Having signing sale contracts for medical gloves, face masks or other personal protective equipment (PPE) worth millions US Dollars, but after receiving a large amount of deposit or payment from overseas buyers, a lot of medical gloves and PPE suppliers in Vietnam did not deliver the products or provide them but in low quality or insufficient quantity not in accordance with the commitments specified in the sale contracts. The worst issue is that it is very hard for the buyers to claim back their deposits or initial payments. The sellers and suppliers try to delay or avoid payment, some of whom are out of reach, and the buyers can not locate their companies’ office or find them anywhere. This situation has caused a great number of economic losses and damages to foreign buyers.
Understanding the concerns of Clients, ALB & Partners Law Firm would like to give 6 legal advice on purchase of medical gloves, face masks or PPE in Vietnam.
1. Choosing the right seller or supplier of medical gloves and PPE in Vietnam
Before signing sale contracts or making initial payment to any seller or supplier of these products in Vietnam, be sure to have a very good understanding about the partners you are doing business with by making a thorough investigation or legal due diligence about them.
From our experience, unreliable or fraudulent sellers/ suppliers of medical gloves, face masks and PPE in Vietnam may have some of the following characteristics:
- the seller or supplier is a newly established legal entity or has a small scale business;
- the sale contract sent by them is of big value but very simple whose shipment schedule is very tight;
- they offer a huge goods quantity and promise for immediate shipment or delivery;
- they easily agree with the terms and conditions proposed by the buyers and request for urgent transfer of fund;
- they suspiciously offer low price and continuously urge the buyers to make payment;
- they usually confirm that they are authorized supplier/agent/distributor of some reputable medical gloves and PPE manufacturers in Vietnam, and even show a lot of fake certificates of CE, FDA, ISO;
- the seller or supplier commits to providing with a variety of relevant certificates for the shipment as well as willing to accept a penalty for violation or compensation with a large value under the contract, even on a day-by-day basis;
- In some cases that we have resolved, they used a fake corporate seal or used information of other reputable companies.
- they will make a last-minute change due to some reasons and ask for more fund to be able to deliver;
- In addition, in most contracts, the Vietnamese court as a dispute resolution body is chosen instead of an arbitration center, resulting in lots of costs for debt collection in Vietnam due to relatively complicated and lengthy litigation process.
2. Checking with the medical gloves, face masks or PPE manufacturers they are working with.
Lots of scammers and fraudsters keep saying that they are authorized agents or suppliers of reputable manufacturers like VRG Khai Hoan, HTC, Quantum Care, etc, and they even show relevant certificates to convince overseas buyers. In this situation, the buyer should contact with the manufacturers to verify the information provided in order not to be deceived by them.
3. Checking with Customs Department in Vietnam
Medical gloves and PPE scammers usually show to their potential overseas buyers their factories, warehouses or previous practical transactions with other customers in order to prove their production and distribution capability as well as their reputation and prestige. To verify what they advertise is correct or not, the buyer can contact the Customs Department in Vietnam for help with accurate information on their previous shipments to overseas customers.
4. Preparing a perfect sale contract
After the buyer feels assured with your seller/supplier, another work is to prepare a sale contract good enough for the transaction.
Our experience from previous contractual disputes we have settled for our Clients shows that a lot of foreign buyers were not careful enough about the terms and conditions of the contract despite very big value of its. The contract is usually simply drafted by the seller or supplier with many clauses not beneficial for the buyer. Therefore, if any problems or disputes arise afterwards, the buyer will not be well protected.
A typical clause of dispute resolution in the contract usually selected by the overseas buyer is the Court or Arbitration Center of the buyer’s country or of another neutral country, and same as the governing law of the contract, thinking that it will be more favorable for the buyer. However, in fact, on the contrary, an arbitral award from the arbitration center or a judgment from the Court in Vietnam will be more powerful and prompt enough to force the seller or supplier to perform the obligations specified in the contract if they violate any terms and condition thereof.
5. Carefully checking the goods/products before shipment or delivery
There have been some cases of medical gloves, face masks or PPE returned after shipments as they did not meet requirements as specified in the sale contract and had to be returned to Vietnam by the buyer or the importing country, which caused serious losses to the buyer. Therefore, it is better to have an independent inspection company, usually SGS, to help check the quality and quantity of the products before delivery.
6. Hiring a professional law firm to help complete the transaction securely
A professional law firm that has experience in this area as well as previously settled disputes or collect debts related to purchase of medical gloves, face mask and PPE can help the buyers with the aforementioned scope of work from section 1 to 5 herein to ensure the purchase will be completed securely and successfully.
From what we have observed, most buyers did not realize the important role of lawyers in their transactions until relevant problems or disputes arose. Most of the dispute cases related did not have legal advice of lawyers at the beginning, which is completely unfavorable for the buyers while the value of transactions is very big, they did not have a good preparation in term of legal aspects as well as due diligence about the seller/supplier.