The Business Litigation Blog

Are You Facing an Unconscionable Contract?

Our legal system and laws concerning contracts assume that, in most cases, agreements reached between two or more parties are fair and freely entered into. That is, without some evidence suggesting otherwise, it is presumed that a contract governing two or more parties’ conduct and behavior was agreed to and that the parties were both able to understand and agree to the contract’s terms. But what if this was not the case? What if, for instance, one party to the contract was in a much better position to insist on terms and conditions that were favorable to him- or herself and unfavorable to the other person? In such a case, you may be looking at anunconscionable contract.

What is an Unconscionable Contract?

Generally speaking, an unconscionable contract is one whose terms are so unfair or disadvantageous to one party that a reasonable and informed individual would not agree to the terms and enter into the contract. When a court is looking at an unconscionable contract or a contract that contains an unconscionable term, the court can: (1) refuse to enforce the contract at all, relieving both parties of their obligations and treat the situation as if no contract existed; (2) enforce the contract except for the unconscionable term; or (3) enforce the contract in such a way so as to avoid an unconscionable result – by limiting the type or amount of damages available.

When is a Court Likely to Find a Contract Unconscionable?

There are certain situations in which a court is more likely to find that the parties entered into an unconscionable contract. These situations include:

  • Duress, where one party physically threatens the other or puts unacceptable commercial pressure on the other party to sign the contract. Duress is difficult to prove, especially where no physical force or threat of physical force is involved.

  • Unconscionable bargaining power, where it is clear that one party did not understand or could not have understood the consequences of signing the contract.

  • Limitations on remedies, in which one party insists that the other party waive its rights to pursue certain remedies or agree to pursue only a limited range of remedies.

Proving that a contract is unconscionable and therefore unenforceable is a common tactic used by parties who do not want to be legally obligated to keep the promises they made under a contract. But the party that wishes to claim a contract is unconscionable “bears the burden” of producing evidence showing that the contract is in fact unconscionable. Often, more evidence is needed than simply the party’s testimony that he or she did not understand what he or she was signing.

How the Patterson Law Firm Can Help

Having a court find a contract unconscionable can be either a great victory (for the party claiming the contract was unconscionable) or a disaster (for the party expecting the other party to keep its word). In either case, the Patterson Law Firm is here to help you. Where a contract is unfair and unconscionable, we can help you get out from under the burdens of the contract. Where the contract is fair and the other party wants to avoid his or her obligations, we can help ensure the court enforces the agreement. Contact us today at 312.223.1699 to discuss your contract dispute.

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