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Unconscionability and Exculpatory Clauses - Vietnamese Law and US Law in

Comparative Perspective
By Do Minh Tuan

Acknowledgement: I am grateful to Prof. Stephen Hesse and Melissa Vogt for their helpful
comments.

Freedom of contract is not unlimited. In other words, the contracting parties’ autonomy is
constrained by a requirement that they not make a contract which results in any negative
impact on society. Some types of contract are expressly prohibited by statute, such as a
contract to commit a crime, a contract violating usury statute, and so on. If the parties enter
into such a contract regardless of the prohibition provided by statute, the contract will be
void. In both US contract law and Vietnamese contract law, a contract which is contrary to
statute1 is void. In many circumstances, other contracts may arise which do not contravene a
statute but produce negative impacts on society. Such contracts are deemed to be against the
public policy. Thus, in the US, a contract which is contrary to public policy is also illegal and
invalid. According to Article 123 of the Civil Code 2015, a contract which is in violation of
social morals is also void. Unlike the defenses which are discussed above, illegality or
violation of public policy is involved in protection of public welfare. 2 In fact, the US courts
interfere with a great number of contracts on the basis of public policy violation. We
nonetheless limit our research to unconscionability and exculpatory clauses which are useful
for Vietnam in improving its corresponding law.
In practice, there are many contracts in which one party is superior to another party, such as
consumer contracts, employment contracts, and so on. In consumer sale contracts, sellers and
consumers are not in an equal position; sellers are presumed to be more sophisticated than
consumer buyers. As a result, sellers are likely to include some terms which are unfair to
consumers in consumer sale contracts. In particular, in the case of an adhesion contract, a
consumer has two choices: “take it or leave it”. It is hardly possible for the consumer to put
his or her own terms into the contract. “Fairness” is thus an important factor in contract
defenses, but unfairness alone generally does not provide grounds for relief. 3 Therefore,
courts are reluctant to deny enforcement of what the parties have signed for the exclusive
reason of unfairness. This is so even if it appears to violate the consumer's expectations to the
extent that it does not represent his or her understanding of the contract terms. 4 In the US,
during the pre UCC period, a few courts used other defenses, such as lack of mutuality, failure
of consideration, and construction of contract terms to avoid unfair contracts. 5 But numerous
other court decisions adhered to the principle of contractual freedom and, notwithstanding the
harshness, held that a party who enters a contract for fair consideration and in compliance
with the other common law requirements necessary for the formation of a binding contract is
not entitled to relief.6 The limited attacks on unconscionable contracts led to not only great

1
According to Article 123 of the Civil Code 2015, a contract is contrary to a prohibition provided by an Act of the National Assembly is
void.
2
Claude D. Rohwer & Anthony M. Skrocki, Contracts in a Nutshell, West Group, St. Paul, Minn., 2000, at 323. 3 Claude D. Rohwer &
Anthony M. Skrocki, Contracts in a Nutshell, West Group, St. Paul, Minn., 2000, at 317. 4 John A. Spanogle, Jr., Analyzing
Unconscionability Problems, University of Pennsylvania Law Review [Vol.117:931 1969], at 933.
5
John A. Spanogle, Jr., Analyzing Unconscionability Problems, University of Pennsylvania Law Review [Vol.117:931 1969], at 934.
6
J.H.A., Unconscionable Contracts under the Uniform Commercial Code, University of Pennsylvania Law Review, [Vol.109:401 1961],
at 408.

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difficulty in predicting the courts' handling of normal, fairly drafted contracts but also
contracts with longer, more technical, and less clear language.7
UCC §2-302 has been adopted by a vast majority of jurisdictions in the US since the mid

1960s. It reads:

(1) If the court as a matter of law finds the contract or any clause of the contract to
have been unconscionable at the time it was made the court may refuse to enforce the
contract, or it may enforce the remainder of the contract without the unconscionable
clause, or it may so limit the application of any unconscionable clause as to avoid any
unconscionable result.

(2) When it is claimed or appears to the court that the contract or any clause thereof
may be unconscionable the parties shall be afforded a reasonable opportunity to
present evidence as to its commercial setting, purpose and effect to aid the court in
making the determination.
Spanogle Jr. pointed out the significances of UCC §2-302:
First, it can help transform traditional notions of "freedom of contract." The common
law has always limited the meaning of "freedom of contract" that allows only the
choice between entering into a particular contract or abstaining, so that when one
party has chosen to contract the other is absolutely "free" to impose any terms…8
Second, the unconscionability doctrine can improve the stability of contracts. It seems
that courts have always regulated contracts for unfairness. But prior cases created
problems because of the surreptitious manner of decision, the misused technical
devices, and the uncertainty produced by their use. Under the Code, courts will not
 have to use surreptitious devices in such cases…9
It could be said that unconscionability permits the courts to "police" the contract bargain.10
UCC §2-302 gives the courts authority to strike down or modify a contract where free choice
is absent, or where a term of a contract to which the parties never agreed is invoked, or where
a literal reading would extend the contract beyond the intentions of the parties. 11 It should be
noted that the doctrine of unconscionability is applicable to all contracts, notwithstanding the
fact that UCC §2-302’s scope is limited to contracts for the sale of goods.12 The doctrine of
unconscionability may apply to both bargained-for contracts and to standard form contracts.13

7
John A. Spanogle, Jr., Analyzing Unconscionability Problems, University of Pennsylvania Law Review [Vol.117:931 1969], at 934.
8
John A. Spanogle, Jr., Analyzing Unconscionability Problems, University of Pennsylvania Law Review [Vol.117:931 1969], at 935.
9
John A. Spanogle, Jr., Analyzing Unconscionability Problems, University of Pennsylvania Law Review [Vol.117:931 1969], at 936.
10
Lawrence Kalevitch, Contract, Will & Social Practice, 3 J.L. & Pol'y 379 1994-1995, at 407, 408. 11 J.H.A., Unconscionable Contracts
under the Uniform Commercial Code, University of Pennsylvania Law Review, [Vol.109:401 1961], at 421.
12
Restatement (Second) § 208.
13
John J. A. Burke, Contract as Commodity: A Nonfiction Approach, 24 Seton Hall Legis. J. 285 1999-2000, at 305.

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Unconscionability relates to unfair surprise,14 and oppression.15 The principal objective of the
doctrine is to prevent oppression and unfair surprise, not to disturb the allocation of risks
because of superior bargaining power.16 Unconscionability is divided into procedural
unconscionability and substantive unconscionability. A plaintiff could be afforded relief from
a contract under the doctrine of unconscionability if he or she is successful in proving
procedural and substantive unconscionability.17
To establish procedural unconscionability, “we must examine the contract formation process
for a lack of meaningful choice.”18 In Crown Mortgage Co. v. Young,19 the Illinois Appellate
Court held:
Several aspects of this contract’s formation indicate its procedural unconscionability.
First, there was an obvious inequality in the parties’ abilities to understand the
transaction at hand. Unclaimed, a company that deals in this type of transaction,
presented its contract to a defendant who did not fully understand Unclaimed’s
relationship to her and, had very limited reading skills, and had no knowledge of the
simple procedures required to obtain the surplus money at issue. Unclaimed preyed on
this disparity by claiming in its solicitation letter that it needed to conduct research to
determine how to obtain the money, when, as the circuit court noted, the matter
required no research at all. Second, and relatedly, there existed a vast discrepancy in
bargaining power between the defendant, a widowed woman with limited education
and apparently limited means, and Unclaimed, a company with sufficient resources to
send a notary to the plaintiff’s residence to obtain her signature on a contract it
devised. Third, the defendant’s testimony regarding how the contract was presented to
her demonstrates that she was offered no opportunity to change the contract that
 Unclaimed proposed or to meaningfully negotiate its terms.20

14
“‘Unfair surprise’" is a relatively easy concept to visualize. Hiding a clause in a mass of fine print trivia is one method of surprising the
non-drafting party with unknown terms. Another method is to phrase the clause in language that is incomprehensible to a layman or that
diverts his attention from problems raised or rights lost. A variety of deceptive sales practices and other tactics might be catalogued, but
the foregoing should suffice to indicate the type of problem covered by ‘unfair surprise.’" (See John A. Spanogle, Jr., Analyzing
Unconscionability Problems, University of Pennsylvania Law Review [Vol.117:931 1969], at 943); “Unfair surprise is found in several
situations. One is where the ignorance of a party or carelessness on his part, known to the other party, results in a contract with a term
or terms not understood or intended by him and extremely favorable to the other party. A second situation involves forms read or
understood only with great difficulty by reason of their appearance in very fine print, their being printed on both sides of translucent
paper, or their being misleadingly arranged. These two situations approach, if they do not pass, the borderline of sharp practice, fraud
and mistake. A third situation of unfair surprise is the attempted contracting out of the dominant purpose of the contract. A fourth type is
a limitation of remedies asserted, as a bar to personal injury claims in the case of new consumer goods.” (William B. Davenport,
Unconscionability and the Uniform Commercial Code, 22 U. Miami L. Rev. 121 (1967), at 138).
15
“Oppression, strictly as a linguistic and syntactical matter, might refer to what took place between the parties at the time they entered
into the contract in question (a sort of quasi-duress), or it might just as well refer to the effect of that contract upon the complaining
party.” (See Arthur A. Leff, Unconscionabilit y and the Code: The Emperor ' s New Clause, 115 U. Pa. L. Rev. 485 1966-1967, at 499).
John A. Spanogle, Jr. stated: “A court may find that "oppression" connotes only those harsh terms obtained through oppressive means,
so that the definition of the term depends upon procedural abuses. But a court may also interpret "oppression" to mean terms, however
obtained, that will create oppressive effects, so that procedural abuses are irrelevant.”
(John A. Spanogle, Jr., Analyzing Unconscionability Problems, University of Pennsylvania Law Review [Vol.117:931 1969], at 948).
16
UCC §2-302, Comment 1.
17
“Standing alone, this procedural unconscionability might be insufficient to invalidate a contract.” (Crown Mortgage Co. v. Young, 2013
IL App (1st) 122363); A contract is unenforced on grounds of unconscionability where the “inequality of the bargain is so manifest as to
shock the judgment of a person of common sense, and where the terms are so oppressive that no reasonable person would make them
on the one hand, and no honest and fair person would accept them on the other.” (Haun v. King, 690 S.W.2d 869, 872 (Tenn. Ct. App.
1984); see also In re Friedman, 64 A.D.2d 70, 407 N.Y.S.2d 999
(1978)).
18
Matter of Lawrence, 2014 NY Slip Op 07291 [24 NY3d 320].
19
Crown Mortgage Co. v. Young, 2013 IL App (1st) 122363.
20
Crown Mortgage Co. v. Young, 2013 IL App (1st) 122363.

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Maryland courts have interpreted that substantively unconscionable terms are “unreasonably
favorable to the more powerful party,” “impair the integrity of the bargaining process or
otherwise contravene the public interest or public policy,” “attempt to alter in an
impermissible manner fundamental duties otherwise imposed by the law,” or are otherwise
“unreasonably and unexpectedly harsh”.21 In Maine, the Uniform Premarital Agreement Act

provides a test for determining the enforceability of premarital agreements as follows:

A premarital agreement is not enforceable if the party against whom enforcement is
sought proves that:
A. That party did not execute the agreement voluntarily; or
B. The agreement was unconscionable when it was executed and, before execution of
the agreement, that party:
(1) Was not provided a fair and reasonable disclosure of the property or financial
obligations of the other party;
(2) Did not voluntarily and expressly waive, in writing, any right to disclosure of the
property or financial obligations of the other party beyond the disclosure provided;
and (3) Did not have, or reasonably could not have had, an adequate knowledge of the
property or financial obligations of the other party.22
The Supreme Court of Texas states: “[T]he basic test for unconscionability is whether, given
the parties’ general commercial background and the commercial needs of the particular trade
or case, the clause involved is so one-sided that it is unconscionable under the circumstances
existing when the parties made the contract.”23 However, mere inadequate consideration does
not constitute substantive unconscionability. The New York Court of Appeals states, “It is not
unconscionable for an attorney to recover much more than he or she could possibly have
earned at an hourly rate.”24
In Feeney v. Dell Inc.,25 the plaintiffs, John A. Feeney and Dedham Health and Athletic
Complex (Dedham Health), commenced a putative class action against Dell in 2003 for a
"deliberate and systematic practice" of charging and collecting from the plaintiffs and other
Massachusetts residents monies falsely characterized as a lawful sales tax on the purchase of
optional service contracts for computers, on the basis that this constituted "unfair or deceptive
acts or practices" in violation of G. L. c. 93A and regulations issued by the Attorney General
of Massachusetts. In response, Dell moved to stay the proceedings and to compel arbitration
according to the "Dell Terms and Conditions of Sale" (terms) and pursuant to the FAA, 9
U.S.C. § 4. The effective terms of the plaintiffs' purchases contained an arbitration clause
compelling arbitration of any claim against Dell (but not binding Dell in connection with any
claims it may have against a customer) and mandating that any such claims be arbitrated on an
individual basis. The effect of the terms was to prohibit a Dell customer from participating in
a class action against Dell. The issue of this case is whether the arbitration clause was
unenforceable on the grounds of unconscionability. Judge Cordy held:
An arbitral forum may be ill suited to class proceedings, but a judicial forum is not. It
is hardly unreasonable to force nonconsensual class litigation on a business defendant
where the need for that nonconsensual class litigation stems directly from the
defendant's attempt at absolving itself from liability by promulgating an

21
Walther v. Sovereign Bank, 386 Md. 412, 426 (2005); see also Freedman v. Comcast Corp., 988 A.2d 68 (Md. Ct. Spec. App. 2010).
22
19-A M.R.S.A. § 608(1). (cited from Dick v. Dick, 2002 ME 92, footnote 1).
23
In re First Merit Bank, N.A., 52 S.W.3d 749, 757 (Tex. 2001).
24
Lawrence v Graubard Miller, 2008 NY Slip Op 09434 [11 NY3d 588], footnote 4.
25
Feeney v. Dell Inc., 465 Mass. 470; 989 N.E.2d 439.

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 unconscionable, exculpatory arbitration agreement that denies the right to proceed on
a class basis while at the same time providing none of the mitigating features found in
the Concepcion agreement. A doctrine that denies enforcement of an agreement to
arbitrate in such limited circumstances does not "stand[] as an obstacle to the

accomplishment of the full purposes and objectives of Congress" in enacting the FAA.
Concepcion, supra at 1753.26
The term “unconscionable contract” has not appeared in the Civil Codes of Vietnam or many
other civil law countries. But it does not mean that there is no doctrine similar to
“unconscionability” in these civil law countries. Both the German and the French systems
treat the "unbargained for" contract with broad flexible provisions similar to the
unconscionability concept of the Uniform Commercial Code. 27 Under the German practice,
the courts will not apply the doctrine of gute Sitten unless the party seeking its application
proves that his opponent has been exploiting his difficulties, indiscretion, or inexperience (der
Notlage, des Leichtsinns oder der Unerfahrenheit). 28 In both the French and the German
systems, the mere fact of a disproportionate bargain is not recognized as sufficient grounds
for setting aside the contract. 29It could be asserted that “unconscionability” is not a concept
solely developed by the common law tradition. Vietnam has indeed adopted the doctrine of
“sự thiệt thòi” (unfair disparity) in limited cases. The doctrine of unfair disparity has been
employed to attack a term in an adhesion contract or a general condition wh ich “exculpates
the drafting party from liability or increase the non-drafting’s liability or deprive the non-
drafting party of legitimate interest.” 30 Consumer contracts may be struck down on the
grounds of unfair disparity. Section 16.1 of 2010 Protection of Consumers’ Rights Act of
Vietnam states:
Terms of the contracts concluded with consumers and general trading conditions shall
have no effect in the following cases:
a) Where they exclude liability of organizations or individuals trading goods and/or
services to consumers as prescribed by laws;
b) Where they restrict or exclude the right to complaint and take lawsuits by
consumers; c) Where they allow organizations or individuals trading goods and/or
services to unilaterally change the conditions of the contract agreed in advance with
the consumer or the rules, regulations for good sales or service supply applies to
consumers when
buying and using goods and/or services do not specifically indicate in the contract; d)
Where they allow organizations or individuals trading goods and/or services to
unilaterally determine the consumer who fails to perform one or more obligations; e)
Where they allow organizations or individuals trading goods and/or services to set
forth or change the price at the time of delivery of goods or providing of services; f)
Where they allow organizations or individuals trading goods and/or services to
explain the contract in case of different interpretation of the terms;
g) Where they exclude liability of organizations or individuals trading goods and/or
services in cases where organizations or individuals trading goods or services sell
goods or provide services through a third party;

26
Feeney v. Dell Inc., 465 Mass. 470; 989 N.E.2d 439.
27
J.H.A., Unconscionable Contracts under the Uniform Commercial Code, University of Pennsylvania Law Review, [Vol.109:401 1961],
at 415.
28
J.H.A., Unconscionable Contracts under the Uniform Commercial Code, University of Pennsylvania Law Review, [Vol.109:401 1961],
at 417.
29
J.H.A., Unconscionable Contracts under the Uniform Commercial Code, University of Pennsylvania Law Review, [Vol.109:401 1961],
at 417.
30
Article 405.3 and Article 406.3 of the Civil Code 2015.

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h) Where they force consumers to comply with obligations even if the organizations or
individuals trading goods and/or services have not fulfilled their obligations; i) Where
they allow organizations or individuals trading goods and/or services to transfer
rights and obligations to third parties without the consumer’s consent.31
Similar to the US doctrine of unconscionability, according to the doctrine of unfair disparity,
a mere adhesion contract is not per se unenforceable. There are inevitably imbalances
between the drafting party and non-drafting party in adhesion contracts and consumer
contracts; it is not necessary to establish procedural oppression, but substantive deprivation
(sự thiệt thòi). Unfortunately, the doctrine of unfair disparity is not open to other types of
contract in Vietnam. Apart from adhesion contracts and consumer contracts, “oppression”
may occur in other transactions. In practice, a wise man may not use a standard form contract
to create a contractual relationship with a weaker party. He instead tells the weaker party to
draft the contract and then he inserts some terms which are unfairly detrimental to the weaker
party into the draft while uttering, “I would not sign if my terms are changed or removed.”
The weaker party has no choice but to accept those terms. In this case, it is im possible to
apply Articles 405.3 and 406.3 of the Civil Code 2015, or Section 16.1 of the Protection of
Consumers’ Rights Act 2010 to set aside the contract. The role of contract law is not merely
to protect the freedom of contract, but also to ensure fairness. In our perspective, the weaker
party will be damaged by the oppression. Kalevitch suggests:
Consider the following argument: unconscionability imposes an external criterion to
the enforcement of bargains based on the test of whether a reasonable person would
have agreed to the contract. By testing the actual parties' bargain against the
hypothetical bargain that reasonable people would have made, the doctrine eschews
actual party intent in favor of fictitious intent.32
In our opinion, “sự thiệt thòi” should be extended to any contract in which one party avails
himself or herself of another party’s disadvantage by means of unfair surprise or oppression to
put into the contract terms which are oppressive to the other party. Our view would not be a
surprise to civil law scholars. It has been more than 40 years since a Vietnamese scholar
recommended: “We should follow the Western European Codes to rule that a contract in
which one party is abused because of his inexperience, financial difficulty, or emergency is
avoidable.”33
Additionally, there is a mistake in the drafting of Articles 405.3 and 406.3 of the Civil Code
2015. Article 405.3 reads: “Where a standard form contract contains a term which exculpates
the drafting party from liability, [or] increases the non-drafting’s liability or deprives the non
drafting party of legitimate interest, such term shall be unenforceable, unless otherwise
agreed.” In parallel, Article 406.3 states: “Where a general condition exculpates the drafting
party from liability, [or] increases the non-drafting’s liability or deprives the non-drafting
party of legitimate interest, such general condition shall be unenforceable, unless otherwise
agreed.” The drafters mistakenly put the clause “unless otherwise agreed” into the provisions.
What does “unless otherwise agreed” means? In commenting on Article 407.3 of the Civil
Code 2005 (which had the same meaning as Article 405.3 of the Civil Code 2015), the
Restatement of the Civil Code 2005 stated:

31
http://www.itpc.gov.vn/investors/how_to_invest/law/Law%20No.59_2010_QH12/mldocument_view/?set_language=en (last visit at
17:35 on August 18, 2017).
32
Lawrence Kalevitch, Contract, Will & Social Practice, 3 J.L. & Pol'y 379 1994-1995, at 417.
33
Vũ Văn Mẫu, Việt Nam Dân luật khái luận, quyển II: Khế ước và Nghĩa vụ, in lần thứ 1, Bộ quốc gia giáo dục xuất bản, năm 1963,
đoạn 176, trang 147 (Vu Van Mau, Overview of Vietnamese Civil Law, Volume II: Contracts and Obligations, first edition, the Ministry of
National Education, 1963, ¶ 176, at 147).

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These terms which are in a standard form contract shall not be enforceable unless
otherwise agreed [it means that a non-drafting party accept these terms.] The non
drafting party’s acceptance must be written by him in the contract.34
Luckily, we are not alone in understanding “unless otherwise agreed” as “the non-drafting

party manifests his or her assent to these terms.” Articles 405.3 and 406.3 of the Civil Code
2015 could be construed such that where harsh terms are accepted by a non-breaching party,
they are enforceable against him or her. He or she then has no opportunity to attack them.
The clause “unless otherwise agreed”, in effect, eliminates the objectives of Articles 405.3
and 406.3 of the Civil Code 2015 and makes them nonsense. Since where the non-breaching
party affixes his or her signature on the contract that means that he or she accepts all terms of
the contract including the harsh terms, it is not difficult for a sophisticated superior party to
trap a weaker party in a game of words that leads a third person to understand that the weaker
party has accepted oppressive terms. “I agree”, “I accept”, “I acknowledge”, “We have read,
and now agree to all terms” are good examples of powerful words which manifest a person’s
assent. It is very easy for a sophisticated superior party’s attorney to insert these words into a
contract.
The clause “unless otherwise agreed” may be interpreted such that the non-drafting party
receives fair consideration in exchange for his or her detriment. For example, A buys a used
car from B at a very low price in exchange for A’s consent to release B from liability for the
car’s quality. It is not therefore a one-sided contract and cannot be struck down on the basis of
unfair disparity. Nevertheless, the wording might not give rise to the second meaning if there
is no official interpretation coming from case law. We therefore suggest that the courts should
give the second meaning to “unless otherwise agreed” through case law in the short term. But,
the clause “unless otherwise agreed” should be removed from Articles 405.3 and 406.3 of the
Civil Code 2015 in the long term. In addition, Articles 405.3 and 406.3 of the Civil Code
2015. should be consolidated to constitute a new provision with the following language:
Where a party who is superior to another party abuses the disadvantage of the other
party by any means to put into a contract between them a term which exculpates the
superior party from liability, [or] increases the other party’s liability or deprives the
non-drafting party of legitimate interest without fair consideration, such term is
unenforceable.
In Vietnam, the doctrine of unfair disparity covers exculpatory clauses as well. In the US,
exculpatory clauses are also related to the doctrine of unconscionability. Exculpatory clauses
are contract terms by which one party agrees not to hold the other party liable for future
harm.35 The enforcement of exculpatory clauses is sometimes refused due to
unconscionability. In the US, courts refuse to enforce a contract term which releases a party
from future willful torts and gross negligence.36 As analyzed in the previous section,
according to Vietnamese contract law, if a contract violates an Act of the National Assembly
or social morals, it is void. It is extremely unethical for a party to intentionally harm another
party and then insulate himself or herself from liability under a pre-existing exculpatory
clause. The enforcement of such a clause would encourage irresponsibility in society.
Further, in professionalism, professionals are required to have well-equipped skills, care and
diligence; in other words, professionals owe a strict duty of care to their clients. However,
exculpatory clauses might prejudice a professional’s strict

34
Viện Khoa học Pháp lý – Bộ Tư pháp, PGS.TS. Hoàng Thế Liên (chủ biên) (2010), Bình luận khoa học Bộ luật dân sự năm 2005 (tập
II) – phần thứ ba: Nghĩa vụ dân sự và Hợp đồng dân sự, Nhà xuất bản Chính trị Quốc gia, tr. 240 (Institute of Legal Science – the
Ministry of Justice, The Restatement of the Civil Code 2005 – Volume II (Civil Duties and Contracts), National Political Publishing
House, 2010, at 240).
35
Claude D. Rohwer & Anthony M. Skrocki, Contracts in a Nutshell, West Group, St. Paul, Minn., 2000, at 328. 36 Winterstein v. Wilcom,
16 Md. App. 130, 293 A.2d 821(1972); Lloyd v. Sugarloaf Mountain Corp., 2003 ME 117, ¶ 21, 833 A.2d 1; Husseinv. L.A. Fitness
International, L.L.C., 2013 IL App(1st) 121426.

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duty of care. A doctor may negligently cut his patients’ legs or kidneys, without fear of being
held liable because of a preexisting exculpatory clause. Consequently, patients might always
be in danger and at risk that they might be barred from seeking damages for a doctor’s
malpractice. We therefore suggest that Vietnamese courts should so strictly construe
exculpatory clauses that an exculpatory clause absolving a party from liabilities for intentional

tort or malpractice is per se violative of social morals and is thus void.

Besides, exculpatory clauses are often found to violate public policy and are thus
unenforceable.37 The public policy is interpreted by the California Supreme Court as follows:
[T]he attempted but invalid exemption involves a transaction which exhibits some or all of
the following characteristics. It concerns a business of a type generally thought suitable for
public regulation. The party seeking exculpation is engaged in performing a service of great
importance to the public, which is often a matter of practical necessity for some members of
the public. The party holds himself out as willing to perform this service for any member of
the public who seeks it, or at least for any member coming within certain established
standards. As a result of the essential nature of the service, in the economic setting of the
transaction, the party invoking exculpation possesses a decisive advantage of bargaining
strength against any member of the public who seeks his services. In exercising a superior
bargaining power the party confronts the public with a standardized adhesion contract of
exculpation, and makes no provision whereby a purchaser may pay additional reasonable
fees and obtain protection against negligence. Finally, as a result of the transaction, the
person or property of the purchaser is placed under the control of the seller, subject to the
risk of carelessness by the seller or his agents.38
The Illinois Courts state:
Public policy dictates that parties cannot enter into an enforceable exculpatory
agreement if they are (1) employer and employee; (2) “the public and those charged
with a duty of public service, such as a common carrier or a public utility”; or (3)
persons or entities enjoying “a disparity of bargaining power so that the agreement
does not represent a free choice on the part of the plaintiff,” such as an agreement
with a monopoly.39
Under Article 123 of the Civil Code 2015, exculpatory clauses are void on the grounds of
violation of social morals. Notwithstanding that public policy is not used in the Civil Code
2015, Vietnamese courts should interpret “social morals” so as to cover “public policy”.
Public utilities such as hospitals, schools and transportation services must provide necessary
services to a significant number of social members for the social welfare. Thus, they are
under a duty to provide services to the public in good quality and safety. However,
exculpatory clauses may invalidate this duty and give rise to public utilities’ unethical
behaviors against the public. On the other hand, a duty of good faith40 can be applied to
require a party with superior bargaining power not to abuse the other party, or otherwise the
abuse amounts to bad faith which is immoral. As a result, in the context of exculpation,
Vietnamese courts should state that a party who provides a public service or has superior
bargaining power over the other party cannot be relieved from liability under an exculpatory
clause.

37
Claude D. Rohwer & Anthony M. Skrocki, Contracts in a Nutshell, West Group, St. Paul, Minn., 2000, at 328. 38 Tunkl v. Regents of
University of California (1963) 60 Cal.2d 92 [32 Cal. Rptr. 33, 383 P.2d 441] (quoting City of Santa Barbara v. Superior Court (2007) 41
Cal.4th 747 [62 Cal. Rptr. 3d 527, 161 P.3d 1095]).
39
Johnson v. Salvation Army, 2011 IL App (1st) 103323, 957 N.E.2d 485 (quoting McKinney v. Castleman, 2012 IL App(4th) 110098).
40
See Article 3.3 of the Civil Code 2015.

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