What makes a contract unconscionable?

What circumstances may make a contract unconscionable?

A contract may receive closer scrutiny if the negotiation process or the terms themselves appear unusually unfair: 

• Extremely one-sided rights or obligations.
• Hidden or confusing contract terms.
• A significant imbalance in bargaining power.
• Little or no opportunity to review or negotiate the agreement.
• Important terms buried in fine print.
• Contracts presented on a take-it-or-leave-it basis.

The overall circumstances are often just as important as the wording of the contract.

What factors do courts often consider?

When unconscionability is raised, the focus is often on both the contract and the events leading up to its signing, such as: 

• Whether the parties understood the agreement.
• The clarity and prominence of important terms.
• The opportunity to ask questions or negotiate.
• The relative bargaining power of the parties.
• The commercial reasonableness of the contract terms.
• Applicable laws governing the agreement.

No single factor automatically makes a contract unconscionable. The outcome usually depends on the combination of circumstances.

What to do next…

1. Review the contract and identify the terms you believe are unusually unfair.
2. Gather drafts, emails, and other records of the negotiations.
3. Document the circumstances surrounding how the agreement was presented and signed.
4. Consider whether the contract accurately reflects what both parties understood and agreed to.

What to consider in your specific situation

• The type of contract and business relationship involved.
• The specific terms that appear unfair or one-sided.
• Whether there was a meaningful opportunity to negotiate.
• The bargaining power of each party.
• The events leading up to the signing of the agreement.
• Applicable laws governing contract enforceability.

Since every situation is different, consider getting more information through Rocket Copilot or an attorney review to move forward more confidently.