In warehouse lease contract disputes, the lessor often thinks that it has an advantage when the property is damaged, the handover is unsatisfactory and the actual repair costs are incurred. However, from a cracked warehouse floor to a judgment forcing the lessee to compensate is a significant legal gap.
The value of the case lies not only in the annulment of a first-instance judgment.
The appellate business and commercial judgment No. 04/2025/KDTM-PT[1] dated January 16, 2025 of the People's Court of Binh Duong province is a remarkable case. The first-instance court once forced the lessee to pay more than VND 2.7 billion, including the cost of repairing the warehouse floor, other items and one month's rent due to the delay in handover. However, the appellate level canceled the entire judgment for retrial because it believed that many important issues had not been fully collected and assessed.
The value of the case lies not only in the annulment of a first-instance judgment. It shows a common fact: businesses can actually suffer losses but are still unlikely to be compensated if they can't prove where the losses came from, who was responsible for, and how much they were fairly valued.
Property damage does not mean the responsibility of the lessee
The dispute in the case focuses mainly on the condition of the warehouse floor after more than 05 years of use. The lessor believes that the lessee's operation has caused the warehouse foundation to crack and be seriously damaged. The lessee countered that the cracks had existed since the time of handover, related to the foundation structure and had never been completely remedied.
The difference between these two interpretations determines almost the entire liability for compensation.
The law does not implicitly speculate that any damage discovered when returning the warehouse is caused by the lessee. The lessee must return the property in the same condition as when it was received, except for natural wear and tear or otherwise agreed. However, in order to claim compensation, the lessor must also prove that the damage exceeds normal wear and tear and arises from the lessee's breach of the obligation to preserve and use the property.
For warehouses, factories or logistics centers, the delineation of the cause is often technical. A crack in the concrete foundation can be caused by mining loads, but it can also be caused by design, construction quality, materials, expansion joints or subsidence. Without technical records or professional assessments, it is easy to conclude that the fault belongs to any party.
In the case, the initial handover record recorded that the warehouse floor had cracks. Meanwhile, the record of agreement to repair before the end of the contract does not clearly show the entire crack in the foundation under the responsibility of the lessee. The Court of Appeal therefore considered that there was not enough basis to include the entire cost of ground treatment in the scope of compensation. The first lesson is that the indemnity obligation must be determined on the basis of the additional damage caused by the lessee, not the entire defect discovered at the time of return.
To do that, the initial handover dossier must be detailed enough. A record that only states that the property is "operating normally" or "handed over in the status quo" will have very limited probative value. Enterprises need to record the location, size and extent of damage, accompanied by photos, videos, drawings of the current status and relevant technical documents. During the lease period, inspections, repairs and operation warnings also need to be documented. Therefore, the burden of proof therefore does not start from the date of filing the lawsuit, but from the first day of handing over the property.
The repair invoice is not enough to prove the damage
After receiving the warehouse, the owner signed a contract with the contractor to repair the foundation with a value of more than 1.1 billion VND. There is also the cost of cleaning, scrubbing the floor and repairing the folding gate. The first-instance court shall base on the contract, acceptance record and invoice to compel the lessee to pay compensation.
However, the appellate level raises a more important question: is the entire amount really damaged by the lessee?
In fact, businesses often consider invoices as the central evidence of the claim. But the invoice first of all only proves that there was a transaction and an expenditure. It does not answer the problems on its own: whether the repair is necessary or not; whether the volume is suitable for the current situation; whether the unit price is reasonable or not; and whether the entire work is the responsibility of the violating party or not.
A repair option may simultaneously include repairing damage, dealing with old defects, renovating and upgrading the property. If it is all combined into one contract and then the lessee is required to pay, the claim may go beyond the purpose of recovering the actual loss.
This point is clearly reflected in the case when the contractor selected by the lessee offers a cost of about 115 million VND, while the plan implemented later has a value many times higher. A large difference does not mean that the cheaper option is right or that the more expensive option is unreasonable. But it creates substantive disputes over the scope, methods, and value of repairs, which require independent valuation, appraisal or technical evaluation.
The Court of Appeal held that the first-instance level should notify and create conditions for the parties to request valuation or appraisal of prices for the repair of warehouse floors, equipment and related items. The failure to take this step is one of the important shortcomings that caused the case to be resolved.
The lesson here is not that businesses have to choose the cheapest repair option. The injured party has the right to choose a solution to ensure the safety and ability to exploit the property. But the business must be able to explain why the solution is necessary, that the volume is appropriate and that the cost reflects the market price.
A compelling compensation filing so there are not only contracts and invoices. It needs survey records, photos of the current status, description of causes, technical plans, comparative quotations, volume acceptance records, and actual payment documents.
Causality is a link that is easily forgotten
To be compensated, businesses not only have to prove that there is a violation and there is damage. The violation must also be the direct cause of such damage. This is often the weakest link in the dispute.
The enterprise can prove that the lessee has not finished repairing the property when the contract expires. Businesses can also prove that they have paid for repairs. But between those two events, there is still a need for a bridge: which specific expenditure is a direct consequence of the obligation that the lessee does not perform?
In the case, the repair contract after returning the warehouse includes both the treatment of cracks and a five-year warranty. Meanwhile, the agreement between the lessor and the lessee does not specify that the lessee must bear the entire disposal of the foundation structure or pay for such a plan with a warranty period. The Court of Appeal found that taking the entire value of the repair contract later to bind the lessee was not in accordance with the scope of the original agreement.
The same problem arises for a claim equivalent to one month's rent. The lessor thinks that it takes more than a month to repair, so it cannot operate the warehouse and asks the lessee to pay one month's rent. However, the old rental unit price does not automatically become a loss.
The enterprise must also prove that the property cannot actually be exploited during the repair period; the repair period is reasonable and directly arises from the damage caused by the lessee; at the same time, the lessor has lost an actual income or direct benefit that should have been enjoyed.
If the warehouse does not have a new tenant or there is no evidence of exploitability immediately after the handover date, multiplying the old rent by the repair time may only be an estimate. On the contrary, if there is already a subsequent lease but the handover must be postponed, discounted or compensated to the new customer, the causal relationship will be clearer.
In fact, many lessors implicitly consider the deposit to be an amount that can be temporarily held and deducted by themselves when a dispute arises.
The breached party must also limit losses
The scope of compensation also depends on how the breached party behaves after the damage is detected. The claimed party must take reasonable measures to limit the loss. If losses are exacerbated by delays, lack of cooperation, or unnecessary solution options, the portion of the damage that could have been avoided may not be acceptable.
In warehouse lease disputes, this issue is usually considered through whether the lessor creates conditions for the lessee to repair or not, whether it responds promptly to the construction plan or not, whether it chooses a reasonable remedial solution or allows the damage to last for a long time.
In the case, the lessee said that it had hired a contractor to handle it but was cut off by the lessor and prevented the construction. The lessor believes that this contractor is not an agreed unit and the repair plan does not meet the requirements. The Court of Appeal said that when the plan to use the original contractor could not be implemented, the two parties did not continue to negotiate fully to find an alternative.
If the lessor rejects all repair options without providing clear technical criteria, it will be difficult to ask the lessee to bear all costs afterwards. On the contrary, the lessee arbitrarily chooses another contractor without agreeing on quality, method and warranty, it is also difficult to prove that it has fulfilled its obligations.
The contract therefore needs to stipulate in advance the damage handling process, including the inspection deadline, repair standards, the right to choose a contractor, the quotation approval mechanism, the right to hire an independent expert, and the consequences if a party does not cooperate.
The deposit is not the default compensation fund
The case also raises a common issue: can the lessor keep the entire deposit until the claim is settled?
The lessee requested the refund of more than VND 6.4 billion in deposit and late payment interest. The court of first instance did not accept this request, but noted that the lessor would refund the deposit after the lessee fulfilled its compensation obligation. The appellate level argued that the settlement was contradictory and inconsistent with the contractual terms on the deposit payment period.
In fact, many lessors implicitly consider the deposit to be an amount that can be temporarily held and deducted by themselves when a dispute arises. However, deposits, offsets obligations and custody are not the same.
The right to dispose of the deposit depends first of all on the contract: which obligation the deposit is secured, which cases are deductible, what documents are required, when the non-disputed part must be repaid, and whether the retention of the money during the dispute settlement period is allowed.
If the contract only stipulates the return of the deposit within a certain period of time after the lessee returns the warehouse and pays the related amounts, it is difficult for the lessor to keep the entire deposit indefinitely just because it has unilaterally determined a damage. When the damage is still in dispute, keeping the deposit is many times greater than the claim value may also give rise to the obligation to pay late payment interest.
A well-governed contract needs to separate the undisputed deposit and the portion that is allowed to be retained; stipulate the mechanism for notifying deductions, the time limit for settlement and interest rates if the repayment is delayed.
From asset management to evidence management
In high-value warehouse lease contracts, businesses often invest significantly in fire prevention, insurance, operation and technical maintenance, but little investment in legal evidence systems. Sketchy handover records, intermittent maintenance records, damage notices are only verbal exchanges, and the selection of contractors lacks an independent verification mechanism.
Warehouse lease contract management should therefore not stop at signing a strict document. Enterprises need to manage the entire contract life cycle, from survey, handover, operation, periodic inspection, recording of problems, remedial requirements to acceptance and settlement of deposits.
In a compensation dispute, the advantage does not necessarily belong to the party with more invoices, nor does it automatically belong to the property owner. The advantage belongs to the party that proves an unbroken logical chain: which obligations are violated; any damage arising from the violation; which remedies are necessary; what costs are reasonable; and what losses are really unavoidable.
From the perspective of the case, the most important asset when a dispute occurs is not only the warehouse, but also the records proving the warehouse. A damage can be repaired in a matter of weeks, but the evidence gap that forms over the years of contract performance is sometimes irreparable, even after multiple rounds of trial.
[1] https://www.google.com/search?q=b%E1%BA%A3n+%C3%A1n+s%E1%BB%91+04%2F2025%2Fkdtm-pt+t%C3%B2a+%C3%A1n+t%E1%BB%89nh+b%C3%ACnh+d%C6%B0%C6%A1ng&oq=b%E1%BA%A3n&gs_lcrp=EgZjaHJvbWUqBggBECMYJzIGCAAQRRg5MgYIARAjGCcyBggCEEUYOzIGCAMQRRg9MgYIBBBFGEEyBggFEEUYQTIGCAYQRRhBMgYIBxBFGD3SAQg2MDM2ajBqN6gCALACAA&sourceid=chrome&source=chrome.ob&ie=UTF-8, truy cập ngày 06/08/2026.
