Unconscionable Contract
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Unconscionability (sometimes known as unconscionable dealing/conduct in
Australia Australia, officially the Commonwealth of Australia, is a country comprising mainland Australia, the mainland of the Australia (continent), Australian continent, the island of Tasmania and list of islands of Australia, numerous smaller isl ...
) is a doctrine in
contract law A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more Party (law), parties. A contract typically involves consent to transfer of goods, Service (economics), services, money, or pr ...
that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior
bargaining power Bargaining power is the relative ability of parties in a negotiation (such as bargaining, contract writing, or making an agreement) to exert influence over each other in order to achieve favourable terms in an agreement. This power is derived f ...
, that they are contrary to good conscience. Typically, an ''unconscionable'' contract is held to be
unenforceable An unenforceable contract or transaction is one that is valid but one the court will not enforce. Unenforceable is usually used in contradiction to void (or ''void ab initio'') and voidable. If the parties perform the agreement, it will be valid ...
because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the
consideration Consideration is a concept of English law, English common law and is a necessity for simple contracts but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions. It is commonly referred to a ...
offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract.


Overview

Unconscionability is determined by examining the circumstances of the parties when the contract was made, such as their bargaining power, age, and mental capacity. Other issues might include lack of choice, superior knowledge, and other obligations or circumstances surrounding the bargaining process. Unconscionable conduct is also found in acts of
fraud In law, fraud is intent (law), intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly. Fraud can violate Civil law (common law), civil law (e.g., a fraud victim may sue the fraud perpetrato ...
and
deceit Deception is the act of convincing of one or many recipients of untrue information. The person creating the deception knows it to be false while the receiver of the information does not. It is often done for personal gain or advantage. Deceit ...
, where the deliberate
misrepresentation In common law jurisdictions, a misrepresentation is a False statements of fact, false or misleading''Royal Mail Case, R v Kylsant''
931 Year 931 ( CMXXXI) was a common year starting on Saturday of the Julian calendar. Events By place North Africa * The Ummayad Caliphate of Córdoba invades and conquers the city of Ceuta, which was ruled by the Berber dynasty Banu I ...
Question of law, statement of fact made during negotiations by one party to another, the statement then in ...
of fact deprives someone of a valuable possession. When a party takes unconscionable advantage of another, the action may be treated as criminal fraud or the civil action of deceit. For a contract to be unconscionable, it must have been unconscionable at the time it was made; later circumstances that make the contract extremely one-sided are irrelevant. Criteria for determining unconscionability vary between jurisdictions and the question of whether a contract is unconscionable is regarded as a
question of law In law, a question of law, also known as a point of law, is a question that must be answered by a judge and can not be answered by a jury. Such a question is distinct from a question of fact, which must be answered by reference to facts and evide ...
rather than a
question of fact In law, a question of law, also known as a point of law, is a question that must be answered by a judge and can not be answered by a jury. Such a question is distinct from a question of fact, which must be answered by reference to facts and eviden ...
; meaning that, in jurisdictions where juries are employed in civil cases, it is the judge and not the jurors who decide whether to apply the doctrine. Upon finding unconscionability, a court has significant flexibility on how it remedies the situation. It may refuse to enforce the contract against the party unfairly treated on the theory that they were misled, lacked information, or signed under duress or misunderstanding; it may refuse to enforce the offending clause, or take other measures it deems necessary to have a fair outcome and damages are usually not awarded. For instance, in ''
Uber Technologies Inc v Heller ''Uber Technologies Inc v Heller'', 2020 SCC 16, is a 2020 decision of the Supreme Court of Canada. The Court held 8–1 that an arbitration clause in a contract the plaintiff David Heller had signed with Uber was Unconscionability, unconscionable ...
'' (2020) the
Supreme Court of Canada The Supreme Court of Canada (SCC; , ) is the highest court in the judicial system of Canada. It comprises nine justices, whose decisions are the ultimate application of Canadian law, and grants permission to between 40 and 75 litigants eac ...
found an
arbitration clause In contract law, an arbitration clause is a clause in a contract that requires the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdict ...
requiring
gig worker Gig workers are independent contractors, online platform workers, contract firm workers, on-demand workers, and temporary workers. Gig workers enter into formal agreements with on-demand companies to provide services to the company's clients. ...
s in Ontario to litigate before the Dutch
International Chamber of Commerce The International Chamber of Commerce (ICC; French: ''Chambre de commerce internationale'') is the largest, most representative business organization in the world. ICC represents over 45 million businesses in over 170 countries who have interest ...
was unconscionable and so void. ''Procedural unconscionability'' is seen as the disadvantage suffered by a weaker party in negotiations, whereas ''substantive unconscionability'' refers to the unfairness of terms or outcomes. Most often the former will lead to the latter, but not always. The existence of the procedural unconscionability without substantive unconscionability may be sufficient to set aside a contract, but the latter, by itself, may not. As with issues of consideration, the court's role is not to determine whether someone has made a good or bad bargain, but merely whether that party had the opportunity to properly judge what was best in their own interests. There are several typical examples in which unconscionability are most frequently found: *Where a party that typically engages in sophisticated business transactions inserts boilerplate language into a contract containing terms unlikely to be understood or appreciated by the average person, such as a disclaimer of
warranties In law, a warranty is an expressed or implied promise or assurance of some kind. The term's meaning varies across legal subjects. In property law, it refers to a covenant by the grantor of a deed. In insurance law, it refers to a promise by the ...
, or a provision extending liability for a newly purchased item to goods previously purchased from the same seller. *Where a seller vastly inflates the price of goods, particularly when this inflation is conducted in a way that conceals from the buyer the total cost for which the buyer will ultimately be liable. A similar example would be severe penalty provisions for failure to pay loan installments promptly that are physically hidden by small print located in the middle of an obscure paragraph of a lengthy loan agreement. In such a case a court may find that there is no meeting of the minds of the parties to the contract and that the weaker party has not accepted the terms of the contract. *Where a seller offers a standardized
contract of adhesion A standard form contract (sometimes referred to as a ''contract of adhesion,'' a ''leonine contract'', a ''take-it-or-leave-it contract'', or a '' boilerplate contract'') is a contract between two parties, where the terms and conditions of the co ...
for the purchase of necessary goods or services (e.g. food, shelter, means of transportation) to consumers on a "take it or leave it" basis, without giving consumers realistic opportunities to negotiate terms that would benefit their interests. While there is nothing unenforceable or even wrong about adhesion contracts in themselves, specific terms may render them unconscionable. Examples of gross one-sidedness would be provisions that limit damages against the seller, or limit the rights of the purchaser to seek relief in the courts against the seller. In the 2009 case of '' Harris v. Blockbuster, Inc.'', the plaintiff argued that Blockbuster's provision to compel
arbitration Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision. The third party neutral (the 'arbitrator', 'arbiter' or 'arbitral tribunal') renders the decision in the form of an 'arbitrati ...
and forbid
class action lawsuits A class action is a form of lawsuit. Class Action may also refer to: * ''Class Action'' (film), 1991, starring Gene Hackman and Mary Elizabeth Mastrantonio *Class Action (band), a garage house band * "Class Action" (''Teenage Robot''), a 2002 epi ...
was illusory and unconscionable. However, whether that contract was unconscionable is unknown, as the court ruled that it was illusory and therefore not enforceable, and disregarded all further consideration.


By country


Australia

The leading
Australia Australia, officially the Commonwealth of Australia, is a country comprising mainland Australia, the mainland of the Australia (continent), Australian continent, the island of Tasmania and list of islands of Australia, numerous smaller isl ...
n case is ''
Commercial Bank of Australia Ltd v Amadio ''Commercial Bank of Australia Ltd v Amadio'',. is a seminal case in Australian contract law and Equity (law), equity, in which the High Court held that unconscionable dealing due to a lack of knowledge or education and the consequent imbalanc ...
'',. in which an elderly Italian migrant couple guaranteed their builder son's business debts to the Commercial Bank. At the time the mortgage was executed, the bank manager was aware of the son's precarious financial position and knew that the Amadios, who did not speak English well, were not so informed, but did nothing to further explain the situation to them or suggest they get independent advice. In addition, the bank did not advise the Amadios that there was no limit on their liability under the guarantee; the Amadios believed their liability was limited to $50,000. When the son's business failed, the Amadios had the contract set aside due to unconscionable dealing by the bank. The court held that the bank manager knew about the "special disability" of Amadios, referring to their advanced age, lack of business acumen, lack of fluency in written English, and their reliance on their son's nadequatedisclosure of his finances. A special disability is one which seriously affects the ability of the person subject to it to make sensible decisions of their own best interest.. This "disability" was sufficiently evident to the bank, as the stronger party, to make their acceptance of the weaker party's assent to the transaction manifestly unfair. The bank did not ensure that the Amadios fully understood the nature of the transaction; therefore, the bank's taking advantage of the opportunity that presented itself was unconscionable. While ''Amadio'' is the leading authority on unconscionable dealing in Australia, courts have frequently relied upon other cases to help define what constitutes special disability. Courts have extended the scope of what is special disability to include infatuation causing vulnerability and mental disorder. In ''Louth v Diprose'',. the Respondent, a solicitor, was infatuated with Louth. He provided her with a multitude of gratuitous gifts and a marriage proposal, which Louth declined. Louth suffered from depression and threatened to commit suicide if she were to become evicted. In response, the Respondent bought her a house and put it in Louth's name. Following a deterioration of the relationship, the Respondent requested Louth to transfer the property in his name, which Louth refused. The Respondent initiated legal proceedings to recover the property, alleging he had suffered a special disability entitling rescission of the contract. Deane J, in the majority, held that Diprose's infatuation placed him in a position of emotional dependence which placed Louth in a position of ascendancy and influence. Louth was found to be aware of the special disability she had deliberately created and exploited it for her benefit, even though Louth articulated her lack of romantic interest in Diprose on numerous occasions. Intoxication is generally not regarded as a special disability, although in ''Blomley v Ryan'' it was found that the severity of Ryan's drunkenness, in combination with Blomley's knowledge of his alcoholism, was enough to warrant special disability. In ''Blomley v Ryan,'' the Plaintiff purchased a property from the Defendant at a very low price. During the transaction, the Defendant was of old age and heavily intoxicated which was conspicuous to the Plaintiff. After the transaction, the Defendant refused to perform the transfer of property and so the Plaintiff sought specific performance while the Defendant sought to set aside the contract. The Court ruled that 'mere drunkenness' is not a defence to resist a contract. However, it stated that where there is knowledge of one party that the other party is seriously inebriated and that party takes advantage of such inebriation, equity will intervene to refuse specific performance. Courts have also frequently relied upon the observation of the majority of the High Court in ''Krakowski v Eurolynx Properties Ltd'' when considering the amount of knowledge that can be imputed to a company. Based on this case, the new concept of "unconscionability" in general and contractual law was passed by Australian legislation, defining it in two ways: # Using undue influence or coercion, where the consumer is not in a position to make an independent decision based on the fact that undue influence is made to bear upon him/her. # The stronger party is taking advantage of the fact that the consumer either does not have enough knowledge or understanding of the contract or is incapable of making an independent decision. The trader does not point out that the consumer has avenues in getting help in clearly understanding the contract. So, in this case, the trader is taking advantage of the consumer's lack of understanding for his own benefit. ''Amadio'' and other cases have seen a greater willingness by courts to set aside contracts on the grounds of unconscionability... This has been partly influenced by recent statutory developments..


Canada

The doctrine of unconscionability is well-established in Canada, where it has branched from the older and more settled doctrine of undue influence. The leading case on unconscionability in Canada is ''
Uber Technologies Inc v Heller ''Uber Technologies Inc v Heller'', 2020 SCC 16, is a 2020 decision of the Supreme Court of Canada. The Court held 8–1 that an arbitration clause in a contract the plaintiff David Heller had signed with Uber was Unconscionability, unconscionable ...
'' (2020). As applied in Canada, the doctrine limits the enforceability of "unfair agreements that resulted from an inequality of
bargaining power Bargaining power is the relative ability of parties in a negotiation (such as bargaining, contract writing, or making an agreement) to exert influence over each other in order to achieve favourable terms in an agreement. This power is derived f ...
". The test for unconscionability applied by Canadian courts is to determine whether there was an inequality of bargaining power between the parties to the contract and, if so, whether this inequality resulted in the contract being an "improvident bargain" for the party with lesser bargaining power. The inequality criterion is satisfied where one party is unable to sufficiently protect its interests while negotiating the contract, while the improvidence criterion is satisfied where the contract "unduly advantages the stronger party or unduly disadvantages the more vulnerable". Improvidence must be measured with reference to the time of the contract's formation and involves a contextual assessment of "whether the potential for undue advantage or disadvantage created by the inequality of bargaining power has been realised". It is particularly relevant in the context of
standard form contract A standard form contract (sometimes referred to as a ''contract of adhesion,'' a ''leonine contract'', a ''take-it-or-leave-it contract'', or a '' boilerplate contract'') is a contract between two parties, where the terms and conditions of the co ...
s; especially with regard to
choice of law Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states (as in ...
, choice of court, or
forum selection clause In contract law, a forum selection clause (sometimes called a dispute resolution clause, choice of court clause, governing law clause, jurisdiction clause or an arbitration clause, depending on its form) in a contract with a conflict of laws ...
s. Where the disadvantaged party understood the improvident terms of the contract, the contract is unconscionable if they were so reliant on the advantaged party that they assented out of perceived necessity; meanwhile, where the disadvantaged party did not understand the improvident terms, "the focus is on whether they have been unduly disadvantaged by the terms they did not understand or appreciate". The intended purpose of the doctrine of unconscionability is "the protection of vulnerable persons in transactions with others". *In ''Uber v Heller'' (2020), a
gig worker Gig workers are independent contractors, online platform workers, contract firm workers, on-demand workers, and temporary workers. Gig workers enter into formal agreements with on-demand companies to provide services to the company's clients. ...
was attempting to bring a
class action A class action is a form of lawsuit. Class Action may also refer to: * ''Class Action'' (film), 1991, starring Gene Hackman and Mary Elizabeth Mastrantonio * Class Action (band), a garage house band * "Class Action" (''Teenage Robot''), a 2002 e ...
lawsuit against
Uber Uber Technologies, Inc. is an American multinational transportation company that provides Ridesharing company, ride-hailing services, courier services, food delivery, and freight transport. It is headquartered in San Francisco, California, a ...
arguing that drivers are employees and therefore entitled to benefits under the Ontarian
Employment Standards Act The ''Employment Standards Act, 2000'' (the Act) is an Act of the Legislative Assembly of Ontario. The Act regulates employment in the province of Ontario, including wages, maximum work hours, overtime, vacation, and leaves of absence. It diff ...
and equivalent legislation in other provinces and territories. However, Uber attempted to invoke an arbitration clause included in its contracts with Canadian drivers which required that all disputes between Uber and the drivers be resolved by arbitration in the Netherlands. In an 8–1 decision, the Supreme Court of Canada held that the arbitration clause in Heller's contract with Uber was unconscionable. Further, the majority held that the contract was
void Void may refer to: Science, engineering, and technology * Void (astronomy), the spaces between galaxy filaments that contain no galaxies * Void (composites), a pore that remains unoccupied in a composite material * Void, synonym for vacuum, a s ...
because it attempted to contract out of the ''Employment Standards Act''. As a result, the Court allowed Heller's
class action A class action is a form of lawsuit. Class Action may also refer to: * ''Class Action'' (film), 1991, starring Gene Hackman and Mary Elizabeth Mastrantonio * Class Action (band), a garage house band * "Class Action" (''Teenage Robot''), a 2002 e ...
lawsuit against Uber to proceed to trial. Justice Russell Brown, in a
concurring opinion In law, a concurring opinion is in certain legal systems a written opinion by one or more judges of a court which agrees with the decision made by the Majority opinion, majority of the court, but states different (or additional) reasons as the bas ...
, argued that the arbitration clause was unenforceable because it effectively denied Heller access to justice and was therefore contrary to public policy. *In ''Harry v. Kreutziger'' (1978), Harry was a
First Nations First nations are indigenous settlers or bands. First Nations, first nations, or first peoples may also refer to: Indigenous groups *List of Indigenous peoples *First Nations in Canada, Indigenous peoples of Canada who are neither Inuit nor Mé ...
Aboriginal with a congenital partial hearing defect. A commercial fisherman, he had a grade 5 education and was not widely experienced in business matters. He owned a boat worth only $1,000, but it came with a fishing license: since the British Columbia government had ceased issuing new licenses, one could only be obtained through transferral. Due to this limitation and recent excellent salmon harvests, licenses were worth around $15,000, meaning that the total value of Harry's boat was $16,000. Kreutziger first offered Harry a check for $2,000, which he returned through his brother. Kreutziger gave him back the cheque several times, assuring Harry that as an Aboriginal he would easily be able to get another license. Harry finally agreed to sell for $4,500, but then Kreutziger unilaterally reduced the price by $570, deducting the cost of conversion of the boat license from an "AI" license (available only to Aboriginal peoples) into an "A" license. Harry then applied for another license, but was rejected on the grounds that he had left the fishing industry when he sold the boat. Harry sued to have the sale set aside, but was unsuccessful at trial. The British Columbia Court of Appeals found there was a clear inequality between the parties due to Harry's lack of education and physical handicap, as well as the difference in class, culture, and economic circumstances between the two parties. Kreutziger's actions clearly demonstrated his power; he was very aggressive in the negotiations and was able to unilaterally modify the price for his own benefit. Kreutziger was also unable to demonstrate that the deal was in any way fair, as the price was one-quarter of the true value of the boat and license. The court rescinded the contract because of the unconscionability of the underlying transaction, ruling that the buyer was trying to take advantage of the seller's lack of knowledge of the value of the license, and ordered Kreutziger to return the boat and license to Harry, and Harry to return the payment of $3,930 to Kreutziger.


England and Wales

"Inequality of bargaining power" is a term used in
England and Wales England and Wales () is one of the Law of the United Kingdom#Legal jurisdictions, three legal jurisdictions of the United Kingdom. It covers the constituent countries England and Wales and was formed by the Laws in Wales Acts 1535 and 1542. Th ...
to express essentially the same idea as unconscionability; which can in turn be further broken down into cases on duress, undue influence, and exploitation of weakness. In these cases, where someone's consent to a bargain was only procured through duress, out of undue influence or under severe external pressure that another person exploited, courts have felt it was unconscionable to enforce agreements. Controversy exists as to whether a contract should be voidable simply because one party was pressured by circumstances wholly outside the other party's control. The leading case on undue influence is considered to be ''
Lloyds Bank Ltd v Bundy ''Lloyds Bank Ltd v Bundy'' is a decision of the English Court of Appeal in English contract law, dealing with undue influence. One of the three judges hearing the case, Lord Denning MR, advanced the argument that under English law, all impairmen ...
'' which adopted the American position that all impairments of autonomy should fall under the single principle of "inequality of bargaining power". In this case, Bundy agreed to increase the
mortgage A mortgage loan or simply mortgage (), in civil law (legal system), civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners t ...
on his farmhouse in order to maintain the
line of credit A line of credit is a credit facility extended by a bank or other financial institution to a government, business or individual customer that enables the customer to draw on the facility when the customer needs funds. A financial institution ...
being extended to his son's business. The question was whether the contract leading to the repossession of Bundy's farmhouse was voidable due to pressure brought by the bank. The
Court of Appeal of England and Wales The Court of Appeal (formally "His Majesty's Court of Appeal in England", commonly cited as "CA", "EWCA" or "CoA") is the highest court within the Senior Courts of England and Wales, and second in the legal system of England and Wales only to ...
ruled that since the amount of the loan was already higher than the existing mortgage, Bundy received no direct benefit from the agreement to increase the mortgage amount; that the bank failed to notify him of the true financial condition of his son's business, and that it threatened to call in his son's loan if Bundy did not agree to the increase. Furthermore, since Bundy relied upon Lloyd's for the mortgage and his son's line of credit, the bank-customer relationship was found to have created a fiduciary duty; hence, the bank should have recommended that he seek independent legal advice.
Lord Denning Alfred Thompson Denning, Baron Denning, (23 January 1899 – 5 March 1999), was an English barrister and judge. He was called to the Bar of England and Wales in 1923 and became a King's Counsel in 1938. Denning became a judge in 1944 when he w ...
MR found that the contract was voidable owing to the unequal bargaining position in which Bundy had found himself, in that he had entered into the contract without independent advice and that unfair pressures were exerted by the bank. Essentially, the court ruled that only the bank benefitted from the agreement to raise the amount of the mortgage, and that it had exploited Bundy's weakness. The transaction was found to be unconscionable, and Bundy only had to honor the lower mortgage amount. It is notable that Denning's judgment did not represent the law in ''
National Westminster Bank plc v Morgan is a judicial decision of the House of Lords relating to English contract law and the doctrine of undue influence. The case is most well known for the comments of Lord Scarman about the supposed requirement of "manifest disadvantage" to set a ...
'', in which a family home was likewise subjected to a second mortgage to secure a loan on the husband's business with Abbey National Bank. The Morgans got into arrears on the loan, and National Westminster Bank, commonly known as "NatWest", offered a rescue package to help the couple save their home, where they would pay off the existing mortgages and give the couple a
bridge loan A bridge loan is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing. It is usually called a bridging loan in the United Kingdom, also known as a "caveat loan ...
for the purposes of aiding the husband's business. In the limited time the NatWest manager spent alone with Mrs. Morgan, she stated that she did not want to be exposed to any extra risks, as she had no faith in her husband's business ability. The bank manager assured her that the risks were limited and did not advise her to get independent legal advice. She signed the contract, and the bank later called in the loan when the Morgans defaulted. Mrs. Morgan's defense was that the bank manager had exercised undue influence over her in procuring her signature. Unlike ''Lloyds Bank Ltd v Bundy'', it was found that there was no undue influence since the transaction was not a "manifest disadvantage" to the couple, and that Mrs. Morgan had not established a relationship of trust and confidence in the brief time she spent with the NatWest manager. Unconscionability is also an important element of the English law of trusts. A
constructive trust In trust law, a constructive trust is an equitable remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding a legal property right which they should not possess ...
arises, by operation of law, when the conscience of a legal owner is affected meaning they cannot deny the equitable interest of the beneficiary for whom they consequently hold the property as trustee. Additionally, unconscionability is a necessary element to the finding of
proprietary estoppel Proprietary estoppel is a legal claim, especially connected to English land law, which may arise in relation to rights to use the property of the owner. It may even be effective in connection with disputed transfers of ownership. Proprietary esto ...
.


United States

The leading case for unconscionability in the United States is ''
Williams v. Walker-Thomas Furniture Co. ''Williams v. Walker-Thomas Furniture Co.'', 350 F.2d 445 (D.C. Cir. 1965), was a court opinion, written by Judge J. Skelly Wright, that had a definitive discussion of unconscionability as a defense to enforcement of contracts in American contrac ...
'', in which the defendant, a retail furniture store, sold multiple items to a customer from 1957 to 1962. The extended credit contract was written so that none of the furniture was considered to be purchased until all of it was paid for. When the plaintiff defaulted and failed to make payments on the last item of furniture, the furniture store attempted to repossess all of the furniture sold since 1957, not just the last item. The
District of Columbia Washington, D.C., formally the District of Columbia and commonly known as Washington or D.C., is the capital city and Federal district of the United States, federal district of the United States. The city is on the Potomac River, across from ...
Court of Appeals returned the case to the lower court for trial to determine further facts, but held that the contract could be considered unconscionable and negated if it was procured due to a gross inequality of bargaining power. Under the Second Restatement of Contracts, a party may assert a claim for relief from unilateral mistake regarding the terms or conditions of a contract or a
liquidated damages Liquidated damages, also referred to as liquidated and ascertained damages (LADs), are damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach (e.g., lat ...
clause. Relief for unilateral mistake may be granted if the mistake would render enforcement of the contract unconscionable. The Restatement considers factors such as: 1) absence of reliance by the promisee; and 2) gross disparity in values exchanged.Restatement (Second) of Contracts § 153 (1979). Despite the indication of these considerations, however, most challenges to liquidated damages clauses survive legal challenges based on unconscionability. The Restatement also has a separate provision on unconscionability at §208, "Unconscionable Contract or Term," which broadly allows a court to limit the application of an unconscionable term or contract in order to avoid an unconscionable result. Additionally, the concept as applied to sales of goods is codified in Section 2-302 of the
Uniform Commercial Code The Uniform Commercial Code (UCC), first published in 1952, is one of a number of uniform acts that have been established as law with the goal of harmonizing the laws of sales and other commercial transactions across the United States through U ...
.


See also

*''
Armendariz v. Foundation Health Psychcare Services, Inc. ''Armendariz v. Foundation Health Psychcare Services, Inc.'', 24 Cal. 4th 83, 6 P.3d 669 (2000), was a case decided by the Supreme Court of California that defined the California standard for unconscionability. Two former employees of Foundation ...
'' *
Duress Coercion involves compelling a party to act in an involuntary manner through the use of threats, including threats to use force against that party. It involves a set of forceful actions which violate the free will of an individual in order to i ...
*
Implied warranty In common law jurisdictions, an implied warranty is a contract law term for certain assurances that are presumed to be made in the sale of products or real property, due to the circumstances of the sale. These assurances are characterized as warr ...
*
Liability waiver Liability refers to the following: Law * Legal liability, in both civil and criminal law ** Public liability, part of the law of tort which focuses on civil wrongs ** Product liability, the area of law in which manufacturers, distributors, supp ...
* Mistake (contract law) § Unilateral Mistake § Exceptions: Exception (3). *'' Moffat v Moffat'' *
Non est factum (Latin for " tis not ydeed") is a defence in contract law that allows a signing party to escape performance of an agreement "which is fundamentally different from what he or she intended to execute or sign". A claim of means that the signature ...
*
Undue influence Undue influence (UI) is a psychological process by which a person's free will and judgement is supplanted by that of another. It is a legal term and the strict definition varies by jurisdiction. Generally speaking, it is a means by which a person ...


References

{{Authority control Contract law Equitable defenses Legal doctrines and principles