This article analyzes the current situation regarding unclear exemption clauses, highlighting common issues in the digital era and addressing frequently asked questions related to such clauses.

I. The current situation regarding unclear exemption clauses

An exemption clause is a crucial contractual provision, typically used to limit or exclude a party’s liability in case of incidents, breaches, or risks. However, the lack of clarity in many exemption clauses has become a growing concern, especially in sectors such as digital services, e-commerce, employment contracts, and business-to-consumer agreements.

The most prevalent issue in the digital era is the widespread use of generic exemption clauses in electronic transactions in Vietnam. Approximately 70–80% of websites, applications, and electronic contracts still copy standard templates without industry-specific adjustments. They often fail to define the “scope of exemption” or the “conditions of application”, creating confusion for both businesses and consumers. Many clauses also use vague expressions such as “unforeseeable circumstances” or “force majeure” without properly referencing or defining “force majeure” in accordance with civil law. Consequently, such clauses expose contracts to the risk of being declared invalid in the event of disputes.

II. Legal provisions governing unclear exemption clauses

To clarify issues related to unclear exemption clauses, several relevant legal provisions are summarized below.

1. What is an unclear exemption clause?

An unclear exemption clause refers to a contractual or legal provision whose meaning or scope is ambiguous, easily misunderstood, or open to multiple interpretations.

As a result, the parties may hold differing understandings of their rights and obligations, leading to disputes or difficulties in contract performance.

2. In which types of contracts do unclear exemption clauses commonly appear?

Such clauses are frequently found in commercial, service, sales, employment, and insurance contracts, as well as in standard-form agreements, particularly those drafted unilaterally by one party without clearly defining the extent or scope of liability exclusion.

3. How should parties address unclear exemption clauses?

When discovering an unclear exemption clause, parties should take the following steps:

  • Negotiating and clarifying the intended meaning: The parties should review and align their understanding of the clause corresponding with the contract’s original purpose.
  • Interpreting in accordance with legal principles: Under Article 404 of the Civil Code 2015, unclear contractual terms must be interpreted based on the parties’ intent throughout the contractual process, consistent with the contract’s purpose, nature, and local customs, while considering interrelations among the clauses.
  • Applying the principle of protecting the weaker party: If an unclear clause creates a disadvantage for one party, interpretation should favor such a party.
  • Seeking legal advice: Consulting a lawyer ensures that the interpretation complies with applicable laws and minimizes legal risks.
  • Amending or restating the contract: If necessary, the parties may modify or supplement the clause to ensure clarity and prevent future disputes.

III. Questions about unclear exemption clauses

1. Can a signatory request to nullify an unclear exemption clause?

According to Article 404 of the Civil Code 2015, when a contract contains ambiguous wording susceptible to multiple interpretations, it must be construed in the manner most consistent with the contract’s purpose and nature. If the drafting party inserts a provision that disadvantages the other, interpretation must favor the non-drafting party.

Moreover, if an unclear clause causes unfairness or violates the law, the injured party may request the court or competent authority to interpret, amend, or nullify the provision. In practice, a contracting party may seek modification or nullification of such a clause to safeguard its rights.

2. Can a party claim damages for harm caused by an unclear exemption clause?

If a court or arbitral tribunal finds that an unclear exemption clause is unenforceable or violates mandatory legal provisions (for example, consumer protection laws prohibiting liability exclusion for willful misconduct or gross negligence), the clause will be void.

Furthermore, if an unclear exemption clause causes harm, the injured party may claim damages depending on the specific circumstances. Under Articles 13, 419, and 585 of the Civil Code 2015, the injured party may claim compensation based on general contractual or tort liability principles, provided they can prove that the unclear clause through ambiguity or misleading content caused actual damage.

3. How can parties prevent the inclusion of unclear exemption clauses?

 Since unclear exemption clauses frequently appear in contracts, the following preventive measures should be implemented:

  • Drafting contracts in a clear and transparent manner.
  • Requiring the drafting party to define vague terms precisely and specify exempted circumstances in detail.
  • Using plain and accessible language, avoiding unnecessary legal jargon.
  • Limiting exemption clauses to acceptable risks, excluding fundamental contractual obligations.
  • Always consulting a lawyer before signing high-value or complex contracts containing exemption provisions.
  • Regularly reviewing and updating standard templates to ensure compliance with new legal developments.
  • Ensuring all clauses, particularly exemption clauses, clearly and consistently with the parties’ objectives.

4. What are the legal consequences of having an unclear exemption clause in a contract?

Ambiguous exemption clauses may lead to the following legal consequences:

  • The clause may be deemed invalid or unenforceable.
  • Disputes may arise over intent and scope of liability, resulting in litigation or judicial interpretation.
  • The injured party may pursue compensation or file a lawsuit.
  • Questions regarding the contract’s transparency may harm the enterprise’s reputation and credibility.

5. If only part of a contract contains an unclear exemption clause, does the rest remain valid?

Under Article 130 of the Civil Code 2015, if only part of a contract contains an invalid or unclear provision, the remainder of the contract remains valid unless the void portion is inseparable or materially affects the rest.

In such cases, the competent authority may annul or adjust the invalid section in accordance with contract law.

IV. Legal consulting services regarding unclear exemption clauses

To avoid legal and financial risks associated with ambiguous exemption clauses, professional legal guidance is essential.

NPLaw, with a team of seasoned attorneys and experts specializing in contract drafting and risk assessment, provides comprehensive legal services, including:

  • Risk analysis and assessment: Reviewing and evaluating the legality, clarity, and potential risks of existing or proposed exemption clauses.
  • Transparent contract drafting: Assisting in drafting clear, enforceable exemption clauses that comply with applicable laws and maximize legal protection for clients.
  • Contract negotiation support: Representing or advising clients during negotiations to amend, remove, or clarify unfavorable or ambiguous exemption clauses proposed by counterparts.
  • Dispute resolution support: Representing clients in court or arbitration proceedings involving the interpretation or enforceability of exemption clauses.

For inquiries or legal assistance regarding the review and resolution of unclear exemption clauses, please contact us for timely and professional support.