Also known as: procedural unconscionability · substantive unconscionability · unconscionability · unconscionable · contract unconscionability
Written by attorneys · grounded in primary & secondary sources — see below
A two-part analysis for determining whether a contract or term is unenforceable on grounds of unfairness. Procedural unconscionability focuses on defects in the bargaining process such as oppression or unfair surprise. Substantive unconscionability focuses on whether the terms themselves are unreasonably one-sided or oppressive.
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Patrick Phan agreed to sell a rare tool to Precision Tools after both parties overlooked a clause that shifted all repair costs to Patrick. When Precision later demanded enforcement, the court examined the bargaining process for surprise and the one-sided cost allocation for oppression. Finding both procedural and substantive unconscionability, the court refused to enforce the disputed term.
Phuong Pham and Prosperity Investments negotiated a separation agreement that left Phuong with minimal assets while requiring her to assume substantial debts. The court considered the parties' economic circumstances and the rushed process that prevented independent advice. Finding both procedural and substantive unconscionability, the court declined to bind the parties to the agreement.
Pamela Phillips signed a premarital agreement waiving all spousal support after her fiancé presented it without prior notice or counsel. The court reviewed the absence of meaningful bargaining and the harsh long-term financial impact. Finding both procedural and substantive unconscionability, the court refused to enforce the support waiver.
Pilar Pena purchased consumer goods from Phoenix Technologies under a contract that excluded all consequential damages for personal injury. The court assessed the standardized form and lack of negotiation alongside the severe one-sided risk allocation. Finding both procedural and substantive unconscionability, the court struck the exclusion as unenforceable.
Philip Powell signed an employment settlement assigning all future inventions to Pacific Bank after limited discussion and no opportunity for counsel. The court examined the bargaining defects and the sweeping assignment of rights. Finding both procedural and substantive unconscionability, the court limited enforcement of the assignment clause.
Piper Patel and her spouse submitted a separation agreement that allocated nearly all marital property to one side after a hurried signing process. The court reviewed the economic disparity and absence of independent advice. Finding the agreement unconscionable, the court directed the parties to submit a revised version or face court-ordered property division.
Many jurisdictions require a showing of both elements before refusing enforcement. Procedural defects alone may not suffice if the terms are fair, and unfair terms alone may not suffice if the bargaining process was free of oppression or surprise.
Supporting sources
Courts examine the bargaining process for oppression, lack of meaningful choice, and unfair surprise. Factors include whether the agreement was presented on a take-it-or-leave-it basis, whether the disadvantaged party had an opportunity to review or consult counsel, and whether key terms were hidden or inadequately explained.
…and undue influence, not to mention differences in economic bargaining power” to enable the courts to avoid enforcement of unconscionable provisions in long printed standardized contracts. 1 Corbin on Contracts (1950) § 128, p. 188. Freedom of contract is not such an immutable doctrine as to admit of no qualification in the…
…the rationale of the cases from which the section is explicitly derived.[^maj-5] Accordingly, we hold that where the element of unconscionability
…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…
…and a like misunderstanding is developed, a court of equity will refuse to execute it.[^maj-2] If a contract
…court found no lack of knowledge regarding the nature of the parties’ assets, a necessary predicate to considering the issue of unconscionability
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Terms are substantively unconscionable when they are unreasonably one-sided in context, such as complete waivers of spousal support or property rights that leave one party destitute. Courts assess the overall fairness of the allocation in light of the parties' circumstances at the time of signing.
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Yes. When a contract or term is unconscionable, a court may refuse enforcement entirely, enforce the remainder without the offending term, or limit the term's application to avoid an unconscionable result.
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No. Gross disparity in the values exchanged can be an important factor but is ordinarily insufficient by itself. Courts usually require additional indications of bargaining defects or overall imbalance that together render enforcement oppressive.
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