This year, the company’s business plan focuses on expanding into new markets
such as Australia and/or Vietnam. As an investment analyst, you are required to
prepare a report on one (1) of the following topics:
Topic 2: Compliance with Key Areas of Law: Research how companies in Vietnam
that go to Australia comply with contract law.
- Identifying specific cases of scandals, legal disputes, or compliance issues
and how they were resolved (At least 2 real cases).
- Use these case examples to illustrate how contract law can significantly
impact business operations.
- Analyze the potential business implications by distinguishing between
legislation, regulations, and standards.
To complete the report, you may choose to analyze the law of Vietnam or Australia,
or both legal systems depending on the chosen topic.
Word count: 1,500 – 1,700 words (not including the coverpage, reference page
and appendices)
Compliance with Contract Law in Australia: Case Studies, Business Implications,
and Insights for Vietnamese Companies
Abstract
Table of Contents
I. Introduction:
Contracts are central to commercial transactions, defining rights, obligations, and
expectations, and enabling businesses to operate with certainty. They provide a legal
framework for planning, protection, and predictability in activities such as purchasing
goods, leasing property, or hiring employees (Turner, Gamble, & Trone, 2022).
For Vietnamese companies expanding into Australia, understanding and complying with
Australian contract law is crucial due to its common law foundation and statutory
framework. This report examines challenges in contract formation, interpretation, and
enforcement, using case studies of disputes and regulatory breaches to analyse business
implications and recommend strategies for effective compliance and risk management in
the Australian commercial environment.
II. Legal Framework of Contract Law
2.1. In Australia:
Australian contract law is founded on the common law tradition, where judicial precedent
plays a central role in defining the rights and obligations of parties. Unlike codified
systems, courts interpret agreements flexibly, applying established principles to modern
commercial contexts.
At the same time, statutory frameworks supplement the common law, notably the
Australian Consumer Law (Schedule 2, Competition and Consumer Act 2010 (Cth)) and
the Contracts Review Act 1980 (NSW), which prevent unfair conduct and promote
contractual fairness. Together, common law and statutes provide a balanced foundation,
ensuring both flexibility and predictability.
A contract in Australia is an agreement that creates legally enforceable obligations. For
enforceability, six elements must be present: offer, acceptance, intention to create legal
relations, consideration, legal capacity, and legality of purpose. Absence of any element
can render a contract void, voidable, or unenforceable.
Valid contracts are fully enforceable, as demonstrated in Carlill v Carbolic Smoke Ball
Co [1893], where the court upheld a unilateral contract based on clear offer and
performance. In contrast, Commercial Bank of Australia v Amadio (1983) illustrates
judicial intervention where unconscionable conduct affected fairness, showing courts’
role in protecting vulnerable parties. Certain contracts, such as property transfers, also
require formal statutory compliance under the Conveyancing Act 1919 (NSW); failure to
meet these formalities renders them unenforceable.
Contracts are classified according to enforceability, form, obligation type, formality, and
purpose. Express contracts, whether written or oral, clearly state terms, while implied
contracts are inferred from conduct or trade practice, as in Brogden v Metropolitan
Railway Co (1877).
Parties may enter bilateral contracts, where mutual promises are exchanged, or unilateral
contracts, where performance alone constitutes acceptance. Simple contracts require
consideration, while formal contracts or deeds necessitate writing, signature, and
witnessing, particularly in land or high-value transactions. Additionally, contracts are
differentiated by purpose, including commercial agreements between companies and
consumer contracts protected under the ACL.
Australian businesses adopt robust compliance practices to reduce risk and ensure
enforceability. Agreements are carefully drafted with explicit terms on obligations,
remedies, and dispute resolution. Many include mediation or arbitration clauses to
resolve conflicts efficiently. Companies also maintain internal legal audits, standardised
templates, and training to align operational practices with statutory obligations. These
measures ensure transparency, fairness, and consistency in both domestic and
cross-border dealings.
Remedies for breach like damages, specific performance, and injunctions, reinforce
accountability and commercial certainty. By combining judicial oversight, statutory
safeguards, and proactive business compliance, Australian contract law provides a
reliable framework that supports commercial integrity and the predictable resolution of
disputes.
2.2. In Vietnam:
Vietnam’s contract law follows the civil law tradition, where most legal rules are codified
in statutes. The Civil Code 2015 provides the foundational framework, while the
Commercial Law 2005 and other specialised laws regulate particular contract types.
Under Article 385 of the Civil Code, a contract is defined as an agreement between
parties to establish, change, or terminate rights and obligations. Such codification reflects
Vietnam’s approach of providing clarity, consistency, and predictability in contractual
relationships.
Article 398 further elaborates that a contract may include terms such as subject matter,
quantity and quality of goods or services, price and payment methods, performance
terms, rights and obligations of parties, liability for breach, and dispute resolution
mechanisms. This open-ended approach recognises party autonomy, allowing flexibility
while ensuring contracts remain legally enforceable.
Vietnamese law classifies contracts in two main ways:
First, by legal nature under Article 402, which identifies six types: bilateral contracts,
unilateral contracts, principal contracts, accessory contracts, contracts for the benefit of a
third party, and conditional contracts. Bilateral contracts create mutual obligations, while
unilateral contracts bind only one party. Principal contracts are independent, whereas
accessory contracts depend on a principal contract for validity. Third-party beneficiary
contracts confer rights on non-signatories, and conditional contracts take effect only upon
the occurrence of specified events.
Second, contracts are classified by subject matter across different statutes, such as sale,
lease, loan, mandate, labour, and commercial contracts, each governed by its respective
legal framework.
In practice, ensuring compliance involves careful drafting and adherence to formalities,
particularly for agreements requiring written form or notarisation, such as land transfers.
Businesses increasingly adopt standardised contract templates, conduct internal legal
audits, and include arbitration clauses through the Vietnam International Arbitration
Centre (VIAC) to manage risks. These measures enhance enforceability and reflect
Vietnam’s efforts to modernise contract law in line with international business standards.
2.3. Comparative Observations
Both Vietnam and Australia recognise bilateral and unilateral contracts and classify
agreements by purpose, ensuring enforceability and legal certainty.
However, Australian law, grounded in common law, relies on judicial precedent and
flexible interpretation, with classification based on enforceability, form, obligation type,
formality, and purpose.
In contrast, Vietnam’s civil law system codifies contract types and formal requirements.
Australia distinguishes simple contracts from formal deeds and treats third-party or
conditional contracts as doctrines, highlighting the system’s adaptability and case-by-case
responsiveness.
III - Australian Contract Cases:
Australian contract law emphasises both the formal validity of agreements and the
substantive fairness of business conduct, reflecting a combination of common law
principles and statutory protections under the Australian Consumer Law (ACL).
The ACCC v Quantum Housing Group Pty Ltd case highlights the importance of
transparency and disclosure under Australian contract law. Quantum Housing advised
NRAS investors to terminate existing agreements and switch to managers chosen by the
company, while failing to disclose its financial ties to those managers and imposing a
$10,000 approval fee per property. The Federal Court found that this selective disclosure,
combined with repeated warnings, misled investors into believing the advice was
independent, breaching sections 18 and 21 of the ACL.
Regulatory enforcement resulted in a $700,000 penalty for the company and $50,000 for
its director. It is clear that Australian courts focus on conduct rather than solely on the
counterparty’s vulnerability. Pressure tactics, hidden interests, or aggressive persuasion
can be actionable, as reinforced by ACCC v Coles Supermarkets Pty Ltd, where systemic
exploitation of bargaining power was deemed “not consistent with acceptable business
and social standards”.
Moreover, the Andrews v ANZ Group Ltd case illustrates that Australian courts scrutinize
contractual fees for fairness and proportionality. ANZ charged late payment, over-limit,
and dishonour fees, which were challenged by 38,000 customers as potential penalties.
The High Court confirmed that a fee may be unenforceable if grossly disproportionate to
the legitimate interests of the charging party, including operational costs, risk
provisioning, and regulatory obligations, supported by Paciocco v ANZ (2016) 258 CLR
525 case. Relief under equity can reduce or invalidate excessive fees, emphasizing that
the court assesses the substance and commercial justification, not just the legal form.
These cases collectively highlight key doctrinal frameworks in Australian contract law:
(1) protection against misleading or unconscionable conduct, (2) enforcement of clear
and proportionate contractual obligations, and (3) the use of equitable remedies to uphold
fairness. Businesses must not only comply with statutory requirements but also ensure
transparency, proportionality, and ethical conduct in contractual dealings. The emphasis
on fairness, disclosure, and proportionality shows how Australian law balances
contractual freedom with consumer and investor protection.
IV - Analysis of Legal Impacts on Business
Australian commercial law integrates legislation, regulation, and ethical standards to
shape both contractual obligations and business conduct. For Vietnamese companies
seeking to enter this market, understanding this interplay is essential, as legal compliance
extends beyond the formal validity of contracts to encompass transparency, fairness, and
proportionality in execution.
Legislation forms the foundation. The Australian Consumer Law (ACL), particularly
sections 18 and 21, prohibits misleading or unconscionable conduct, requiring businesses
to act honestly and fairly. The Quantum Housing case shows how failure to disclose
financial interests and selective advice to investors constituted breaches, highlighting that
statutory compliance applies not only to the terms of a contract but also to how contracts
are carried out in practice.
Regulations operationalize legislation by providing detailed guidance and enforcement
mechanisms. Bodies like the Australian Competition and Consumer Commission
(ACCC) monitor compliance, imposing fines or penalties when laws are broken.
Regulatory oversight ensures business practices reflect the broader legislative purpose,
protecting consumers and smaller businesses from unfair treatment.
Standards and ethical norms also influence judicial decisions. In Paciocco v Australia and
New Zealand Banking Group Ltd, the High Court applied the doctrine of penalties to
assess whether credit card fees were excessively disproportionate to the bank’s legitimate
interests. Unlike ACCC enforcement, this review evaluates the fairness of contract terms
themselves, emphasizing that even formally valid contracts must meet ethical and
proportional standards.
For Vietnamese businesses, these lessons show that a narrow focus on contract form is
not enough. Companies must ensure transparency in dealings, justify all contractual fees,
avoid undue pressure on partners or customers, and integrate ethical standards into
corporate culture. By combining statutory compliance, regulatory awareness, and
adherence to industry norms, Vietnamese firms can reduce legal risk, maintain credibility,
and operate successfully in Australia’s commercial environment.
V - Recommendation:
For Vietnamese companies expanding into Australia, ensuring compliance with
Australian contract law is critical to avoid disputes and protect business operations. Firms
should implement robust internal policies, including drafting contracts with clear
governing law and dispute resolution clauses, maintaining transparency in fees, and
avoiding misleading practices. Conducting pre-transaction legal audits, training staff on
Australian contract and consumer law, and including arbitration clauses under recognised
centres can mitigate risks. Learning from past cases of contract breaches or legal disputes
highlights the importance of aligning domestic corporate compliance with Australian
statutory, regulatory, and ethical standards for successful cross-border operations.
VI - Conclusion:
Understanding how contracts are classified under Australian and Vietnamese law is
crucial for effective domestic and cross-border operations. While both systems recognize
bilateral and unilateral contracts, differences in legal basis, classification criteria, and
formalities affect enforcement and interpretation. Vietnamese companies should clearly
define governing law and dispute resolution to ensure compliance, legal certainty, and
smooth international business transactions.
References