Unilateral modification of contract terms: how is it resolved?

The following article analyzes the current situation, relevant legal regulations, and questions related to unilateral modification of contract terms.

The following article analyzes the current situation, relevant legal regulations, and questions related to unilateral modification of contract terms.

I. Current situation of unilateral modification of contract terms

In business and civil transactions, cases where one party unilaterally modifies contract terms without consent from the other party are increasingly common.

Such actions often arise from changes in demand, implementation conditions, or economic interests, but they are not always lawful. To fully understand such an issue, it is first necessary to clarify the concept and different forms of contract modification.

1. Definition of unilateral modification of contract terms

Unilateral modification of contract terms refers to an act in which either party independently adjusts, supplements, or removes one or more contract clauses without the consent of the other party.

Such conduct often violates the principles of freedom and voluntariness in commitment and agreement as prescribed in Articles 3 and 385 of the Civil Code 2015. Since a contract is fundamentally a mutual agreement, any modification is only valid when all parties consent.

Example: Company A unilaterally increases the service price agreed upon with Company B without any supplemental written agreement. Such behavior is considered a unilateral modification of the contract.

2. Forms of contract modification

In practice, contract terms may be modified in several ways, including:

Lawful modification (supplementary agreement): The parties execute an addendum or sign an amendment to the contract following legal procedures (Articles 421 and 403 of the Civil Code 2015). It is the legitimate and recognized way to amend a contract.
Unilateral modification (unlawful agreement): One party issues a notice or applies new terms without the other party’s consent, thereby breaching contractual obligations.
Modification based on prior agreed provisions: Certain contracts may stipulate that one party has the right to unilaterally adjust terms under specific circumstances (e.g., price adjustments due to market fluctuations). In such cases, unilateral modification is lawful if the agreed conditions are satisfied.

II. Legal provisions on unilateral modification of contract terms

Under Vietnamese law, a contract is viewed as a binding agreement between the parties. Therefore, any modification or supplementation made without mutual consent is generally considered a breach. However, in some exceptional cases, the law may allow or recognize such unilateral modification.

1. Consequences of unilateral modification

Unilaterally changing contract terms can lead to serious consequences, including:

Disrupting the balance of rights and interests between the parties;
Causing disputes, complaints, or delays in contract performance;
Being considered a contractual breach, leading to liability for damages or contractual sanctions as provided under Articles 351, 360, and 361 of the Civil Code 2015.

Example: A landlord unilaterally increases the rental price without the tenant’s consent, causing financial harm to the tenant. The tenant is entitled to request cancellation of the modified clause.

2. Circumstances allowing unilateral modification

According to Clause 1, Article 421 of the Civil Code 2015, as a general rule, contracts may only be amended with the parties’ mutual consent.

However, Article 420 of the Civil Code 2015 provides an exception for cases of fundamental change of circumstances. When the parties cannot reach an agreement within a reasonable time, either party may unilaterally request the Court to amend the contract to restore the balance of lawful rights and interests due to the changed circumstances.

The Court may only amend the contract if termination would result in greater loss than the cost of performance under the amended terms.

A fundamental change of circumstances exists when all of the following conditions are met:

The change occurred after the contract was concluded due to objective reasons;
At the time of conclusion, the parties could not have foreseen the change;
The change is so substantial that the contract would not have been made, or would have been made with entirely different content if had the parties known;
Continuing to perform the contract without amendment would cause serious harm to one party;
The affected party has taken all reasonable measures within its capability but cannot prevent or mitigate the impact.

3. Legal consequences of unlawful unilateral modification

If a party unilaterally modifies contract terms in violation of the law (without consent or legal grounds), it may be subject to the following sanctions:

Restoration of the original terms and continuous execution under the original agreement (Article 352 of the Civil Code 2015);
Compensation for damages caused to the affected party (Article 360 of the Civil Code 2015);
Contractual fines if such sanctions are stipulated (Article 418 of the Civil Code 2015);
Termination of the contract by the injured party if the violation is deemed substantial (Article 428 of the Civil Code 2015).

Example: In a transport contract, if the carrier unilaterally changes the route or freight rate without consent from the charterer, the charterer may cancel the contract and claim damages.

III. Common questions regarding unilateral modification of contract terms

1. If the contract does not provide for clauses for unilateral modification, is it lawful?

Under Article 385 of the Civil Code 2015, a contract is a mutual agreement between the parties. If the contract does not authorize unilateral modification, any such modification has no legal effect and may constitute a breach.

However, where fundamental modification of circumstances occurs under Article 420, either party may request the Court to amend the contract if the parties cannot reach agreement within a reasonable time.

2. Which main clauses are most commonly disputed when unilateral modification?

Disputes often arise over unilateral modifications to:

Contract value and payment terms;
Duration and execution schedule;
Subject matter of the contract (goods, services, quality, quantity);
Rights and obligations of the parties.

3. Are unilateral modifications allowed in international contracts?

In international contracts, modifications also require mutual consent. However, under the Vienna Convention 1980 (CISG) and many legal systems, certain exceptions such as force majeure, fundamental change of circumstances, or serious breach allow lawful adjustment or termination.

4. What factors does the Court consider in determining the legality of unilateral modification?

According to Article 420 of the Civil Code 2015, the Court may only decide to modify the contract if termination would cause greater loss than continued performance after amendment.

It also examines whether the following conditions for fundamental modification of circumstances are satisfied:

The change occurs due to objective causes after contract conclusion;
The change was unforeseeable at the time of contracting;
The change substantially alters the basis of the contract;
Continuous execution without amendment would cause serious harm;
The affected party took all reasonable preventive measures.

5. What legal risks arise from unilateral modification?

Typical legal risks include:

Being deemed in breach of contract (Article 351 of the Civil Code 2015);
Taking liability for damages (Article 360 of the Civil Code 2015);
Occurring contractual sanctions (Article 418 of the Civil Code 2015);
Unilateral termination due to serious breaches (Article 428 of the Civil Code 2015);
Risk of contract cancellation or invalidity (in whole or in part);
Reputational damage and loss of long-term cooperation.

V. Why legal consultation is essential in unilateral contract modification

Unilateral modification of contract terms always carries the potential for disputes. A lawyer can:

Assess the legality of proposed modifications;
Advise negotiation strategies to minimize risk;
Draft or review contracts to prevent disputes;
Represent and protect clients’ interests before Courts or Arbitration bodies.

With professional legal consultation, individuals and enterprises can ensure compliance with the law and safeguard their legitimate rights and interests.

If you require legal advice regarding unilateral modification of contract terms, please contact NPLaw for prompt and effective assistance.