Drafting the international supply of service contract

In the current era, trade liberalization has become an inevitable trend and is creating a huge impact on Vietnamese businesses. However, the reality is that many Vietnamese businesses still face numerous challenges when it comes to drafting, signing, and executing international service supply contracts. These difficulties often stem from a lack of knowledge about international law as well as domestic legal regulations. To address this issue, Viet An Law has compiled some important advice related to drafting the international supply of service contract as follows.

Legal basis

• Vietnam’s WTO Commitments on Services;
• Civil Code 2015;
• Law on Commercial 2005.

Characteristics of the international supply of service contract

International supply of service contracts shares common characteristics with regular service supply contracts. However, with the international element, this contract has the following distinctive features:

• The parties to the contract are typically individuals or organizations residing or having their commercial headquarters in different countries. There are also cases where both the service provider and the service recipient are in Vietnam, but the services are provided abroad, making this contract an international service supply contract. For example, a Vietnamese expert providing consulting services for an investment project in Singapore by a Vietnamese company.
• The place of service provision may be in a foreign country for either party to the contract.
• The currency of payment may be a foreign currency for the parties to the contract.
• The law applicable to this contract may be the law of a foreign country applicable to either party to the contract, including relevant international conventions or international business customs in the corresponding field.
• For dispute settlement, the parties clearly stipulate in the contract the method of choice to resolve a dispute when a dispute occurs, including: negotiation, conciliation, arbitration or court.

Classification of the international supply of service contract

Based on the World Trade Organization’s (WTO) classification of service sectors, international supply of service contract can be categorized as follows:

Business service supply contract

Machinery and equipment rental business service

Telecommunications service supply contract

Postal and telecommunications service

Telecommunications and information technology service

Construction and civil engineering service supply contract

Design and technical consulting service

Construction and installation service

Distribution service supply contract

Agency and brokerage services

Wholesale and retail trade services

Business licensing and franchising services

Education service supply contract

Elementary, secondary, and higher education services

Specialized education services

Environmental service supply contract

Wastewater treatment services

Waste collection and disposal services

Environmental sanitation services

Financial service supply contract

Insurance and financial services

Banking and other financial services

Social services and healthcare service supply contract

Medical and healthcare services

Provision of healthcare infrastructure

Tourism and travel service supply contract

Hotel, restaurant, and accommodation services

Travel agency and tour operation services

Tour guiding and tour organization services

Cultural and entertainment service supply contract

Entertainment and cultural education services

Newsstand and library agency services

Sports and entertainment services

Diverse transportation service supply contract

Maritime and railway transportation services

Inland water and air transportation services

Road and pipeline transportation services

Support services transportation contract

Ancillary services for all modes of transportation

Basic terms required in the international supply of service contract

In the process of concluding an international service supply contract, this process follows similar conditions and procedures as when negotiating contracts for general business. The content of an international service supply contract, both in general and for specific contracts, depends on the specific type of service.

Terms that frequently appear in the international service supply contract include:

• Description of the contract’s subject matter.
• Duties and tasks to be performed by the parties involved.
• Duration and schedule for contract performance.
• Provisions regarding fees and service charges, payment methods, and payment deadlines.
• Allocation of rights and obligations among participating parties.
• Rules and penalties in case of contract breaches.
• Terms and conditions for liability waivers in specific cases.
• Provisions on the applicable law for the contract and dispute resolution procedures.
• Validity period of the contract.

Special terms in the international service supply contract

When drafting an international service supply contract, special attention should be paid to the following two terms, which are unique compared to the sale of goods contracts:

Terms of the subject of the contract

Since services are intangible and difficult to quantify, it becomes extremely important to express one of the essential terms of a service contract, which is to mention the scope of work and quality of service. These terms establish a vital legal framework for resolving any potential conflicts that may arise from the interactions between the contracting parties. This should be done to ensure a clear and mutual understanding and consensus between the parties regarding the specific service provided. Clarity in service descriptions can help avoid unnecessary disputes in the future.

Terms of quality of the service

Due to the immaterial feature of service, the determination of standards for service quality is an important part of the contract. In terms of service quality, in cases where the obligations of the supplier are defined based on work results, it is necessary to clearly define the specific results that the party wishes to achieve. For example, in a contract for the supply of freight services, some standards may include:

• Goods damage rate: Stipulating the maximum allowable rate of goods damaged or lost during transportation.
• Delivery Time: Determining the exact time that the goods need to be delivered to the destination location.
• Support services: Materializing transportation-related support services, such as goods status notifications, loading and unloading, or quick problem resolution.

Depending on the type of service and specific requirements of the client and supplier, standards and indicators can be agreed upon based on the reality and importance of the service. Establishing clear quality standards helps create transparency, consensus, and a basis for evaluating the service provider’s performance during contract implementation.

Thus, drafting an international service supply contract requires careful consideration, especially in adjusting the terms to reflect the specific characteristics of the service compared to the goods purchase contract model.

Some notes during the process of signing an international service supply contract

When signing an international service supply contract, there are some important considerations that you should take into account to ensure that the contract is agreed upon reasonably and effectively. Below are some important notes:

• Description of specific services: A clear and detailed identification of the specific services to be provided. This includes job specifications, work processes, and quality standards that the service must achieve.
• Terms of value and payment: Agreement on the value of the service and specific payment methods. This includes both the amount and timing of payments, as well as terms regarding fees, taxes, and other charges.
• Terms of time and service delivery schedule: Clearly define the start and end times of the service, as well as a detailed work schedule. This helps ensure that both parties agree on the timing of execution and adhere to important time constraints.
• Risk allocation and responsibilities: Clearly define who is responsible in case of risks, damages, or incidents. This includes risk management related to transportation, data security, and any other issues that may arise during the service supply process.

In conclusion, signing an international service supply contract requires careful preparation and clear agreement among the parties involved. Taking note of the above points helps ensure that the contract is executed smoothly and meets all the requirements of all parties concerned.

The above is a detailed article on the issue of drafting the international supply of service contract. If you have any legal difficulties or concerns related to business law, please contact Viet An Law for the most specific and detailed advice!