Unconscionability Flashcards
General Definition of Unconscionability
A contract is unconscionable when its terms or its formation is so unfair that no reasonable person would offer it or accept it and the contract is so unfair that a reasonable person reviewing the circumstances would “produc[e] an exclamation at the inequality of it.”
In other words, generally speaking, unconscionability is an extremely unfair contract in formation and/or substance.
§208.Unconscionable Contract or Term.
If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.
§2–302.Unconscionable Contract or Clause.
(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.
Proving Unconscionability, Generally
To demonstrate unconscionability, the proponent must show:
(1) procedural unconscionability; and
(2) substantive unconscionability.
Procedural Unconscionability
Procedural unconscionability exists if the procedure surrounding the formation of the contract causes the claimant to have an absence of meaningful choice in entering the contract.
Evidence of Procedural Unconscionability
(1) the existence of disparity of bargaining power between the claimant (e.g., unsophisticated or uneducated, has a great need for the contract) and the other party (e.g., big company, company that has a monopoly over the good or service, sophisticated persons; represented by lawyers)
(2) The fact that the contractual provision at issue may cause unfair surprise to the claimant (e.g., because it was buried in fine print or the claimant was required to sign it without significant time to consider it)
(HAINES v. SPEEDWAY)
(3) The use of a contract of adhesion.
[A contract of adhesion is a contract (generally a form contract) submitted by one party to the other party on a take-it-or-leave it basis with no realistic opportunity to bargain as to its terms.]
Substantive unconscionability
Substantive unconscionability exists if the substance of the contract (i.e., its terms) is oppressive and extremely unfair to one party to the contract.
While inadequacy of consideration does not void a contract, the gross disparity of consideration can be evidence of unfairness.
If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.
§208.Unconscionable Contract or Term.
A contract is unconscionable when its terms or its formation is so unfair that no reasonable person would offer it or accept it and the contract is so unfair that a reasonable person reviewing the circumstances would “produc[e] an exclamation at the inequality of it.”
In other words, generally speaking, unconscionability is an extremely unfair contract in formation and/or substance.
General Definition of Unconscionability
To demonstrate unconscionability, the proponent must show:
(1) procedural unconscionability; and
(2) substantive unconscionability.
Proving Unconscionability, Generally
Procedural unconscionability exists if the procedure surrounding the formation of the contract causes the claimant to have an absence of meaningful choice in entering the contract.
Procedural Unconscionability
(1) the existence of disparity of bargaining power between the claimant (e.g., unsophisticated or uneducated, has a great need for the contract) and the other party (e.g., big company, company that has a monopoly over the good or service, sophisticated persons; represented by lawyers)
(2) The fact that the contractual provision at issue may cause unfair surprise to the claimant (e.g., because it was buried in fine print or the claimant was required to sign it without significant time to consider it)
(3) The use of a contract of adhesion.
[A contract of adhesion is a contract (generally a form contract) submitted by one party to the other party on a take-it-or-leave it basis with no realistic opportunity to bargain as to its terms.]
Evidence of Procedural Unconscionability
Substantive unconscionability exists if the substance of the contract (i.e., its terms) is oppressive and extremely unfair to one party to the contract.
While inadequacy of consideration does not void a contract, the gross disparity of consideration can be evidence of unfairness.
Substantive unconscionability
(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.
§2–302.Unconscionable Contract or Clause.
