Fundamental Change of Circumstances in Vietnam Construction Contracts

Updated: 22 October 2026 · IVLF Advisors

When steel doubles in price, a regulation changes mid-project or the piling hits ground nobody surveyed, a fixed-price contractor in Vietnam does not automatically get relief, and an employer does not automatically escape a claim. Relief depends on a short, precise legal test, and on notices sent at the right time.

This article sets out the fundamental change of circumstances construction contract Vietnam position after the Law on Construction No. 135/2025/QH15 and Decree 210/2026/NĐ-CP took effect on 1 July 2026, and how to prepare a claim or a defence, whether the project is an expressway, a factory, a wind farm or a hotel.

Fundamental change of circumstances construction contract Vietnam: the legal test

Vietnamese law has two layers. The construction-specific layer defines the events; the civil-law layer supplies the conditions that must be satisfied before relief is available.

Article 13(2) of the Construction Law lists the circumstances that count as a fundamental change in construction activity: a change by the State of policy or law, abnormal geological conditions that could not be foreseen, and other cases under related laws. Article 13(3) then states that these events must meet the conditions of civil law on force majeure and on performance when circumstances change fundamentally. Those conditions are in the Civil Code 2015, Articles 156 and 420.

Decree 210 (see the official government summary, in Vietnamese) gives the contractual mechanics. Article 18(2) refers force majeure and fundamental change back to Article 13 of the Construction Law, and asks the parties to agree a procedure: written notice, assessment of the impact, and a proposal to amend, suspend, terminate, pay or liquidate. Article 6 adds that a lump-sum price is not changed except for force majeure, fundamental change, change of scope or agreement.

Five conditions every fundamental change of circumstances construction contract Vietnam claim must meet

Civil Code Article 420 (the general provision on fundamental change of circumstances) sets five cumulative conditions. Treat them as a checklist for the evidence you will need.

Condition	What it means in a construction dispute	Evidence to assemble
1. Objective cause arising after signing	The change comes from outside the parties and post-dates the contract	Dated legal texts, market indices, geotechnical reports
2. Not foreseeable at signing	Neither party could have anticipated it when contracting	Tender-stage information, the base-date data, risk registers
3. So large that the contract would not have been made, or would have been made on entirely different terms	A significant change, not ordinary commercial fluctuation	Re-pricing exercise comparing original and current cost
4. Continuing without change would cause serious loss to one party	Real, quantified hardship	Cash-flow analysis, cost-to-complete forecasts
5. The affected party took all reasonable measures to prevent or reduce the effect	Mitigation: re-sequencing, alternative suppliers, value engineering	Correspondence, purchase records, programme revisions

Failure on any one condition defeats the claim. Foreseeability at signing and mitigation are usually the most contested points, so build that evidence early.

Fundamental change versus force majeure, change in law and price volatility

These concepts overlap in discussion but follow different routes. Mixing them up is a common reason for a failed claim.

Concept	Source	Typical result
Force majeure Vietnam	Construction Law Art. 13(1); Civil Code Art. 156; Decree 210 Art. 18	A party prevented from performing is relieved to the extent of the event; may lead to amendment, suspension or termination
Fundamental change of circumstances	Construction Law Art. 13(2); Civil Code Art. 420; Decree 210 Art. 18	Right to ask for renegotiation of terms; performance continues meanwhile unless agreed otherwise
Change in law	Construction Law Art. 13(2)(a), 84(2)(a); contract clause (for example FIDIC cl. 13.7)	Amendment or contractual adjustment for the cost and time effect
Abnormal price volatility	Decree 210 Art. 18(3)	Parties compare positions, share risk and amend using Articles 22 to 25

Force majeure under Article 13(1) covers natural disasters and environmental catastrophe, fire and epidemic, emergencies affecting security and public order, strikes and embargoes, archaeological finds, and other cases under related laws. For that route, see our guide to force majeure in Vietnamese construction contracts. The test is stricter: the event must be objective, unforeseeable, and impossible to overcome despite all necessary measures (Civil Code Article 156).

Fundamental change is different. Performance is still possible but has become seriously unbalanced. That is why the remedy is renegotiation rather than release from performance.

Abnormal geological conditions and change in law as qualifying events

The Construction Law names two events that fit the fundamental change category without further definition: a change in State policy or law, and abnormal geological conditions not foreseeable at signing. Neither is automatic relief. Both must still satisfy the civil-law conditions, and the contract itself may have allocated the risk.

For abnormal geological conditions, the question is what the contractor could reasonably have known. A contract that discloses a geotechnical report and places site risk on the contractor creates an argument that the ground was foreseen. For change in law, the Base Date concept in FIDIC cl. 13.7 is a useful model: only changes after a fixed date count. Without such a clause, Vietnamese law looks to the date the contract was signed.

The procedure: notice, assessment, renegotiation

Decree 210 Article 18(4) requires a party that cannot perform because of force majeure or fundamental change to notify the other in writing and propose a solution. A late or informal notice weakens a claim even if the underlying event is real. Under Article 420, the affected party may require renegotiation within a reasonable time, and, unless the parties agree otherwise, must keep performing during the negotiations.

A workable sequence is:

1. Record the event. Date it, identify the source document and preserve evidence.
2. Give written notice in the form and to the address the contract requires, describing the event, the affected obligations and the proposed response.
3. Assess the impact. Quantify time and cost, separating the effect of the event from other causes.
4. Propose terms. Amendment of price, programme or scope; suspension; or an orderly exit.
5. Negotiate in good faith within a stated timetable, while continuing performance.
6. Document the outcome in a written amendment, as the Construction Law requires for any contract change.

If negotiation fails, the Civil Code lets a party ask a court to terminate or amend the contract to rebalance interests, but only where failing to do so would cause one party a major loss. Whether an arbitral tribunal can exercise the same power where the contract has an arbitration clause depends on the governing law and the institutional rules. A dispute board under Decree 210 Article 17 can be useful here, because it can give an early view while the project continues. Where the parties choose institutional arbitration, VIAC is one Vietnamese option.

Abnormal price movements under Decree 210 Article 18(3)

Article 18(3) deals specifically with price movements beyond what could be forecast that cause serious loss. The parties are to analyse the effect of the movement against the position at signing, the loss each side would suffer by continuing or ending the contract, and the position under Article 13 of the Construction Law, and then to amend the contract under Article 84(2) and (3) of the Construction Law in a way that harmonises interests and shares risk.

The decree lists the factors to weigh: the signing date, the volume already performed and still to perform, the scope affected, and the measures the parties have taken. It then sends the parties to the amendment procedures in Articles 22 to 25.

Note what the decree does not do. It does not set a percentage threshold for a price rise, and it does not guarantee a result. A claimant needs evidence that the movement was abnormal and unforecastable, not just large.

Public investment and PPP projects: additional constraints

The following rules apply to public investment and PPP projects only; private-capital contracts follow what the parties agreed within the Construction Law.

• Under Construction Law Article 84(3)(d), the investor considers amendment for force majeure or fundamental change on principles that keep the investment objective and scale unchanged, do not exceed the total investment, ensure efficiency and avoid loss. The contract type, price form, price adjustment method and price data source may also be amended.
• Decree 210 Article 22(4) requires a written request with grounds and an impact assessment, a written reply within 7 working days, and negotiation; if the amendment requires a change to investment policy, feasibility report, design or total investment, the employer must first adjust those items.
• Article 23 allows a lump sum to be adjusted for force majeure or fundamental change.
• Article 25 requires the investor to obtain the investment decision-maker’s decision before agreeing a programme extension that exceeds the approved project duration.

These constraints mean that a public employer may be willing but unable to agree a change quickly. Build approval lead time into any renegotiation timetable.

FIDIC contracts and the Vietnamese overlay

The FIDIC 1999 Silver Book allocates unforeseen difficulty to the contractor: under cl. 4.12 the contractor is deemed to have obtained all necessary information, accepts total responsibility for foreseeing difficulties and costs, and the price is not adjusted for unforeseen difficulties unless the contract says otherwise. It does allow price adjustment for changes in legislation after the Base Date (cl. 13.7), cost adjustment only if the Particular Conditions contain a formula (cl. 13.8), and release from performance where the governing law entitles the parties to it (cl. 19.7).

That last clause matters. It operates where an event makes performance impossible or unlawful, or where the law governing the contract releases the parties from further performance. It does not by itself create a hardship right.

The tension for a foreign contractor is that cl. 4.12 places ground risk on the contractor, while Vietnamese law recognises abnormal geology as a fundamental change event. Which prevails in a given case depends on the governing law, mandatory rules and the wording of the Particular Conditions. Time bars matter too: cl. 20.1 requires notice of a claim within 28 days of awareness, so a claim based on fundamental change should be notified under the contract as well as under Vietnamese law. Our article on terminating a construction contract in Vietnam covers what follows if renegotiation fails.

Drafting a hardship and renegotiation clause

Do not rely on the statute alone. A hardship and renegotiation clause should specify:

• the events that qualify, and those excluded because the contractor bears the risk;
• a threshold, such as a percentage change in a named index or in the cost of an identified input;
• notice periods, content and the effect of late notice;
• the renegotiation timetable and the duty to continue work meanwhile;
• interim measures, such as agreed provisional payment;
• escalation to a dispute board or expert, and then arbitration or court;
• consequences of failure, including termination rights under Article 85 of the Construction Law, which allows termination where force majeure prevents amendment because a party no longer has the capability to perform.

Decree 210 Article 22(3) also allows the parties to adopt price adjustment formulas widely used in international practice, which gives a legal basis for index-linked clauses.

Building the evidence file for a fundamental change of circumstances claim

A fundamental change of circumstances claim is won or lost on documents prepared before the dispute starts. Treat the file as a project control task, not a legal exercise reserved for the end.

• Baseline. Keep the tender-stage price build-up, the base-date information, the geotechnical and survey data supplied, and the risk register as at signing. These show what was foreseeable.
• Event record. Collect the official text of any new law or policy, supplier notices, index series and site records, each with a date and source.
• Mitigation log. Record alternative sourcing, re-sequencing, design changes and other steps taken, with their cost and result.
• Impact analysis. Prepare a comparison of cost and programme with and without the event, prepared by someone who can explain the method to a tribunal or court.
• Notice trail. Keep proof of delivery of every notice to the address stated in the contract.

Lenders and sponsors should ask for this file in monthly reporting once an event is notified. A fundamental change of circumstances claim presented for the first time at completion, without contemporaneous records, is difficult to prove and difficult to finance against.

A hypothetical example

This is an illustration only. A private developer and a contractor sign a lump-sum building contract, with ground investigation data provided by the developer. During excavation, the contractor finds unmapped, contaminated fill requiring special disposal. It gives written notice promptly, suspends the affected zone while a geotechnical specialist reports, and proposes a revised programme and cost.

The developer argues that the data disclosed fill risk and that the contract allocated site risk to the contractor. The result will turn on what the data actually disclosed, whether the finding fits “abnormal geological conditions not foreseeable at signing”, and whether the contractor can show mitigation. A claim based only on a price rise in disposal costs, without those findings, would be weaker.

Fundamental change of circumstances construction contract Vietnam: how it plays out by project type

The legal test is the same, but the triggering events differ by sector. Public investment and PPP projects add the decree’s procedures; private projects follow the parties’ agreement plus the Construction Law and Civil Code.

Infrastructure and transport

Expressways, ports, metro and airport terminals run for years, so material price movements and unforeseen ground conditions are the usual claims. The North–South high-speed railway (about 1,541 km through 15 provinces and cities, per VietNamNet on 9 October 2026) shows how varied ground can be along one alignment. For Long Thành International Airport, phase 1 terminal construction began on 31 August 2023, and commercial operation is expected from 24 December 2026 according to press reports; a programme of that length makes price-adjustment clauses and notice discipline essential. Where public funds are involved, the decree’s procedure often applies.

Heavy industry and FDI factories

Steel and petrochemical plants depend on imported equipment and commodity prices. Hardship claims commonly cite currency, freight or supply-chain disruption, but price volatility alone rarely meets the test, so the claim must show the effect on the contract as a whole.

Renewable energy and power

Solar, wind and LNG power projects are sensitive to changes in law, tariff or grid-connection policy. A change in energy regulation may qualify as a change in law under the contract, or in rare cases support a fundamental-change argument. Offshore works add weather and seabed risk.

Real estate and hospitality

Resorts, hotels, urban areas and mixed-use schemes face permit and land-handover delays and design changes. A hypothetical case: a resort contractor claims relief after a planning change halts one phase; the first question is whether the event was foreseeable and who bore it contractually.

Sector	Typical trigger	What to check
Expressway, rail, airport terminal	Ground, prices, long programme	Notice timing; public-project procedure
Factory, steel, petrochemical	Imported equipment, commodity prices	Whether effect on contract is fundamental
Solar, wind, LNG power	Policy, grid, weather	Change-in-law clause versus hardship
Resort, hotel, mixed-use	Permits, land handover, design changes	Foreseeability and risk allocation

Conclusion

The fundamental change of circumstances construction contract Vietnam route is a renegotiation right, not a free pass. It is strongest when the event is one of those named in the Construction Law, the Civil Code conditions are evidenced, notice is prompt and in writing, and the contract has been drafted to support rather than contradict it. A practical next step is to review your live contracts for a hardship clause, a notice procedure and a base date, and to open a file now for the evidence you would need to prove the five conditions.

Frequently Asked Questions

Is a rise in material prices a fundamental change?

Not automatically. Decree 210 Article 18(3) deals with abnormal price volatility beyond forecast causing serious loss, and the Civil Code conditions must still be met. Evidence of unforeseeability and mitigation is essential.

Must I keep working while negotiating?

Generally yes. Under Civil Code Article 420 the parties continue performing during renegotiation unless they agree otherwise, so stopping work risks a separate breach.

Can a court change my contract price?

A court may amend or terminate where negotiation fails and refusing to do so would cause one party major loss. This is an exceptional remedy, and tribunal power is a separate question.

Is fundamental change the same as force majeure?

No. Force majeure concerns events that prevent performance; fundamental change concerns events that make performance seriously unbalanced. Different tests and remedies apply.

Does a FIDIC contract exclude this right?

Not necessarily. FIDIC cl. 4.12 allocates unforeseen difficulty to the contractor, but mandatory Vietnamese law and the governing law may still affect the outcome. Seek advice on the specific wording.

Disclaimer: This article provides general information on Vietnamese law as at 22 October 2026 and is not legal advice for any specific matter. FIDIC references are to the 1999 edition.