is an act that alters the subject matter of supply originally agreed upon by the parties.

2. Is a contractor’s change of materials compared to the contract considered a breach of the obligation to deliver materials?

A contractor’s change of materials compared to the contract may not necessarily constitute a breach of the obligation to deliver materials. Pursuant to Clause 27, Article 140 of Decree No. 214/2025/ND-CP regarding the handling of situations arising in online bidding and cyberspace-based procurement, if a contractor proposes to replace materials with versions manufactured in a newer production cycle or production year than those specified in the contract, the project owner may approve such proposal based on actual usage needs.

Accordingly, if the contractor’s change of materials falls within the circumstances described above, it will not be regarded as a breach of the obligation to deliver materials. In other cases, however, such conduct may be considered a violation of the obligation to deliver materials, resulting in non-conforming materials under the contract.

3. What are “equivalent materials”, and how do they differ from a contractor’s unilateral change of materials compared to the contract?

“Equivalent materials” are generally understood as materials that may differ in name, model, or origin but provide equivalent technical specifications, quality standards, and functionality compared to the requirements set out in the bidding documents or contract. In procurement activities, this interpretation stems from the principle prescribed in Clause 2, Article 24 of the Law on Bidding 2023. Under this provision, bidding documents must not specify a particular brand name or origin in a manner that restricts competition, except where absolutely necessary and accompanied by the phrase of “equivalent”. The assessment of equivalence must also be based on the technical criteria disclosed in the bidding documents.

In contrast, a contractor’s unilateral change of materials compared to the contract occurs after contract execution. Once a contract has been signed, the contractor is obligated to deliver materials in strict accordance with the agreed terms. Any substitution requires the approval of the project owner. This principle is consistent with Clause 1, Article 421 of the Civil Code 2015, which provides that contractual amendments are effective only upon mutual agreement of the parties.

Thus, “equivalent materials” are lawful only where their use is expressly permitted by the bidding documents or subsequently approved by the project owner during contract performance. Conversely, if a contractor unilaterally substitutes materials without satisfying equivalency requirements or obtaining valid approval, such conduct will still be deemed an unlawful change of materials in contravention of the contract.

4. How are “negligence” and “intentional fault” distinguished in cases where a contractor changes materials compared to the contract?

The distinction between negligence and intentional fault in cases where a contractor changes materials compared to the contract primarily depends on the contractor’s awareness and intention at the time of the conduct. Pursuant to Article 364 of the Civil Code 2015:

  • Intentional fault exists where the contractor is fully aware that changing the materials violates the contractual terms but nevertheless proceeds with the substitution, typically for purposes such as reducing costs, replacing the contracted materials with inferior products, or obtaining personal benefit. In such circumstances, the contractor’s conduct is generally considered serious because it involves not only a breach of contractual obligations but also a deliberate element, potentially resulting in more severe legal sanctions.
  • Negligence occurs where the contractor fails to recognize or foresee the consequences of the substitution, even though, under normal circumstances, such consequences should have been known or could have been anticipated through reasonable diligence. Accordingly, even in cases of negligence, the contractor may still be required to remedy the consequences and compensate for corresponding damages.

III. Legal regulations relating to contractors changing materials compared to the contract

1. Under the commercial law, does the project owner have the right to refuse acceptance of products immediately upon discovering that the contractor has changed the materials compared to the contract?

Pursuant to Clause 2, Article 39 of the Commercial Law 2005, a project owner (buyer) has the right to refuse acceptance of products if it discovers that the contractor has changed the materials compared to the contract in a manner that renders them inconsistent with the parties’ agreement. The seller is obligated to deliver products that conform to the agreed type, quality, and characteristics. If the contractor delivers products that deviate from these requirements, it has failed to properly perform its contractual obligations.

Accordingly, if a contractor changes materials compared to the contract without obtaining approval, the project owner may lawfully refuse acceptance at the inspection or acceptance stage. However, in case the change is insignificant or has been approved in advance by the project owner (for example, through a written approval or contract addendum), refusal to accept the materials may no longer be appropriate.

2. What legal basis requires a contractor to prove equivalence when seeking to change materials compared to the contract?

The requirement that a contractor prove equivalence when changing materials compared to the contract arises from the principles of ensuring competition and compliance with contractual commitments.

Pursuant to Clause 2, Article 24 of the Law on Bidding 2023, if bidding documents specify a brand or origin, they must include the phrase of “equivalent”. In addition, Clause 1, Article 34 of the Commercial Law 2005 requires sellers to deliver products in accordance with the agreed terms. Point c, Clause 1, Article 39 of the Commercial Law 2005 further provides that materials failing to meet the quality standards of the sample materials delivered by the seller to the buyer are considered non-conforming materials. Consequently, a contractor seeking to replace materials specified in the contract must demonstrate that the proposed replacement materials are equivalent in quality and technical characteristics.

The obligation to prove equivalence serves to ensure that the quality and content of the original agreement are not compromised.

3. How is a contractor intentionally changing materials compared to the contract handled under the law?

If a contractor intentionally changes materials compared to the contract, such conduct constitutes a breach of contractual obligations. First, the contractor fails to deliver the agreed materials as required under Clause 2, Article 39 of the Commercial Law 2005, the project owner has the right to refuse acceptance of the materials.

If the contractual breach causes losses to the non-breaching party, the contractor must compensate for damages under Clause 1, Article 302 of the Commercial Law 2005. In addition, where agreed by the parties, the contractor may also be subject to contractual sanctions under Article 300 of the same Law.

Furthermore, an intentional change of materials compared to the contract may be considered a fraudulent act involving the deliberate provision of false or misleading information and documents in bidding dossiers, thereby distorting the contractor selection results under Point b, Clause 4, Article 16 of the Law on Bidding 2023.

In such circumstances, the contractor may be prohibited from participating in bidding activities for a period ranging from three to five years under Point a, Clause 1, Article 133 of Decree No. 214/2025/ND-CP.

4. What are the regulations governing adjustment of contract value where a contractor replaces contracted materials with lower-priced materials?

A contractor may change materials compared to the contract if the circumstances fall within Clause 27, Article 140 of Decree No. 214/2025/ND-CP. Specifically, Point d of this Clause provides that the unit price of the replaced materials must not exceed the unit price stipulated in the contract.

If the project owner approves the replacement of contracted materials with lower-priced materials, the parties must amend the contract in accordance with Point h, Clause 2, Article 114 of Decree No. 214/2025/ND-CP.

Accordingly, a contractor may only replace materials specified in the contract when all legal conditions are satisfied and the project owner has granted approval. In addition, a formal contract amendment must be executed as the legal basis for adjusting the contract value and payment obligations.

IV. Questions relating to contractors changing materials compared to the contract

1. If the original materials have been discontinued, is a contractor automatically permitted to replace them with a new model?

The fact that the original materials have been discontinued does not automatically authorize a contractor to replace them with a new model. According to Clause 1, Article 69 of the Law on Bidding 2023, the contracting parties are obligated to perform the contract in accordance with its agreed terms and conditions. Any amendment to the contract may only be made where there is a lawful basis and mutual agreement between the parties.

Accordingly, replacement with a new model is only lawful if it has been approved by the project owner and formally documented through a contract amendment or modification.

2. If the acceptance minutes have already been signed but it is later discovered that the contractor changed the materials compared to the contract, can the money be recovered?

Pursuant to Clause 1, Article 69 of the Law on Bidding 2023, the contractor is required to perform the contract strictly in accordance with its terms. Unauthorized replacement of materials constitutes a contractual breach. Thus, even where acceptance procedures have been completed, the underlying breach continues to exist and is not automatically legitimized by the signing of acceptance records.

However, it should be noted that if the acceptance process was conducted properly, with clear confirmation of the type and specifications of the materials delivered, and there was no fraudulent conduct involved, recovery of payment may be more difficult. In such cases, the injured party must provide evidence demonstrating the contractor’s fault.

3. If a contractor changes the country of origin while retaining the same brand, is this considered an unauthorized change of materials compared to the contract?

Pursuant to Clause 1, Article 69 of the Law on Bidding 2023, contractors are required to comply with all contractual requirements. Information concerning the origin of materials is often a material criterion associated with quality, technical standards, or bidding document requirements. Thus, even where the brand remains unchanged, altering the origin may fundamentally change the nature of the materials supplied.

Point a, Clause 1, Article 70 of the Law on Bidding 2023 (as guided by Clause 1, Article 114 of Decree No. 214/2025/ND-CP regarding contract amendments) requires that any change relating to the materials supplied must receive approval from the project owner and be reflected through an appropriate contract amendment. Accordingly, if a contractor unilaterally changes the country of origin without obtaining consent, such conduct constitutes a contractual violation.

In practice, a change in the country of origin may not be regarded as a breach where all of the following conditions are satisfied:

  • The contract does not specifically require a particular origin;
  • The replacement materials possess equivalent or superior technical standards and quality;
  • The project owner has validly approved the substitution.

4. May payment be withheld if it is discovered that a small portion of the materials supplied by the contractor does not conform to the agreed type?

In principle, payment is generally based on the quantity and scope of work that have been properly inspected and accepted. If the supplied materials do not conform to the agreed type or specifications, the procuring entity has the right to refuse acceptance of the non-compliant portion, resulting in non-payment for such a portion.

Accordingly, payment may be withheld; however, from a legal perspective, it constitutes non-payment for work or materials that have not been validly accepted, rather than an arbitrary retention of funds. The withholding should be limited solely to the non-compliant portion.

5. How should a project owner respond when a contractor blames supply chain disruptions to justify changing materials compared to the contract?

Pursuant to Clause 1, Article 69 of the Law on Bidding 2023, the contractor remains obligated to perform the contract in accordance with its agreed terms.

Only where the supply chain disruption qualifies as force majeure under Clause 1, Article 156 of the Civil Code 2015, namely, an event that occurs objectively, could not reasonably have been foreseen, and cannot be remedied despite the application of all necessary measures within the affected party’s capacity, may the contractor be considered for exemption from or reduction of liability.

Nevertheless, even in such circumstances, the contractor remains obligated to:

  • Promptly notify the project owner;
  • Propose an alternative solution;
  • Obtain the project owner’s approval; and
  • Execute the necessary contract amendment procedures.

Thus, supply chain disruption is merely a factor to be considered and does not automatically justify a change of materials. Any replacement is lawful only where it is properly substantiated, approved by the project owner, and implemented through a contract amendment in accordance with applicable legal requirements.

V. Are you looking for a reputable law firm to assist with issues relating to contractors changing materials compared to the contract?

When disputes arise due to a contractor supplying materials that do not conform to the contract, seeking assistance from a law firm with expertise in commercial contracts and dispute resolution is essential for protecting legal rights and ensuring compliance with applicable regulations. NPLaw is among the law firms providing legal advisory services relating to contracts and commercial dispute resolution, with extensive experience assisting businesses in complex legal matters.

The issue of contractors changing materials compared to contractual requirements is not merely a technical concern; it also carries significant legal implications that require all parties to exercise caution throughout contract implementation and monitoring. Businesses should clearly understand the distinction between lawful substitution and contractual breach in order to adopt appropriate solutions and avoid unnecessary disputes. In all circumstances, any change of materials should only be accepted where it satisfies legal requirements and has received valid approval from the project owner.

The information above is provided for reference purposes only. Should you require detailed advice regarding your specific circumstances, please contact NPLaw for immediate legal consultation.