Unconscionability in Contracts Defined
Even though all the elements of a contract are present in an agreement, it may still not be enforceable if something violates legal “doctrine.”
Doctrines are legal principles that protect the parties, such as fraudulent concealment or duress, to name just a few. One of these contract doctrines is unconscionability. It’s been codified in the Uniform Commercial Code (UCC), which says “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 the contract….” (UCC Section 2-302). But what does that mean?
Subsequent court decisions give some clarity, and focus on whether the original process of entering into the contract was deficient (“procedural unconscionability”), and/or on whether the terms of the contract are oppressive (“substantive unconscionability”).
Procedural Unconscionability in a Nutshell
“Procedural unconscionability” relates to the bargaining process that occurred before the contract was finalized. In general, this is akin to other doctrines such as duress (for example, feeling forced to enter an agreement out of fear), or duty to disclose (for example, the offeror did not disclose an important defect in the goods) before the contract was signed.
In other words, this means that the wrangling and bargaining that occured before a contract was signed had major problems.
Substantive Unconscionability in a Nutshell
“Substantive unconscionability” relates to a term (or terms) in the contract. For example, if the terms require that payment be received by the end of the day or the price will go up dramatically, but it’s a banking holiday and it’s impossible for the purchaser to get the funds, that term might be considered unconscionable depending on the context of the entire agreement.
In other words, it concerns the content of the contract, not the process that took place before singing.
Order Your Own Affairs
While contract law has some simple elements, there are also vastly complex doctrines and theories associated with contract law. Whether you are entering into a simple transaction or a complex one involving high-dollar amounts, you will want to ensure that there are no unconscionable terms in your contracts.
You can ease your mind by using our online resources to create customizable contracts. Whether you need a specific contract for services, a general one, or a contract for products, your best interests will be protected by using a lawyer-drafted contract.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.