Abstract: This article analyzes the mechanism of exemption from liability due to third-party failure to perform obligations under Article 79(2) of the United Nations Convention on Contracts for the International Sale of Goods (CISG), a specific provision with strict application conditions aimed at limiting the transfer of risk from the obligated party to the other party. By clarifying the concept of "third party," the relationship between Article 79(1) and Article 79(2), as well as the practical interpretation of international courts and arbitration, the article points out the very narrow scope of application of the "double exemption" mechanism in the CISG. Based on a comparison with Vietnamese law, the article shows that the current legal system has not explicitly recognized the case of exemption from liability due to third-party failure to perform obligations and there are still differing views surrounding this issue. Therefore, the article proposes improving Vietnamese law by clarifying the legislative position and increasing the degree of harmonization with the CISG.
Keywords: CISG; exemption from liability; force majeure;international sale contracts; third person.
Introduction
In the course of contract performance, a party may encounter objective impediments that are unforeseeable, beyond its control, and unavoidable, rendering that party unable to perform its contractual obligations. In such circumstances, requiring the impeded party to bear legal liability for non-performance of the contract is unreasonable and may even run counter to the principle of good faith in the conclusion and performance of contracts. For this reason, major legal systems around the world all provide for exemption from liability for breach of contract when a party encounters objective impediments of a force majeure nature.
Rules on exemption from liability are particularly important in the field of international sale of goods, as cross-border transactions must confront numerous risks such as natural disasters, war, epidemics, and changes in policy and law. The United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention 1980 – CISG) provides for exemption from liability in Article 79. In addition to the general provision on force majeure in paragraph 1, paragraph 2 of this Article separately regulates exemption from liability in cases where a third party whom a party has engaged to perform all or part of the contract fails to perform its obligations. This is a specific form of exemption from liability under the CISG and has no corresponding provision in Vietnamese law.
Although in Viet Nam there have been several research works on Article 79(2) of the CISG (to be presented in Section 3), most of them remain at the level of identifying the issue without providing an in-depth analysis. In particular, the question of whether Viet Nam should adopt the CISG’s approach and, if so, to what extent, has not yet been comprehensively addressed. This article contributes several new arguments through an examination of legal materials published in recent years. In addition, the author goes further than previous studies by comparing the law of several countries, examining the views of a number of authoritative scholars, and reviewing certain representative disputes that have been resolved by courts in some jurisdictions.
The first part of the article focuses on clarifying theoretical issues, the historical background, and the legal aspects of the exemption from liability due to a third party’s failure to perform obligations under Article 79(2) of the CISG. Through this analysis, the article elucidates the substance of a provision that has not yet been thoroughly understood by domestic legal professionals and the business community, despite Viet Nam having acceded to the CISG nearly ten years ago.
In the subsequent part, the article analyzes the viewpoints of domestic scholars and, at the same time, refers to the laws of several countries in order to obtain a multidimensional perspective for answering the question of whether it is necessary to supplement a corresponding provision in Vietnamese law. The article concludes that, although the incorporation of such a provision is not an urgent requirement, improving domestic law in a manner that enhances harmonization with the CISG would avoid the parallel existence of two contractual regulatory regimes and help facilitate business activities. Such harmonization becomes even more important in the context of increasingly complex international commercial transactions involving multiple participants.
1.Overview of the provisions of the Vienna Convention 1980 (CISG) on exemption from liability due to a third party’s failure to perform obligations
When concluding a contract, the principle of pacta sunt servanda – agreements must be respected and performed – requires the parties to fully and in good faith perform the obligations they have agreed upon.[1] This principle ensures the binding force and stability of contracts, linking contractual freedom with the obligation not to act contrary to the expectations created for the parties. However, in the course of contract performance, there are exceptions that allow the breaching party to be exempted from or have its liability reduced, the most common being force majeure – under which the breaching party is exempted if it can prove that the non-performance of its obligation was caused by an objective impediment that was unforeseeable, beyond its control, and unavoidable. In addition, in cases where a party encounters hardship – for example, due to a fundamental change of circumstances – the contractual obligations may be adjusted in order to strike a balance between the principle of pacta sunt servanda and fairness in the practical performance of the contract.[2]
According to the International Chamber of Commerce (ICC), force majeure and hardship are often invoked when unexpected events render the performance of obligations impracticable or cause a significant imbalance in contractual interests. In cases of force majeure, the affected party is exempted from liability for breach of contractual obligations; in cases of hardship, the affected party has the right to request renegotiation in order to adjust the contract. In particular, the ICC notes that whereas events considered as force majeure in the past were mainly natural disasters (acts of God), today they have become far more diverse. As national laws usually regulate these issues, differences among legal systems may lead to divergent applications and legal consequences.[3]
Incorporating both Common Law and Civil Law traditions, Article 79 of the CISG sets out several provisions on exemption from liability in contracts for the international sale of goods. Article 79(1) provides that a party “is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.” It can be said that Article 79(1) revolves around a fundamental principle whereby the obligor should not be compelled to bear legal liability for non-performance of the contract when performance is hindered by an impediment that the obligor could neither foresee, control, nor overcome.[4] By protecting the breaching party in situations where it is unable to perform its obligations despite having made its best efforts, this provision also reflects the principle of fairness in the allocation of risks and establishes reasonable limits on contractual liability for performance.[5]
Meanwhile, Article 79(2) provides in detail the conditions for exemption from liability where a party’s breach involves a third party:
“If the party’s failure to perform is due to the failure to perform by a third person whom he has engaged to perform the whole or a part of the contract, that party is exempt from liability only if:
(a) he is exempt under the preceding paragraph;
(b) the person whom he has so engaged would be so exempt if the provisions of that paragraph were applied to him.”
In civil law, the principal–agent relationship implies that the obligor must bear responsibility for the acts of those whom it entrusts or hires to perform contractual obligations. Only in certain specific cases may the principal disclaim liability for the acts of the agent. For example, due to the particular characteristics of the maritime industry, a carrier has great difficulty controlling the master and the crew once the vessel has set sail. Accordingly, the carrier is exempt from liability for compensation for loss of or damage to the goods if such loss or damage arises from the fault of the master, crew members, maritime pilots, or servants of the carrier in the navigation or management of the ship.[6]
Article 79(2) CISG does not, in essence, contradict the principal–agent principle, as in the vast majority of cases a party to the contract must still bear liability if the third party whom it has entrusted or hired fails to perform its obligations.[7] This provision merely establishes a narrow exception to that principle: the obligor may rely on the non-performance of a third party (whom it has engaged to perform part or all of the contractual obligations) as a ground for exemption from liability only if that third party itself also fully satisfies the conditions for exemption set out in Article 79(1). Therefore, Article 79(2) strictly limits the possibility of transferring the effects of an impediment from the third party (agent) to the obligor (principal).
Under Article 79(2) CISG, the failure of a third party to perform its obligations may constitute a ground for exemption from liability for the breaching party in the contract, provided that both the breaching party and the third party satisfy the exemption criteria clearly stipulated in Article 79(1). In other words, in order to invoke Article 79(2) CISG, the criteria relating to an objective impediment must be applied to both the breaching party and the third party engaged by that party. In essence, Article 79(2) increases the burden on the party invoking this paragraph as compared with exemption from liability under Article 79(1). This issue will be examined in greater depth in subsection 2.3 of the article.
2.
Legal aspects of Article 79(2) CISG on exemption from liability due to a third person’s failure to perform obligations
2.1
The concept of a third person under Article 79(2) CISG
First, it is necessary to clarify the concept of a third person (third person) referred to in paragraph 2 of Article 79 CISG. Although the CISG does not define this concept, in Anglo-American contract law the term “third person” is commonly used to refer to subjects who do not participate in the conclusion of the contract and therefore do not have rights and obligations arising directly from the contract. Viewing a contract as a private agreement between the parties (privity of contract) is a fundamental doctrine in Common Law contract law, under which only the parties directly involved in the formation of the contract may enjoy rights or bear liabilities under its terms.[8] This principle protects the private nature of the agreement, ensures that the contract binds only the contracting parties, prevents third parties from intervening in or demanding performance of the contract, and avoids unexpected legal liability for subjects who did not participate in the conclusion of the contract.[9]
However, in the context of Article 79(2) CISG, although the third person does not participate in the conclusion of the contract, that person does take part to a certain extent in the performance of the contract because he or she is engaged by one party (engage). Interpreted broadly, a third person may be an employee or servant of a party, a supplier, or a subcontractor engaged by that party to perform contractual obligations.[10] Nevertheless, according to the general principles of labor law, an employer must bear responsibility for the acts of employees; therefore, the CISG Advisory Council and scholars generally agree that employees do not fall within the scope of Article 79(2).[11]
In judicial practice, the Ticino Cantonal Court of Appeal (Switzerland), in the Furniture V case, affirmed that employees of the seller are not considered third persons within the meaning of the CISG, but rather that third persons must be autonomous and independent parties participating in the performance of part or all of the contract.[12] According to the Court’s view, a third person under Article 79(2) CISG must be someone engaged or entrusted by a party after the conclusion of the international sale of goods contract to perform obligations toward the other party. For example, a carrier through whom the seller delivers the goods to the buyer, or a subcontractor designated by the seller to carry out stages of product finishing, may fall within the scope of this provision.
The CISG Advisory Council has provided interpretative guidance to clarify the concept of a third person under Article 79(2). The Council considers that two groups of third persons should be distinguished: one group that creates the preconditions for the international sale of goods transaction to take place, and another group that is engaged after the conclusion of the contract to perform part or all of the contractual obligations.[13] The first group includes raw material suppliers or agents assisting in buying or selling goods. This group normally does not fall within the scope of Article 79(2), because a party must still bear the risk when its supplier fails to perform obligations toward that party.[14] In such cases, Article 79(1) remains the primary provision for determining the liability of the party in breach of contract.[15]
The judgments of numerous courts and arbitral tribunals have reinforced this line of interpretation.[16] The Vine wax case adjudicated by the German Federal Supreme Court (Bundesgerichtshof – BGH) in 1999 is a landmark precedent concerning the seller’s liability under Article 79(2) CISG. In this dispute, the buyer, a vineyard specializing in grape grafting, purchased black vine wax from the seller, who imported the wax from a third-party manufacturer. The wax was delivered directly from the manufacturer but had not been inspected by the seller and failed to meet industry standards, thereby causing substantial damage to the buyer. The seller argued that it merely acted as an intermediary and that the fault lay beyond its control, and therefore invoked Article 79(2) CISG to seek exemption from liability. However, the Court rejected this argument, holding that the seller had to bear responsibility for the defect even though it originated from the manufacturer, as it still fell within the seller’s sphere of responsibility. The Court emphasized that the delivery of non-conforming goods by the manufacturer did not constitute an impediment under Article 79, because the seller could and should have controlled its supply chain, including the inspection of new products. Accordingly, the Court concluded that the seller remained liable for damages resulting from the delivery of goods not in conformity with the contract to the buyer.[17]
The other group of third persons referred to by the CISG Advisory Council consists of independent parties engaged by one party to perform all or part of the contractual obligations toward the other party. Engagement for this purpose indicates that the third person participates only after the conclusion of the contract so that the obligor can perform the contract. Accordingly, this group may include subcontractors performing part of a party’s work as well as carriers, provided that they directly assist the obligor in performing part or all of its obligations.[18] It may be said that Article 79(2) CISG does not apply where the third person merely plays an indirect supporting role or creates necessary preconditions for the performance of the international sales contract without directly undertaking the performance of obligations arising from that contract.[19]
However, dispute settlement practice shows that there remains some divergence in the understanding of this group of third persons. As mentioned above, according to the Ticino Cantonal Court of Appeal (Switzerland), third persons include carriers delivering goods on behalf of the seller and subcontractors designated by the seller to perform part of the work. By contrast, in a judgment of the Zurich Commercial Court (Switzerland), a carrier was not considered a third person within the meaning of Article 79(2) CISG.[20]
In summary, the concept of a third person under paragraph 2 of Article 79 CISG should be interpreted narrowly. Although no uniform definition has yet been established, scholars and dispute resolution bodies tend to regard a third person as an independent entity engaged by a party after the conclusion of the contract to perform all or part of the contract for the other party, such as subcontractors or carriers. By contrast, suppliers or personnel of the obligor are, in principle, not subject to the scope of Article 79(2).
2.2. Distinguishing the application of Article 79(1) and Article 79(2) CISG
If not properly understood, Article 79(2) may cause confusion in practice. To clarify the circumstances in which Article 79(2) CISG applies, it is necessary to distinguish the purposes of paragraph 1 and paragraph 2 of this provision. It can be seen that Article 79(1) sets out the general principle of exemption from liability due to an objective impediment, whereas Article 79(2) applies where a party seeks exemption from liability because a third person whom it has engaged to perform all or part of the contract has failed to perform its obligations.
First, based on the analysis above, it can be observed that Article 79(2) CISG does not completely exclude the application of Article 79(1) to contracts involving third persons. Scholars and dispute resolution bodies generally agree that Article 79(2) applies only where a party entrusts the performance of all or part of its obligations to a specific group of third persons (for example, subcontractors). If a party’s breach results from the fault of other third persons (for example, employees), Article 79(2) does not apply and Article 79(1) must instead be invoked.[21]
According to the prevailing view, upstream suppliers do not fall within the scope of Article 79(2). They usually create preconditions for, or support, the performance of the contract rather than being engaged to perform all or part of the contractual obligations. They may supply the seller with raw materials or semi-finished products necessary for the manufacture of the goods. In some cases, for example where the seller acts as a commission agent, the supplier may even deliver the very goods under the international sales contract to the seller. Generally, dispute resolution bodies consider that the seller’s responsibility for its suppliers constitutes part of the risk the seller must bear to ensure delivery of the goods. Accordingly, the seller is usually not exempt from liability under Article 79 if the supplier fails to deliver or delivers defective goods, even where such failure is unforeseeable.[22]
The Powder milk case decided by the German Federal Supreme Court (Bundesgerichtshof – BGH) in 2002 provides another example of the seller’s liability for non-conforming delivery. The BGH held that fault still lay with the seller even where the seller’s performance depended on a supplier. Accordingly, the BGH set aside the lower court’s judgment and required verification of whether the deterioration of the powdered milk was truly beyond the seller’s control, that is, whether the conditions of Article 79(1) CISG were satisfied.[23]
Placed in the context of recent geopolitical and economic developments, one may assume a situation in which the seller is unable to perform its delivery obligation because a raw material supplier is affected by economic sanctions. In such a case, to be exempt from liability under the CISG, the seller must consider whether the conditions of Article 79(1) have been met. Similarly, if the buyer is unable to perform its payment obligation because its bank accounts are frozen due to a government embargo, the buyer must invoke Article 79(1) rather than Article 79(2). However, if after the conclusion of the international sales contract the seller has entrusted the manufacture of the goods to a subcontractor and that subcontractor fails to perform the contract due to import restrictions, the seller must invoke Article 79(2) rather than Article 79(1) to seek exemption from liability. Likewise, Article 79(2) will also apply if the buyer has entrusted the obligation to take delivery or to make payment to an independent third person.
2.3. Conditions for exemption from liability under Article 79(2) CISG
Paragraph 2 of Article 79 CISG provides that a breaching party is exempt from liability only if two conditions are simultaneously satisfied: (1) the breaching party itself meets the conditions for exemption from liability under paragraph 1 of Article 79; and (2) the third person also fully satisfies the conditions for exemption from liability under paragraph 1. This mechanism is commonly referred to as “double exemption from liability”, under which both the breaching party and the third person must be unable to perform their obligations due to an objective impediment beyond their control.[24] The purpose of this provision is to make exemption from liability more difficult where the performance of contractual obligations has been entrusted to a third person. It also emphasizes that, in order to obtain exemption under Article 79, the performance of the obligation must truly be prevented by an objective impediment. A reason such as the failure of a subcontractor, in itself, is not sufficient to exempt the breaching party from liability.[25]
With respect to the first condition, a party is exempt from liability only if its breach of contract results from an impediment beyond its control, which in turn arises from the failure of an independent third person to perform the obligations agreed with that party. In other words, the mere failure of the third person must itself have the character of an objective event, in the sense that the breaching party could not foresee it and could not prevent or overcome its consequences despite having taken reasonable measures.
To satisfy the second condition, it must be examined whether the third person’s breach stems from an impediment falling within the scope of Article 79(1) CISG. This requires that the third person, too, be affected by an objective impediment that was unforeseeable, beyond its control, and unavoidable. If this condition is not met, the third person will bear legal liability under the contract between itself and the breaching party in the international sale of goods. At the same time, the breaching party to the international sale of goods contract will also bear legal liability toward the other party.[26]
Schlechtriem and Schwenzer summarize that invoking the fault of a third person does not constitute a ground for exemption unless the third person encounters the same force majeure-type impediment as the party bearing the obligation.[27] Some scholars argue that proving that the third person itself was also confronted with a force majeure situation is often very difficult, thereby significantly reducing the likelihood of exemption under the “double” mechanism established in Article 79(2) CISG.[28] As analyzed above, international dispute resolution practice shows that Article 79(2) is applied with great caution and under strict standards, particularly where the third person is a supplier of the seller.
3. Provisions of Vietnamese law on exemption from liability due to a third party’s failure to perform obligations
When compared with Vietnamese law, it can be seen that exemption from liability due to the acts of a third party was once recognized in the Ordinance on Economic Contracts of 1989.[29] Specifically, Clause 3 Article 40 of this Ordinance provided that a breaching party could be “considered for reduction or full exemption from property liability” if the failure to perform obligations resulted from “a third party breaching an economic contract with the breaching party, while such third party is not required to bear property liability” because the third party encountered objective impediments that were unforeseeable and had taken all necessary measures to remedy them, or because the third party had to comply with an emergency order of a competent State authority in accordance with law.
However, this provision no longer appears in subsequent normative legal documents, starting from the Civil Code (CC) of 1995. Currently, Clause 2 Article 351 of the Civil Code 2015 only provides for exemption from liability when a party encounters a force majeure event as follows: “Where the obligor fails to properly perform an obligation due to a force majeure event, it shall not bear civil liability, unless otherwise agreed or otherwise provided by law.” Prior to that, the concept of a force majeure event is defined in Clause 1 Article 156 as “an event occurring objectively, which is unforeseeable and cannot be remedied despite all necessary and permissible measures having been applied.”
Article 294 of the Law on Commerce (LC) 2005 provides for four cases in which a breaching party is exempt from liability, of which two may be related to the involvement of a third party: (1) where a force majeure event occurs; and (2) where the breach of one party arises from the implementation of a decision of a competent State management authority that the parties could not have known at the time of contract conclusion. It can be seen that, in the case of exemption due to a decision of a competent authority, the law does not directly regard such authority – as a third party – as the ground for exemption, but rather emphasizes the objective consequences caused by that decision on the performance of the contract. It should also be noted that Clause 2 Article 294 of the Law on Commerce 2005 applies only to “the breach of a party” and does not extend to breaches by a third party engaged by that party to perform part or all of the contract (even where such third party is affected by a decision of a competent State management authority). Therefore, this case may be excluded, and attention should be focused solely on exemption in the event of force majeure.
The removal of the provision previously contained in the Ordinance on Economic Contracts 1989 may be interpreted in two ways. First, it may be argued that the Vietnamese legislature no longer recognizes this as a case of exemption from liability. This line of reasoning is more convincing when read together with Article 283 of the Civil Code 2015, which provides that “the obligor may request a third party to perform the obligation, but shall still bear responsibility if the third party fails to perform or improperly performs such obligation, unless otherwise agreed.” Accordingly, the prevailing position of the Civil Code 2015 is that the obligor must still bear responsibility toward the other party even when the performance of contractual obligations has been transferred to a third party.[30] As noted above, Article 79(2) may be regarded as a narrow exception to the principal–agent principle. The absence of any provision in the Civil Code 2015 other than the general principle in Article 283 may indicate that the law does not accept a third party’s failure to perform obligations as a ground for exempting a party from liability under a contract.
Under the second line of interpretation, some Vietnamese scholars (in the studies cited in Section 4 of this article) argue that the force majeure event defined in Article 156 of the Civil Code 2015 is broad enough to encompass cases where a third party fails to perform obligations. The reasoning offered is that the concept of force majeure in the Civil Code 2015 is similar to the concept of an “impediment beyond control” in Article 79 CISG. In addition, Clause 1 Article 156 of the Civil Code 2015 also refers to the concept of an “objective impediment” alongside the concept of a force majeure event.[31] However, it should be noted that the similarity between these concepts is quite understandable, as the criteria for identifying force majeure situations in national legal systems are fundamentally similar. It should also be emphasized that the concept of an “objective impediment” in Article 156 of the Civil Code 2015 applies only in the context of statutes of limitation. More importantly, the similarity between the concept of force majeure in Vietnamese law and that of an objective impediment in the CISG does not answer the core question of whether a third party’s failure to perform obligations should be regarded as a ground for exemption from liability.
In order to answer the above question, it is necessary to determine whether, based on the criteria of a force majeure event (objectivity, unforeseeability, uncontrollability, and impossibility of overcoming), force majeure may be broadly interpreted to include cases where a third party fails to perform its obligations. Let us consider the example in which the seller invokes delayed delivery due to its subcontractor’s failure to perform the contract on schedule. The unforeseeable and unavoidable nature of such an event may be relatively easy to demonstrate. However, to assess whether this event is objective in nature, it is necessary to return to the core principle: the principal–agent relationship established by Article 283 of the 2015 Civil Code. The buyer may argue that it need not concern itself with which third party the seller has hired or relied upon to perform the obligation, since the seller remains responsible in its capacity as the principal. From this perspective, the event is subjective in nature and does not satisfy the objectivity criterion of a force majeure event. It may therefore be said that once the law has determined that the obligor must bear responsibility for the acts of a third party without providing any other exception, the failure of that third party to perform its obligations, as a matter of principle, cannot be regarded as a force majeure event under Vietnamese law.
The author considers this to be the key reason why the CISG separates exemption from liability due to a third party’s failure to perform into a distinct paragraph under Article 79 and imposes more stringent conditions than those applicable to the general exemption regime. This legislative design clearly reflects the CISG’s philosophy of risk allocation: as a matter of principle, the obligor must bear the risk associated with the entities it hires or relies upon to perform the contract. The establishment of the “double exemption” mechanism under Article 79(2) CISG demonstrates that the Convention does not regard every failure by a third party to perform its obligations as a force majeure event vis-à-vis the obligor. On the contrary, only in exceptional circumstances—where the third party’s non-performance satisfies, in a strict sense, the criteria of an objective impediment—may this risk be shifted away from the obligor.
By contrast, if the concept of force majeure under the 2015 Civil Code and the 2005 Law on Commerce is considered broad enough to encompass cases in which a third party fails to perform its obligations, then exemption from liability would be assessed solely on the basis of the general criteria of force majeure, without imposing an independent examination of the circumstances affecting the third party itself. This approach results in a lack of clarity in delineating the boundary between inherent risks arising from the organization and performance of the contract and impediments that are genuinely objective in nature. At the same time, it fails to establish a clear standard for determining whether such cases constitute an exception to the principal–agent principle set out in Article 283 of the 2015 Civil Code. This very ambiguity renders the scope of application of force majeure in situations involving third parties difficult to predict in legal practice.
Accordingly, although current Vietnamese law is relatively compatible with the CISG with respect to certain concepts, there is no specific provision recognizing that a third party’s failure to perform its obligations may serve as a ground for exempting a party from liability under a contract. This has led to differing interpretations and perspectives regarding the necessity of further improving Vietnamese legal provisions in this regard.
4. On the necessity of improving Vietnamese law and several recommendations
Some authors argue that the incorporation of Article 79(2) CISG into Vietnamese law is necessary. Phan Thi Thanh Thuy (2014) contends that “this is a commercial practice that can entirely occur in reality and that Vietnamese law needs to supplement in order to ensure the comprehensiveness and fairness of exemption from liability for breach of contract.”[32] Le Minh Thai (2023) argues that: “Along with the development of the international economy, the expansion of trade, and the development of freight forwarding, transportation services, and logistics, the involvement of third parties in the process of contract performance has become very common in practice. From the perspective of exemptions from liability, the 1980 Vienna Convention will ensure greater fairness and safety for the parties.”[33] According to Pham Minh Quoc (2024), Viet Nam has officially acceded to the CISG; therefore, supplementing the 2005 Law on Commerce with provisions on grounds for exempting a breaching party from liability due to force majeure affecting a third party having a contractual relationship with that breaching party is necessary to ensure compatibility with practice and international customs.[34]
By contrast, Tran Thanh Tam and Pham Thanh Cao (2017) argue that adding such a provision is unnecessary because “even without a separate provision on exemption from liability due to a third party, it can be understood that exemption from liability due to a third party may still be achieved if it constitutes a case of force majeure for a party to the contract or if it is a case agreed upon by the parties.”[35] Le Thi Anh Xuan and Nguyen Thi Minh Trang (2021) likewise affirm that, although there is no clear provision on the role of third parties in a breaching party’s violation comparable to Article 79(2) CISG, the provisions of Article 156 of the 2015 Civil Code and Article 294 of the 2005 Law on Commerce to some extent reflect Viet Nam’s relatively similar viewpoint on the issue of exemption from liability.[36]
Accordingly, there are currently two differing schools of thought as to whether it is necessary to add this provision to Vietnamese law. Regrettably, authors who consider that Vietnamese law is sufficiently broad to encompass this case have almost never provided an explanation. As analyzed in Section 3, whether the concept of force majeure under the 2015 Civil Code and the 2005 Law on Commerce encompasses this case remains a matter of conjecture and contains ambiguities, even contradictions, if interpreted in that direction. In addition, Pham Thanh Tam and Tran Thanh Cao (2017) further argue that a third party’s failure to perform obligations may still be regarded as a case of exemption from liability if it is “a case agreed upon by the parties.”[37] This is entirely reasonable but also rather self-evident. The issue becomes complicated only when the parties have not so stipulated. Ultimately, the purpose of the law is to fill gaps (gap filling) when the parties have not provided specific terms in the contract.
Another reason identified by scholars both domestically and internationally is that Article 79(2) CISG does not appear in the contract law of many countries,[38] such as the Contract Law of China.[39] The UNIDROIT Principles of International Commercial Contracts (PICC) likewise do not regulate this situation.[40] Nevertheless, the German Civil Code (BGB) contains relatively comprehensive provisions on this issue in §275, pursuant to which “a claim for performance shall be excluded to the extent that performance is impossible for the obligor or for any other person.” Notably, the BGB separates the issue of exemption from performance from the issue of exemption from damages and provides as follows regarding liability where a breach occurs due to a third party’s failure to perform its obligations.
§832 Liability for Indirect Employees[41]
(1) A person who entrusts another person with the performance of a task shall be liable to compensate for damage unlawfully caused by that person to a third party in the course of performing the entrusted task. However, liability for damages shall not arise if the person who entrusted the task exercised the care required in commercial transactions when selecting the entrusted person or—to the extent that such person was required to prepare tools, equipment, or manage business operations—exercised due care in such preparation or management; or if the damage would have occurred even had such care been exercised.
Accordingly, under the approach of the German Civil Code (BGB), the fact that a party is not required to continue performing an obligation due to impossibility does not automatically mean that the party is exempt from liability for damages. Instead, liability for damages is assessed independently, based on the degree of care and fault of the obligor in organizing, selecting, and supervising the performance of the obligation by the third party. With respect to the United States Uniform Commercial Code (UCC), Jenkins argues that, regarding exemption from liability due to a third party’s failure to perform obligations, both the CISG and the UCC acknowledge the possibility of exemption related to third parties. However, the UCC is stricter than the CISG in terms of conditions for application. For Section 2-615 of the UCC (on excuse by failure of presupposed conditions) to apply, it must be proven that an exclusive supplier had been agreed upon by the parties, or that a supplier predetermined or contemplated as the specific supplier for that contract failed to perform its obligations.[42]
In English law, force majeure is a concept imported from Civil Law and therefore is not a legal term of doctrinal nature comparable to the doctrine of frustration in the contract law of certain countries. Accordingly, force majeure generally takes effect only when it is expressly provided for in the contract; otherwise, it may not be applied. This differs from many legal systems in Europe and certain mixed systems such as that of the United States.[43] Therefore, in general, exemption from liability due to a third party is not a general rule in English law and applies only where there is a specific contractual provision.
Through comparison with foreign laws, it can be seen that there is diversity in approaches, and the fact that Vietnamese law does not contain such a provision is not an anomalous case.
With respect to the reasons advanced in a number of studies in support of adding this provision (ensuring comprehensiveness, fairness, conformity with the context of integration, and compatibility with international practices), the author of this article shares that view. In addition, it should be recognized that harmonization with the CISG is of significant importance in terms of legal effectiveness. Not only Article 79(2), but many other provisions of the CISG adopt approaches different from Vietnamese law (for example, the provision on fundamental breach in Article 25 or the provision on avoidance of contract prior to the time for performance in Article 72). These differences are inevitable due to differing legal traditions (the CISG is deeply influenced by Common Law and is regarded as a bridge between Common Law and Civil Law).[44] From the perspective of law and economics, taking legal efficiency as a factor for consideration, harmonization is necessary to avoid a situation in which the same enterprise must comply with two different systems of contract law. This inconvenience is most pronounced for enterprises that both conduct domestic business activities and engage in international transactions. If the criteria for fundamental breach, conditions for contract avoidance, grounds for exemption from liability, and the like differ between domestic contract law and international contract law, enterprises will have to maintain two sets of rules and two parallel processes for legal review and advice. This not only increases compliance and transaction costs, but also creates risks of error, because the same factual situation must be assessed differently depending on whether the contract is international or domestic in nature. In the long term, such lack of harmonization leads to waste of resources, reduced competitiveness, and diminished ability of enterprises to respond swiftly to market changes.
The author believes that, regardless of which approach is chosen, it is first necessary to clarify the position of Vietnamese law on exemption from liability due to a third party’s failure to perform obligations. If Viet Nam chooses not to accept this ground for exemption, that position should be expressly reflected in normative legal instruments, in order to eliminate any doubts regarding the scope of application of the force majeure clause. This approach rejects the risk-sharing model of Article 79(2) CISG and places all risks related to third parties entirely on the obligor. It should be noted that, while this approach achieves clarity, it reduces the degree of harmonization between Vietnamese law and international practices.
If the approach of Article 79(2) CISG is adopted—namely, recognizing the possibility of exemption from liability in relation to third parties under strict conditions and expressly provided for by law—Vietnamese law should not expand the existing concept of force majeure in the 2015 Civil Code and the 2005 Law on Commerce, but should instead add a separate definition and clear conditions for application, based on the principle of “dual exemption.” That is, it should be specifically provided that where a breaching party has hired a third party to perform all or part of the obligation, that party shall be exempt from liability only if it can demonstrate that the third party also encountered an objective impediment under the criteria mentioned above. This approach both incorporates the spirit of the CISG regarding impediments related to third parties and avoids equating all difficulties arising from third parties with force majeure events. Given that many Vietnamese scholars also adopt a narrow conception of force majeure, adding a separate provision rather than expanding the concept of force majeure would be more readily accepted.[45]
When introducing an additional provision on this ground for exemption, Vietnamese law should stipulate specific conditions to facilitate application and prevent abuse. For example, the obligor should be required to prove that it applied reasonable measures to select and control the third party but nevertheless could not prevent the third party’s breach and could not remedy the consequences of that breach. This would help fill legal gaps observable in dispute resolution practice worldwide, particularly as modern commerce increasingly relies on supply chains, outsourcing services, and intermediary suppliers. It would also serve to specify the responsibilities of the parties in the process of performing contractual obligations and to enhance predictability in dispute resolution.
In addition, this article concurs with the view of Le Thi Anh Xuan and Nguyen Thi Minh Trang (2021) that the concepts of force majeure and objective impediment should be removed from Article 156 and relocated to the section on interpretation of terms, in order to enhance the professional quality of the Civil Code.[46]
Regardless of the chosen approach, an indispensable parallel task is to strengthen education, training, and dissemination of law for judges, arbitrators, lawyers, and the business community regarding the exemption mechanism under Article 79(2) CISG. If Viet Nam chooses to adopt the CISG model and to formulate a separate provision on exemption from liability related to third parties, legal education and dissemination will play a crucial role in helping stakeholders clearly identify the boundary between exemption from liability due to force majeure in the traditional sense and exemption due to a third party’s failure to perform obligations. Thereby, predictability and legal certainty in the conclusion, performance, and resolution of contract disputes will be enhanced. Conversely, if Viet Nam chooses not to adopt this approach, legal education should explicitly clarify the differences between Vietnamese law and the CISG, in order to avoid misguided expectations on the part of enterprises and to promote the necessary caution when entering into and performing international sales contracts.
Conclusion
In the context of Viet Nam’s increasingly deep integration into the international economy and the growing complexity of global supply chains, the practice whereby a party to a contract entrusts all or part of its obligations to a third party has become a common phenomenon in commercial practice. This trend increases the risk of disputes arising when the third party fails to perform its obligations, while simultaneously posing new challenges to mechanisms for allocating risk and liability for breach of contract. In this context, the provision of Article 79(2) CISG offers a cautious and clear approach, under which exemption from liability related to third parties is recognized, but only under extremely strict conditions.
When compared with the current Vietnamese legal framework, it can be observed that exemption from liability due to a third party’s failure to perform obligations has not been expressly recognized, leading to divergent interpretations in legal scholarship and potentially to inconsistency in practical application. Accordingly, the issue at hand is not necessarily whether to directly adopt the CISG model, but rather to clarify, as a matter of priority, the position of Vietnamese law with respect to this situation. Whether the law chooses not to recognize this as a ground for exemption, or to recognize it under a strict “dual exemption” mechanism similar to that of Article 79(2) CISG, such a choice needs to be clearly reflected in legal provisions in order to enhance predictability and legal certainty for parties in contractual relationships, particularly in the context of modern commercial transactions.
1.
CISG Advisory Council, CISG-AC Opinion No. 7, Exemption of
Liability for Damages under Article 79 of the CISG (Rapporteur: Alejandro
M. Garro), adopted at the 11th meeting in Wuhan, People’s Republic of China
(2007).
2. DO VAN DAI (2016), SCIENTIFIC COMMENTARY ON THE NEW FEATURES OF THE 2015 CIVIL CODE, Hong Duc Publishing House – Viet Nam Lawyers’ Association.
3.
EISELEN, SIEG, “THE CISG AS BRIDGE BETWEEN COMMON AND CIVIL LAW,”
TRONG L.A. DIMATTEO (ED.), INTERNATIONAL SALES LAW: A GLOBAL CHALLENGE,
CAMBRIDGE UNIVERSITY PRESS (2014), TR. 612–629.
4.
Graham, Colin & Rupert Reece (2020), “The Impact of the New
Coronavirus (Covid-19) on International Contractual Obligations: Force Majeure
under English Law,” Client Alert, Gide Loyrette Nouel.
5. Council of State (1989), Ordinance on Economic Contracts No. 24-LCT/HĐNN8 dated 25 September 1989.
6.
International Chamber Of Commerce, Icc Force Majeure And
Hardship Clauses (2020).
7.
Jenkins, Sarah Howard, “Exemption for Nonperformance: UCC, CISG,
UNIDROIT Principles – A Comparative Assessment,” Tulane Law Review, Vol.
72 (1998), tr. 2015–2030.
8.
Kim, Kyujin, “Can Economic Sanctions be Grounds for Exemption
under the CISG?,” Journal of Korea Trade, Vol. 26, No. 5 (2022), tr.
88–105.
9.
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Law School.
10.
Le Minh Thai, “Improving Legal Provisions on International Sales Contracts under the 1980 Vienna Convention,” Democracy and Law Journal, Issue 1, No. 394 (2023).
11.
Le Thi Anh Xuan & Nguyen Thi Minh Trang (2021), “Exemption from Liability due to the Involvement of a Third Party under the 1980 CISG and Vietnamese Law,” Procuracy Science Journal, No. 47, Special Issue 01.
12.
MAZZACANO, PETER J. (2013), EXEMPTIONS FOR THE NON-PERFORMANCE
OF CONTRACTUAL OBLIGATIONS IN CISG ARTICLE 79 AND THE QUEST FOR UNIFORMITY IN
INTERNATIONAL SALES LAW, PHD DISS., OSGOODE HALL LAW SCHOOL, YORK
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13.
NWAFOR, NDUBUISI AUGUSTINE (2015), COMPARATIVE AND CRITICAL
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UNITED NATIONS CONVENTION ON THE CONTRACT FOR THE INTERNATIONAL SALE OF GOODS,
ENGLISH LAW AND UNIDROIT PRINCIPLES, PHD THESIS, UNIVERSITY OF STIRLING.
14.
NGUYEN MINH HANG (Chief Editor) (2016), 101 QUESTIONS AND ANSWERS ON CISG, Thanh Nien Publishing House.
15. Pham Minh Quoc (2024), “Exemption from Compensation Liability for Breach of International Sales Contracts under Vietnamese Law,” Democracy and Law Journal, Issue 1, No. 404.
16.Phan Thi Thanh Thuy (2014), “Comparison of Provisions on Liability for Breach of Contract in the 2005 Vietnamese Commercial Law and the 1980 Vienna Convention,” VNU Journal of Science: Legal Studies, Vol. 30, No. 3, pp. 50–60.
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& SCHWENZER: COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF
GOODS (CISG), 5TH ED., OXFORD UNIVERSITY PRESS.
19.
Tran Thanh Tam & Pham Thanh Cao (2017), “Exemption from Liability due to a Third Party under Article 79(2) of the United Nations Convention on Contracts for the International Sale of Goods: A Comparative Law Perspective,” Legal Science Journal, No. 07 (110).
20. Tran Thi Thuan Giang (2017), “Exemption Clauses for Non-Conforming Delivery under the 1980 Vienna Convention,” Legal Science Journal, No. 07 (110).
21.
UK Parliament (1999), Contracts (Rights of Third Parties) Act
1999, section 1.
22.
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23.
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25.
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[*] PhD, Faculty of Law, University of Economics Ho Chi Minh City. Email: duydk@ueh.edu.vn. Date of approval for publication: 31 December 2025.
[1] Article 1.3 of the UNIDROIT Principles of International Commercial Contracts (PICC).
[2] See PICC Articles 7.1.7 and 6.2.2.
[3] International Chamber of
Commerce. ICC Force Majeure and Hardship Clauses, from https://iccwbo.org/business-solutions/model-contracts-clauses/icc-force-majeure-and-hardship-clauses/ (truy cập 6/12/ 2025).
[4] SCHWENZER, INGEBORG, AND ULRICH G
SCHROETER (EDS), SCHLECHTRIEM & SCHWENZER: COMMENTARY ON THE UN CONVENTION
ON THE INTERNATIONAL SALE OF GOODS (CISG), 5TH EDITION (2022; ONLINE EDN,
OXFORD LAW PRO), tr. 1374.
[5] Tran Thi Thuan Giang (2017), “Exemption Clauses for Non-Conforming Delivery under the 1980 Vienna Convention,” Legal Science Journal, No. 07 (110).
[6] Article IV(2)(a), Protocol amending the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading of 25 August 1924, as amended by the Brussels Protocol of 1968 and further amended by the Brussels Protocol of 1979. See also Article 151 of the 2015 Vietnamese Maritime Code (as amended).
[7] Ibid., note 4, p. 1374.
[8] Legal Information Institute (2021). Privity.
Wex, Cornell Law School, https://www.law.cornell.edu/wex/privity (truy cập 5/12/2025).
[9] UK Parliament. (1999). Contracts
(Rights of Third Parties) Act 1999, section 1, https://www.legislation.gov.uk/ukpga/1999/31/section/1 (truy cập 5/12/2025).
[10] PETER SCHLECHTRIEM (1986),
UNIFORM SALES LAW - THE UN-CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE
OF GOODS, MANZ, VIENNA, tr. 104, https://iicl.law.pace.edu/sites/default/files/cisg_files/schlechtriem.html, truy cập ngày 16/09/2025.
[11] CISG Advisory Council (2007), Opinion
No. 7: Exemption of Liability for Damages under Article 79 of the CISG,
Rapporteur: Professor Alejandro M. Garro, Columbia University School of Law,
New York, N.Y., USA. Adopted by the CISG-AC at its 11th meeting in
Wuhan, People’s Republic of China (2007), đoạn 17-22, https://cisgac.com/opinions/cisgac-opinion-no-7/ (truy cập ngày 14/9/2025).
[12] Tribunale d’appello del Cantone
Ticino, Furniture case V (2003) 12.2002.181, CISG-online 912,
CLOUT 890, https://cisg-online.org/search-for-cases?caseId=6837 (truy cập 20/9/2025)
[13] Ibid., note 11, paras. 17–22.
[14] Tugce Oral (2019), “Exemption
from Liability According to the Art. 79 of the Convention on International Sale
of Goods (CISG)”, Juridical Tribune (Tribuna Juridica) 9(3),
644–658, tr. 652-653.
[15] Ibid., p. 653. See also note 11, para. 18.
[16] PETER J. MAZZACANO (2013),
EXEMPTIONS FOR THE NON-PERFORMANCE OF CONTRACTUAL OBLIGATIONS IN CISG
ARTICLE 79 AND THE QUEST FOR UNIFORMITY IN INTERNATIONAL SALES LAW (PHD DISS.,
OSGOODE HALL LAW SCHOOL, YORK UNIVERSITY). https://core.ac.uk/download/pdf/77106682.pdf (truy cập ngày 21/9/2025).
[17] Bundesgerichtshof. Vine wax
case, VIII ZR 121/98, 24 Mar 1999 (CISG-online 396), https://cisg-online.org/files/cases/6368/translationFile/396_90284026.pdf (truy cập 20/9/2025)
[18] Ibid., note 4, pp. 1385–1388.
[19] Le Thi Anh Xuan & Nguyen Thi Minh Trang (2021), “Exemption from Liability due to the Involvement of a Third Party under the 1980 CISG and Vietnamese Law,” Procuracy Science Journal, No. 47, Special Issue 01, p. 148, accessed on 13 September 2025.
[20] Ibid., note 14, p. 653.
[21] Kyujin Kim (2022), “Can Economic Sanctions be Grounds for Exemption under the CISG?,” Journal of Korea Trade 26(5), pp. 88–105, at p. 102, accessed on 6 December 2025.
[22] Ibid., note 4, pp. 1385–1388.
[23] Bundesgerichtshof (2002), Milk Powder Case, Case No. VIII ZR 304/00 (CISG-online 651), accessed on 20 September 2025.
[24] Tran Thanh Tam & Pham Thanh Cao (2017), “Exemption from Liability due to a Third Party under Article 79(2) of the United Nations Convention on Contracts for the International Sale of Goods: A Comparative Law Perspective,” Legal Science Journal, No. 07 (110).
[25] Ibid., note 16, p. 211.
[26] NGUYEN MINH HANG (Chief Editor), 101 QUESTIONS AND ANSWERS ON CISG, Thanh Nien Publishing House (2016), p. 188.
[27] Ibid., note 4, pp. 1141–1143.
[28] Ibid., note 26.
[29] Council of State, Ordinance on Economic Contracts No. 24-LCT/HĐNN8 dated 25 September 1989, effective from 29 September 1989, accessed on 6 December 2025.
[30] DO VAN DAI, SCIENTIFIC COMMENTARY ON THE NEW FEATURES OF THE 2015 CIVIL CODE, Hong Duc Publishing House – Viet Nam Lawyers’ Association (2016).
[31] Ibid., note 19, p. 150.
[ 32] Phan Thi Thanh Thuy (2014), “Comparison of Provisions on Liability for Breach of Contract in the 2005 Vietnamese Commercial Law and the 1980 Vienna Convention,” VNU Journal of Science: Legal Studies, Vol. 30, No. 3, pp. 50–60, at p. 54.
[33] Le Minh Thai (2023), “Improving Legal Provisions on International Sales Contracts under the 1980 Vienna Convention,” Democracy and Law Journal, Issue 1, No. 394, December 2023.
[34] Pham Minh Quoc (2024), “Exemption from Compensation Liability for Breach of International Sales Contracts under Vietnamese Law,” Democracy and Law Journal, Issue 1, No. 404, May 2024.
[35] Ibid., note 24, p. 65.
[36] Ibid., note 19, p. 150.
[37] Ibid., note 24, p. 65.
[38] Ibid., note 24, p. 64.
[39] Contract Law of the People’s Republic of China, Articles 64–65, accessed on 5 December 2025.
[40] NDUBUISI AUGUSTINE NWAFOR (2015), COMPARATIVE AND CRITICAL ANALYSIS OF THE DOCTRINE OF EXEMPTION/FRUSTRATION/FORCE MAJEURE UNDER THE UNITED NATIONS CONVENTION ON THE CONTRACT FOR THE INTERNATIONAL SALE OF GOODS, ENGLISH LAW AND UNIDROIT PRINCIPLES, PhD Thesis, University of Stirling, p. 17, accessed on 5 December 2025.
[41] Original term: vicarious agents.
[42] Sarah Howard Jenkins (1998), “Exemption for Nonperformance: UCC, CISG, UNIDROIT Principles – A Comparative Assessment,” Tulane Law Review, Vol. 72, pp. 2015–2030, at p. 2026. Note that Tran Thanh Tam and Pham Thanh Cao (ibid., note 27, p. 64) mistakenly stated that the UCC contains no such provision. This issue is addressed in U.C.C. § 2-615, Comment 5 (1996).
[43] Graham, C. & Reece, R. (2020), “The Impact of the New Coronavirus (Covid-19) on International Contractual Obligations: Force Majeure under English Law,” Client Alert, Gide Loyrette Nouel, accessed on 5 December 2025.
[44] Sieg Eiselen (2014), “The CISG as Bridge between Common and Civil Law,” in DiMatteo, L.A. (ed.), International Sales Law: A Global Challenge, Cambridge University Press, pp. 612–629.
[45] Force majeure is literally translated as “superior forces,” referring to something sufficiently powerful to alter an otherwise stable state of affairs and closely related to the concept of an “act of God.” Accordingly, many Vietnamese scholars consider exemption related to third parties to be distinct from force majeure, and, where appropriate, regard it as an “impediment.”[46] Ibid., note 19, p. 150.
