A small clause, a major risk

When entering into contracts with foreign partners, many Vietnamese individuals and businesses focus on the commercial terms—such as pricing, delivery schedules, and product quality—while overlooking the “fine print” that specifies governing law and jurisdiction. This oversight can lead to serious consequences, especially if a dispute arises and you are sued in a U.S. court under the very terms you previously agreed to.

Governing law: Which country’s laws apply?

The governing law clause specifies which legal system will be used to interpret and enforce the contract.

For example, if a contract states: “This agreement shall be governed by the laws of the State of California,” then any legal dispute—such as breach of contract, interpretation of terms, or compensation—will be handled under California law, not Vietnamese law.

This can be highly disadvantageous for Vietnamese parties who are unfamiliar with U.S. legal principles, including how damages are calculated, what constitutes a breach, and how American courts interpret contract obligations.

Jurisdiction clause: Where can you be sued?

The jurisdiction clause specifies which court(s) will have the authority to resolve disputes. By agreeing to this clause, you are consenting to be sued—or to bring a lawsuit—in the court selected in the contract, even if you reside in Vietnam and have never been to the U.S.

A common example: “The parties agree that any disputes shall be submitted to the exclusive jurisdiction of the courts of New York.”

This means that if a dispute arises, the lawsuit must be filed in a New York court—and you may be required to defend yourself there. If you fail to respond within the proper timeframe, a default judgment may be issued against you, as explained in When “having a lawyer” is just a phrase What EB-5 investors should watch out for.

A small clause, a major risk

When entering into contracts with foreign partners, many Vietnamese individuals and businesses focus on the commercial terms—such as pricing, delivery schedules, and product quality—while overlooking the “fine print” that specifies governing law and jurisdiction. This oversight can lead to serious consequences, especially if a dispute arises and you are sued in a U.S. court under the very terms you previously agreed to.

Governing law: Which country’s laws apply?

The governing law clause specifies which legal system will be used to interpret and enforce the contract.

For example, if a contract states: “This agreement shall be governed by the laws of the State of California,” then any legal dispute—such as breach of contract, interpretation of terms, or compensation—will be handled under California law, not Vietnamese law.

This can be highly disadvantageous for Vietnamese parties who are unfamiliar with U.S. legal principles, including how damages are calculated, what constitutes a breach, and how American courts interpret contract obligations.

Jurisdiction clause: Where can you be sued?

The jurisdiction clause specifies which court(s) will have the authority to resolve disputes. By agreeing to this clause, you are consenting to be sued—or to bring a lawsuit—in the court selected in the contract, even if you reside in Vietnam and have never been to the U.S.

A common example: “The parties agree that any disputes shall be submitted to the exclusive jurisdiction of the courts of New York.”

This means that if a dispute arises, the lawsuit must be filed in a New York court—and you may be required to defend yourself there. If you fail to respond within the proper timeframe, a default judgment may be issued against you, as explained in When “having a lawyer” is just a phrase What EB-5 investors should watch out for.