Question: What is the difference between a Memorandum of Understanding (MOU) and a Business Cooperation Contract (BCC)?
Answer
Although both an MOU and a BCC are commonly used in investment transactions, they serve different legal purposes.
A Memorandum of Understanding (MOU) is not specifically recognized as a separate type of contract under Vietnamese law. Its legal effect depends on the parties’ agreed terms. In practice, an MOU is typically used to record the parties’ intention to cooperate, outline key commercial principles, or provide a framework for negotiating a definitive agreement. Certain provisions, such as confidentiality, exclusivity, or dispute resolution, may still be legally binding.
By contrast, a Business Cooperation Contract (BCC) is a form of investment expressly regulated under Article 27 of the Investment Law 2020. A BCC allows investors to cooperate in business and share profits or products without establishing a new legal entity. It creates legally binding rights and obligations and governs the parties’ cooperation throughout the implementation of the project.
Conclusion
An MOU is generally suitable during the preliminary negotiation stage, while a BCC is appropriate when the parties have agreed on the terms of cooperation and intend to commence the investment project. Choosing the appropriate legal instrument helps minimize legal risks and protect the parties’ interests.
If you require legal advice on MOUs, BCCs, investment agreements, or other commercial transactions in Vietnam, please contact SB Law. Our experienced lawyers are ready to provide practical and commercially focused legal solutions tailored to your business needs.
