Duration of implementation of a business cooperation contract: legal regulations and drafting considerations

In business cooperation activities, the duration of implementation of a Business Cooperation Contract is a core element that directly affects the rights, obligations, and overall effectiveness of the cooperation. Clearly defining the commencement date, contractual term, conditions for extension, and termination mechanisms enables the parties to proactively manage their business operations and provides a legal basis for dispute resolution. However, many contracts are still drafted in a cursory manner with respect to this element, thereby leading to potential legal risks. The following article clarifies the nature, legal significance, and relevant regulatory framework governing this issue.

I. The impact of the duration of implementation of a Business Cooperation Contract

The duration of implementation of a Business Cooperation Contract directly influences the allocation of rights, obligations, and benefits among the participating parties. Clearly determining the commencement date, implementation period, and termination date enables the parties to develop investment plans, organize business activities, and monitor the performance of contractual commitments in a proactive manner.

In addition, the implementation period serves as a crucial legal basis for determining liability in cases of breach, delayed performance, or non-performance of contractual obligations. In many instances, disputes arise not solely from the substance of cooperation but primarily from the failure to agree upon or comply with the agreed timeframe. Therefore, precise and comprehensive provisions on the duration of implementation constitute a main safeguard for mitigating risks and protecting the lawful rights and interests of the parties.

II. Understanding the duration of implementation of a Business Cooperation Contract

A thorough understanding of the duration of implementation of a Business Cooperation Contract is essential to limit risks and ensure the effectiveness of cooperation. This includes the definition, legal significance, influencing factors, and methods of establishing an appropriate term consistent with business objectives and legal requirements, thereby enabling the parties to draft and perform the contract effectively.

1. How is the duration of implementation of a Business Cooperation Contract defined?

Pursuant to Clause 14 Article 3 of the Law on Investment 2020, a Business Cooperation Contract (hereinafter referred to as “BCC”) is defined as:

• A contract signed between investors for the purpose of business cooperation and profit or product sharing in accordance with law, without establishing a new economic organization.

According to Clause 1 Article 12 of Circular No. 79/2025/TT-BTC:

• The contract implementation period shall be calculated from the effective date of the contract until the date on which the parties have fulfilled their obligations as stipulated therein.

Accordingly, the duration of implementation of a BCC is the period during which the parties are required to execute all rights and obligations agreed upon under the contract, commencing from the effective date of the contract until the completion of all contractual obligations.

2. Why is it important to determine the duration of implementation?

In a BCC, the implementation period is a fundamental element that directly affects the allocation of rights, obligations, and benefits. Clearly defining the timeframe facilitates progress management, ensures alignment with business plans, and minimizes the risk of disputes. The importance of determining the implementation period includes:

• Progress management: Clarifying the commencement, completion, and performance time.
• Protection of legal interests: Serving as a basis for determining the parties’ rights and obligations.
• Reduction of dispute risks: A clearly defined term mitigates conflicts, delays, or breaches.
• Basis for handling breaches: The implementation period serves as a reference point for claiming damages or applying legal remedies.

Thus, clearly determining the duration of implementation ensures transparency, legal certainty, and effective cooperation while safeguarding the rights and responsibilities of the parties.

3. What factors may affect the duration of implementation?

The duration of implementation of a BCC may be influenced by various factors, including:

• Nature and scope of cooperation: Complex projects involving multiple components or long-term investment typically require longer implementation periods.
• Capacity and resources of the parties: Financial capacity, human resources, technical expertise, and experience directly affect contractual execution. 
• Market conditions and business environment: Price fluctuations, supply chain disruptions, policy changes, or legal amendments may delay implementation.
• Specific contractual arrangements: Provisions regarding milestones, phases, extension conditions, or termination determine the contractual timeframe.
• Objective circumstances: Natural disasters, epidemics, or force majeure may alter or interrupt the implementation schedule.

These factors may impact the contractual timeline; therefore, the parties should clearly address and agree upon them in the contract to mitigate risks and ensure effective cooperation.

4. How may the parties agree on the duration of implementation?

The parties to a BCC may agree on the implementation period in a flexible yet clear and specific manner to avoid disputes, including:

• Determining the commencement and termination dates: Specifying exact dates or effective conditions (e.g., from the signing date or upon fulfillment of certain prerequisites).
• Phased implementation schedules: For long-term projects, dividing performance into stages with defined deadlines.
• Conditions for extension: Agreeing upon the right to extend in justified circumstances, such as market changes or force majeure.
• Linking duration to results or deliverables: Instead of a fixed timeframe, depending on completion to the achievement of specific outputs, profits, or business results.
• Legal basis and remedies for breach: Clearly stipulating consequences of failure to meet deadlines to protect rights and facilitate dispute resolution.

Detailed agreements on the implementation period enhance coordination, reduce disputes, and ensure effective business cooperation.

III. Legal regulations governing the duration of implementation of a Business Cooperation Contract

The duration of implementation is an essential element of a BCC. Vietnamese law provides specific regulations to guide the establishment, performance, supervision, and handling of breaches relating to contractual timelines.

1. Which laws govern the duration of implementation of a Business Cooperation Contract in Vietnam?

- Clause 1 Article 12 of Circular No. 79/2025/TT-BTC provides that the contract implementation period is calculated from the effective date until completion of obligations.

Accordingly, the implementation period is from the effective date of the contract to the full performance of obligations.

- Article 401 of the Civil Code 2015 stipulates that:

• A contract becomes effective from the time of conclusion, unless otherwise agreed or provided by law.
• From the effective time, the parties must execute their rights and obligations. Amendments or termination may only occur by agreement or as prescribed by law.

Additionally, Article 22 of Decree No. 21/2021/ND-CP clarifies that contractual validity is determined by agreement or from the time of conclusion, and security measures do not alter the contract’s effectiveness.

Therefore, the duration of implementation of a BCC is the period from the effective date until completion of obligations, as governed by the Law on Investment 2020, Circular No. 79/2025/TT-BTC, the Civil Code 2015, and guiding decrees.

2. What are the provisions on compensation for breach of the implementation period?

Where a party breaches the implementation timeline, claims for damages are governed by the Civil Code 2015:

• Article 13 provides that individuals and legal persons whose civil rights are infringed are entitled to full compensation, unless otherwise agreed or provided by law.
• Article 360 stipulates that a party breaching an obligation must compensate for all damages arising from such breach, including breaches relating to performance time.
• Article 419 specifies that recoverable damages include:
• Damages determined in accordance with Articles 13 and 360;
• The benefits that the aggrieved party would have obtained had the contract been performed on time, and reasonable costs incurred due to delayed or non-performance;
• Moral damages, where requested and deemed appropriate by the Court.

Accordingly, breach of the contractual implementation period leads to full compensation liability under Articles 13, 360, and 419 of the Civil Code 2015.

3. What is the legal procedure for resolving disputes relating to the implementation period?

Pursuant to Article 317 of the Commercial Law 2005, commercial disputes, including those concerning the duration of implementation of a BCC, may be resolved by:

• Direct negotiation: A flexible and cost-effective method where parties seek amicable settlement.
• Mediation by a third party: Where negotiation fails, parties may appoint a mediator to facilitate resolution.
• Arbitration or Court proceedings: Where amicable methods are unsuccessful, disputes may be submitted to arbitration or court in accordance with procedural law. Decisions rendered are legally binding.

The choice of dispute resolution method depends on the nature and complexity of the dispute and the parties’ relationship. In practice, negotiation and mediation are prioritized to preserve business relations, while arbitration or court proceedings serve as the final recourse.

IV. Questions regarding the duration of implementation of a Business Cooperation Contract

1. Can the implementation period be adjusted during performance?

Pursuant to Article 421 of the Civil Code 2015, the parties may agree to amend the contract, including the implementation period. Amendments must comply with the original contractual form.

Article 420 further allows modification in cases of fundamental change of circumstances.

• The parties are entitled to agree on amendments to the contract, including provisions relating to the time for performance.
• The contract may be amended in the event of a change in circumstances in accordance with Article 420 of the Civil Code 2015.
• Any amendment to the contract must comply with the formal requirements applicable to the original contract.

Accordingly, the implementation period may be extended or adjusted through a written addendum or amendment agreement, provided it complies with legal requirements and does not infringe upon lawful rights and interests.

2. What breaches commonly occur in relation to the implementation period?

Common breaches include:

• Delayed performance of obligations such as capital contribution, resource provision, or profit distribution.
• Unilateral extension of the cooperation period without agreement.
• Failure to perform obligations upon contract effectiveness.
• Failure to meet stage-based deadlines.
• Failure to terminate or liquidate upon expiration.

Such violations frequently give rise to disputes and legal liability.

3. How can the implementation period be extended without constituting a breach?

The extension of the term for performance of a business cooperation contract without being deemed a contractual breach may be executed on the following legal grounds:

• Extension of the contractual performance period by mutual agreement of the parties: Pursuant to Article 421 of the Civil Code 2015 on amendment of contracts, the parties are entitled to agree on amendments to a contract, including the adjustment or extension of the time for performance. Any such extension must be made in writing (in the form of a contract appendix or an amendment agreement) and must comply with the formal requirements applicable to the original contract.
• Extension of the contractual performance period due to fundamental change of circumstances: In accordance with Article 420 of the Civil Code 2015, a contract may be subject to review and adjustment where there is a fundamental change of circumstances and all of the following conditions are fully satisfied:
• The change arises from objective causes occurring after the contract has been concluded;
• At the time of conclusion, the parties could not have reasonably foreseen such change;
• The change is of such magnitude that, had it been foreseen, the contract would not have been concluded or would have been concluded with entirely different contents;
• Continued performance of the contract without adjustment would cause serious damage to one party;
• The affected party has taken all necessary and reasonable measures within its capacity but is unable to prevent or mitigate the damage.

In such circumstances, the parties may renegotiate the contract in order to amend its terms, including extending the time for performance, so as to restore the contractual balance and avoid a breach.

Accordingly, an extension of the performance period of a business cooperation contract shall not be regarded as a breach if it is implemented on the basis of a contractual amendment pursuant to Article 421 or due to a fundamental change of circumstances under Article 420 of the Civil Code 2015, and is properly documented in compliance with the applicable legal form.

4. Which Court has jurisdiction over disputes concerning the implementation period?

If negotiation, mediation, or arbitration fails, the dispute shall fall under the jurisdiction of the Regional People’s Court in accordance with civil procedure law.

• Clause 1 Article 30 of the Civil Procedure Code 2015 provides that commercial disputes between profit-seeking entities fall under court jurisdiction.
• Article 35 of the Civil Procedure Code 2015, as amended in 2025, provides that Regional People’s Courts have first-instance jurisdiction over such disputes.

5. What measures ensure compliance with the implementation period?

The parties may:

• Clearly define timelines and milestones in the contract.
• Provide for sanctions and damages for delay (Article 300 of the Commercial Law 2005; Articles 360 and 419 of the Civil Code 2015).
• Establish supervision and reporting mechanisms.
• Predefine extension conditions under Articles 420 and 421.
• Provide rights to suspend or terminate for serious delay (Articles 351 and 428 of the Civil Code 2015).

These measures mitigate risks, protect lawful rights, and enhance business cooperation efficiency.

V. Are you seeking a reputable law firm to assist with issues relating to the duration of implementation of a Business Cooperation Contract?

In the negotiation, performance, or termination of a BCC, particularly long-term, multi-phase contracts involving complex legal obligations, timely legal advice from NPLAW enables enterprises to:

• Understand their rights and obligations concerning the implementation period and mitigate risks arising from delays or breaches.
• Determine legal liability and compensation obligations in cases of breach.
• Draft, review, and amend BCCs in compliance with law, ensuring clear provisions on duration, extension, and remedies to maximize protection and minimize legal risks.

The above information is for reference purposes only. For detailed advice tailored to your specific circumstances, please contact NPLAW for prompt assistance.