Unconscionability in Contract Law
Business and Commercial Disputes By Harvey Binnall PLLC - 2019/02/21 at 06:55pm
Experienced Alexandria Business Dispute Lawyer
Contracts are not always fair or reasonable. If you are involved in litigation over a contract that may be invalid due to fundamental unfairness (i.e., unconscionability), then we encourage you to contact Harvey & Binnall, PLLC for further guidance on how to proceed.
Unconscionable Contract Provisions
Unconscionable contract provisions are invalid and unenforceable by law. A provision will be deemed unconscionable if it is unjust, one-sided, or oppressive in nature. There are a number of ways in which a provision may qualify as unconscionable, such as:
- One or more of the parties was intimidated, coerced, or otherwise under duress to consent to the contract
- One or more of the parties exercised undue influence
- One or more of the parties lacked sufficient mental competency or knowledge to give informed consent
- One or more of the parties lacked equal bargaining power
- The liability limitations are too extensive, preventing reasonable compensation in the event of a breach
- And more
For example, if one of the parties to a contract threatens to publicly humiliate the other party (with private information) unless they agree to move forward, then a court will likely find that the contract is unconscionable and therefore invalid and unenforceable by law.
Importantly, if a contract term, clause, or provision has been deemed unconscionable and therefore unenforceable, it will not necessarily render the entire contract invalid and unenforceable by law — contracts are typically severable, which is to say that they will be interpreted (to the degree possible) so as to preserve the enforceability of the contract, even if that requires “severing” an unenforceable portion of the contract from the rest of it.
Let’s clarify with a brief example.
Suppose that you have entered into a contract to purchase goods over a period of time, along with maintenance services for such goods. The maintenance services described in the contract are unenforceable as-is, however, because they are not in compliance with OSHA regulation. If a court were to evaluate the contract, they might sever the maintenance portion of the contract and allow the purchase of goods to go through — they might then either require that the other party pay you damages equivalent to the value of the would-be maintenance services or might rewrite the contract so as to create an enforceable maintenance provision.
Speak to a Lawyer at Harvey & Binnall, PLLC for Guidance
Harvey & Binnall, PLLC is a boutique litigation firm whose attorneys have significant experience representing clients in a range of commercial litigation, including contract disputes that involve unconscionable provisions and other enforceability-related issues.
We understand the unique challenge of navigating a contract dispute, and the holistic commercial considerations that such disputes require — it is our belief that by working closely with the client from the very beginning of the engagement, we are able to more effectively represent their interests throughout.