Also known as: unconscionability · unconscionable · unconscionability doctrine
Written by attorneys · grounded in primary & secondary sources — see below
A doctrine under which a court may refuse to enforce a contract or any term that is unconscionable at the time the contract is made. The determination rests on procedural unfairness in the bargaining process together with substantive unfairness in the resulting terms.
Select any source to read its text and confirm it supports the definition.
Dolores Diaz, owner of a small biotech firm, signed a fixed-price supply contract with Duffy Construction after both sides assumed a key patent remained active. Actual production yields turned out to be one-third of the preliminary data she had treated as sufficient. Enforcement would force her firm into ruinous losses, so the court refuses to enforce the price and volume terms.
Diego Duarte and Deborah Dunn signed a separation agreement that awarded all marital assets to Diego and left Deborah with no maintenance. At the dissolution hearing the court examined the parties' economic circumstances and found the terms unconscionable. The court therefore declined to bind itself to the agreement and instead entered its own orders for property division and support.
Dustin Donovan and Daphne Doyle executed a premarital agreement that eliminated all spousal support. After the marriage ended, enforcement would leave Daphne eligible for public assistance. The court refuses to enforce the support-waiver term because it produces substantial hardship arising from changed circumstances.
Dorothy Daniels bought a household appliance from Delta Dynamics under a contract that excluded all consequential damages for personal injury. When the appliance caused severe burns, the court refuses to enforce the exclusion because limitation of consequential damages for injury to the person in consumer goods is prima facie unconscionable.
Deborah Dunn signed a form employment agreement containing a one-sided arbitration clause that limited discovery and capped damages. The court finds the term unconscionable at formation and refuses to enforce it, leaving the remainder of the contract intact.
Dustin Donovan and Dorothy Daniels presented a separation agreement that awarded all property to Dustin and no maintenance to Dorothy. The court finds the agreement unconscionable and directs the parties to submit a revised agreement or, alternatively, enters its own orders for property division and support.
A court looks for both procedural unfairness in the bargaining process, such as oppression or surprise from unequal bargaining power, and substantive unfairness in the terms themselves, such as overly harsh or one-sided results. Both elements need not be present in equal degree. The more substantively oppressive the term, the less procedural unfairness is required.
Supporting sources
…any need for the State to rely, as it does, upon its own interests rather than upon the patient's. The second assumption is unconscionable. Insofar as Nancy Cruzan has an interest in being remembered for how she lived rather than how she died, the damage done to those memories by the prolongation of her death is irreversible.…
…and undue influence, not to mention differences in economic bargaining power” to enable the courts to avoid enforcement of unconscionable
…229, 237–239 (2005). III A The Concepcions argue that the Discover Bank rule, given its origins in California’s unconscionability doctrine and California’s policy against exculpation, is a ground that “exist[s] at law or in equity for the revocation of any contract” under FAA §2. Moreover, they argue that even if we construe…
…the same social problem that is present elsewhere. The community is not bound to provide what is in effect a subsidy for unconscionable employers. The community may direct its law-making power to correct the abuse which springs from their selfish disregard of the public interest. The argument that the legislation in…
…Rand Corporation Institute for Civil Justice)); id. , at 13 ("The transaction costs associated with asbestos litigation are an unconscionable
No. Receipt of consideration does not obligate performance when the contract itself is unconscionable at formation. The doctrine permits a court to refuse enforcement entirely or to strike the oppressive terms regardless of whether the disadvantaged party already received the bargained-for benefit.
Supporting sources
A court may refuse enforcement if the term was unconscionable at the time of signing or if enforcement would result in substantial hardship for a party because of a material change in circumstances arising after the agreement was signed. The court decides the question as a matter of law after considering the agreement as a whole.
Supporting sources
The court may request the parties to submit a revised separation agreement or may make its own orders for the disposition of property, maintenance, and support. It is not required to enforce any portion of the unconscionable agreement.
Supporting sources
Yes. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, while limitation of damages where the loss is commercial is not. The distinction protects vulnerable consumers from harsh exclusions that leave them without meaningful remedy.
Supporting sources