Ms. Le Nguyen Hong Nhung got her LL.B. from the University of Economics and Law, Vietnam National University, Ho Chi Minh City. She is an LL.M. student of the joint program between the University of Economics and Law and the University of Paris I Panthéon-Sorbonne (France). She also works for an international law firm. Her research interests are contract law, investment law, company law, and commercial law.
Sometimes it takes more than two to tango – the application of the “blue pencil”
Abstract:
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.