Unconscionability

Question 1

UCC 2-302: Unconscionable Contract or Clause

Answer 1

(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 contact without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable results.
(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 a determination.

Question 2

RS 208: Unconscionable contract or term

Answer 2

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 contact without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.

Question 3

Define: Unconscionability in normal person language

Answer 3

Lack of a meaningful choice for one party with terms unreasonably favorable for the other party AND all facts must be considered in determining if a meaningful choice is present AND a gross inequality in bargaining may negate the meaning of a choice of one party.

Question 4

What is the rule under Williams v. Walker Furniture about the circumstances that must be considered when a court decides on unconscionably?

Answer 4

In determining reasonableness or fairness, the primary concern must be with the terms of the contract considered in light of the circumstances existing at the time the contract was made.
The standard that it is held to is: So extreme as to appear unconscionable according to the morals and business practices of the time and place the contract was created.

Question 5

What is required to void a contract or term based on unconscionably?

Answer 5

For a court not to enforce a contract under the doctrine of unconscionably, it must be one of two kinds:

1) Either there must be proof of some defect in the process of contract formation (duress, fraud, undue influence)
2) There must be, but only within narrow limits, some incompetence of the party against whom the agreement is to be enforced.

Question 6

What must be present for a term or contract to be voided for unconscionability?

Answer 6

1) A procedural unconscionably: Examines the PROCESS of the negotiation process. This requires a lack of meaningful choice and unfair bargaining power.
2) Substantive Unconscionability: Examines the ACTUAL TERMS of the contract.