Unconscionability

Lore & Background

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 and deceit, where the deliberate misrepresentation of fact deprives someone of a valuable possession. 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.

Reader's Guide

The significance of unconscionability lies in its role as a judicial tool to prevent enforcement of contracts that are overwhelmingly one-sided or exploitative. Courts have significant flexibility in remedying unconscionability, including refusing to enforce the contract against the unfairly treated party, refusing to enforce the offending clause, or taking other measures to achieve a fair outcome; damages are usually not awarded. The doctrine distinguishes between procedural unconscionability (disadvantage in negotiations) and substantive unconscionability (unfairness of terms). Most often the former leads to the latter, but not always. The existence of procedural unconscionability without substantive unconscionability may be sufficient to set aside a contract, but the latter alone may not. The court's role is not to determine whether someone made a good or bad bargain, but whether that party had the opportunity to properly judge their own interests. Typical examples include boilerplate language with terms unlikely to be understood, vastly inflated prices, and standardized adhesion contracts for necessary goods or services on a 'take it or leave it' basis without realistic negotiation opportunities.

Did You Know?

• In Australia, the leading case on unconscionable dealing is Commercial Bank of Australia Ltd v Amadio, involving an elderly Italian migrant couple who guaranteed their son's debts without understanding the unlimited liab
• In Uber Technologies Inc v Heller (2020), the Supreme Court of Canada found an arbitration clause requiring gig workers in Ontario to litigate before the Dutch International Chamber of Commerce was unconscionable and voi
• Intoxication is generally not regarded as a special disability, but in Blomley v Ryan the severity of the defendant's drunkenness combined with the plaintiff's knowledge of his alcoholism was enough to warrant special di
• In Louth v Diprose, the court held that infatuation causing emotional dependence could constitute a special disability, and the party who deliberately created and exploited that disability was found to have acted unconsc