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Mr. Nguyen The Duc Tam

Mr. Nguyen The Duc Tam is a lecturer at the Faculty of Law, University of Economics and Law, Vietnam National University, Ho Chi Minh City, Vietnam. He earned his LL.B. and B.B.A. from the Ho Chi Minh City University of Law; LL.M. from the University of Paris II Panthéon-Assas (France). His research interests are international trade law and alternative dispute resolution (ADR).

Sometimes it takes more than two to tango – the application of the “blue pencil”

At the heart of the doctrine of pacta sunt servanda is the presumption that the parties have freely and voluntarily entered into the contract. However, the modern contract law is developing to the point where a party could refuse to keep his promise on the grounds that the enforcement of a contractual term would be unfair and unreasonable, and therefore that the enforcement of the unfair term would be contrary to public policy. In such an instance, the court may intervene and apply the “blue pencil” doctrine, which allows the court to sever unreasonable terms of the contract and enforce only the reasonable terms. However, the court must be cautious to adopt the “blue pencil” doctrine because its overuse may undermine the doctrine of pacta sunt servanda. In this article, we examine the application of the “blue pencil” doctrine by Vietnamese courts. We argue that Vietnamese courts limit the application of the “blue pencil” doctrine to circumstances where three cummulative conditions are satisfied: (i) the unenforceable term is quantifiable, (ii) the unenforceable term is severable, and (iii) the unenforceable term is excessive in compared to statutory limits. Last but not least, we witness a recent tendency to codify all circumstances where Vietnamese courts should adopt the “blue pencil” doctrine.