unconscionability

A doctrine under which courts may deny enforcement of unfair or oppressive contracts because of procedural abuses arising out of the contract formation, or because of substantive abuses relating to terms of the contract, such as terms which violate reasonable expectations of parties or which involve gross disparities in price; either abuse can be the basis for a finding of unconscionability. Remco Enterprises, Inc. v. Houston, 9 Kan.App.2d 296, 677 P.2d 567, 572.

Basic test of "unconscionability" of contract is whether under circumstances existing at time of making of contract and in light of general commercial background and commercial needs of particular trade or case, clauses involved are so one-sided as to oppress or unfairly surprise party. Division of Triple T Service, Inc. v. Mobil Oil Corp., 60 Misc.2d 720, 304 N.Y.S.2d 191, 201.

Unconscionability is generally recognized to include an absence of meaningful choice on the part of one of the parties, to a contract together with contract terms which are unreasonably favorable to the other party. Gordon v. Crown Central Petroleum Corp., D.C.Ga., 423 F.Supp. 58, 61.

Typically the cases in which unconscionability is found involve gross overall one-sidedness or gross onesidedness of a term disclaiming a warranty, limiting damages, or granting procedural advantages. In these cases one-sidedness is often coupled with the fact that the imbalance is buried in small print and often couched in language unintelligible to even a person of moderate education. Often the seller deals with a particularly susceptible clientele. Kugler v. Romain, 58 N.J. 522, 279 A.2d 640.

Uniform Commercial Code.

(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. U.C.C. No. 2-302.

Section 2-302 should be considered in conjunction with the obligation of good faith imposed at several places in the Code.

See e.g. U.C.C. No. 1-203.

Restatement of Contracts.

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. Restatement, Second, Contracts, No. 208

@ unconscionable bargain

@ unconscionable contract

@ unconscionable bargain or contract

unconscionable bargain or contract

A contract, or a clause in a contract, that is so grossly unfair to one of the parties because of stronger bargaining powers of the other party; usually held to be void as against public policy. An unconscionable bargain or contract is one which no man in his senses, not under delusion, would make, on the one hand, and which no fair and honest man would accept, on the other. Hume v. U. S., 132 U.S. 406, 10 S.Ct. 134, 33 L.Ed. 393.

See also unconscionability

+ unconscionable contract

One which no sensible man not under delusion, duress, or in distress would make, and such as no honest and fair man would accept. Franklin Fire Ins. Co. v. Noll, 115 Ind.App. 289, 58 N.E.2d 947, 949, 950. A contract the terms of which are excessively unreasonable, overreaching and one-sided.

See adhesion contract

- unconscionability.

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