Doctrine Of Unconscionability Research Articles

Unconscionability and Poverty

Matthew Desmond made the claim in Evicted, his powerful work on housing insecurity, that those concerned with alleviating poverty should focus not merely on ensuring that poor people have higher disposable incomes, but on countering the exploitative price gouging that depresses the value of whatever income they have. This suggests the possibility that it might be a worthwhile anti-poverty strategy for courts to use the unconscionability doctrine to regulate exploitative contracts. Three main issues follow from considering this possibility: (1) Do the poor actually pay more for goods of the same quality? (2) If they indeed pay more, do they do so because prices are exploitative? How should we define an exploitative price, and how can we identify that any particular group of buyers is indeed exploited? (3) Could courts seeking to make use of the unconscionability doctrine realistically identify cases in which poor people generally are overcharged, or will courts successfully invoke the doctrine to challenge unwarranted prices only when the price a particular seller charges exceeds some benchmark (e.g., the price charged before an emergency or the price charged to other buyers in highly similar transactions)? While there is (reasonably) good evidence that the poor pay more for equal quality goods and it is possible (but very hard to determine) that exploitative pricing is a genuine issue as well, efforts to use the unconscionability doctrine to solve the problem of exploitative contracts are quite unlikely to succeed. Doctrinal and practical constraints make this solution a bad fit. If we worry, for example, that small stores in urban areas with high concentrations of poor residents overcharge, we should probably look to establishing and sustaining less exploitative suppliers, not to using common law courts to police price gouging.

Stepping Up to the Plate: Minor Leaguers Attempt to Remedy their Unconscionable Plight

Professional baseball players are often thought of as making multi‐million‐dollar salaries, but most professional baseball players have recently made under $15,000 a year. Minor league players toiled under an onerous system resulting from baseball's judicially created antitrust exemption and lobbying efforts that exempted them from minimum wage and overtime. These factors allowed teams to impose a uniform player contract (UPC) on players with numerous unconscionable provisions for years. However, a late‐night Tweet in August of 2022 sent shockwaves through the sports and labor world, announcing that the Major League Baseball Players Association (MLBPA) was sending out authorization cards to represent minor league players. After years of fighting to maintain the authority to impose conditions on minor league players, through lobbying and litigation, Major League Baseball (MLB) turned over a new leaf and recognized the unionization of minor league players under the MLBPA less than three weeks later. In light of this long sought‐after recognition, this article takes a novel approach. First, it provides historical context for baseball's unique ability to impose working conditions on minor leaguers without significant concern for legal ramifications. Second, it provides an overview of the doctrine of contractual unconscionability and analyzes the prior UPC as an unconscionable agreement. Finally, it details the historic unionization process and makes detailed recommendations to ameliorate the unconscionable conditions minor league players have faced when they negotiate with MLB owners to draft their initial collective bargaining agreement.

Still Jammed! Lingering Questions About the Statutory Unconscionability Doctrine Post Stubbings v Jams 2 Pty Ltd (2022) 399 ALR 409

The High Court of Australia recently delivered its highly anticipated judgment in Stubbings v Jams 2 Pty Ltd (2022) 399 ALR 409 (‘Stubbings (HCA)’). The case represents the most recent examination of the unsettled statutory doctrine of unconscionability in the land’s highest judicial forum. Regrettably, the High Court spurned the opportunity to clarify several lingering questions that continue to plague the doctrine. These questions concern matters ranging from the proper distinction between the various unconscionability provisions in the consumer law to the requirements needed under each. This article extrapolates what it can from Stubbings (HCA) and other leading cases to try and add clarity to the frequently litigated but poorly understood statutory unconscionability doctrine.

Comparative Analysis of Deficiencies in the Law on Unfair Contract Terms in Thailand and Practical Ways for Amendment

Abstract This article investigates the legislation on unfair contract terms in Thailand – the Unfair Contract Terms Act, B.E. 2540 (1997) (Thai ucta). It provides critical discussion of fundamental provisions and legal concepts of this Act in comparison with, where relevant, the American statutory unconscionability doctrine, the Unfair Contract Terms Act 1977 of the United Kingdom (UK ucta) and the Directive on Unfair Terms in Consumer Contracts 1993 of the European Union. As this domestic legislation is principally a product of the imitation of the UK ucta, many of its provisions are compared and contrasted with provisions of the UK ucta. This article brings out deficiencies having long dwelled in the Thai ucta and resulting in clouds of confusion even in judicial decisions of Thailand. Practical ways in which those deficiencies can be rectified are clearly recommended in the hope of providing insightful information to legal practitioners and legal scholars alike.

An Attempt at Codifying the Equitable Doctrine of Unconscionable Dealings

This article is written in honour and in memory of my dear colleague the late Professor Denis Ong — a talented, hard-working, and deservedly leading, authority on equity. Here, I seek to articulate a potential ‘codification’ of the equitable doctrine of unconscionable dealings. While I have been advocating a reform-oriented codification of Australia’s contract law, including the equitable doctrine of unconscionable dealings, for almost 15 years, the ambition of this article is limited to a restatement of lex lata. On my path to that goal, I start by providing a brief overview of the origins of the equitable doctrine of unconscionable dealings. I then proceed to discuss Professor Ong’s view of the equitable doctrine of unconscionable dealings before I engage with the modern key cases on the topic. Having outlined my proposed codification of the equitable doctrine of unconscionability, I then say a few words about the relationship between the equitable doctrine of unconscionability and unconscionability under the Australian Consumer Law (ACL), before concluding the article with some final observations.

A New Gig for Unconscionability — Equity and Human Dignity in Uber Technologies v. Heller [2020

In Uber Technologies Inc. v. Heller, the Canadian Supreme Court affirmed the capacity of the doctrine of unconscionability to protect people working in the ‘gig economy’ from oppressive implications of non-negotiable standard form contracts tendered by drastically more powerful business entities. On the basis of unconscionability, the Court rejected Uber’s attempt to enforce a clause in their non-negotiable standard form contract that would preclude its drivers from invoking employment law rights in a domestic court, having stipulated dispute resolution through arbitration in a foreign jurisdiction at upfront and unaffordable expense to the driver. This case note critically elucidateshow the Court’s decision advances standards of human dignity for working people through an equitable reading of the relevant statute, and subsequently applying the characteristic elasticity of the Equitable doctrine of unconscionability in addressing changing social and economic circumstances and drastic power imbalances between parties.

The HMCS Unconscionability: adrift in the Atlantic

ABSTRACT This paper traces the Canadian doctrine of unconscionability’s distant voyage in Uber Technologies v Heller 2020 SCC 16 from the familiar waters of the English ‘unconscionable bargains’ family of doctrines, found in various common law jurisdictions. Since the 19th century, those jurisdictions had included Canada. However, in this important decision of the Supreme Court of Canada, the position of the doctrine shifted significantly. Its movement can be identified as towards the American doctrine of unconscionability, a distinct doctrine not part of the English family, based rather on §2-302 of the Uniform Commercial Code. Court-watchers in the United Kingdom and other Commonwealth jurisdictions wondering whether this reinterpretation of unconscionability might represent a model for progressive reform should understand why it does not. Adrift between two doctrines with different purposes, it is insufficiently suited to serve either. Meanwhile, it may disrupt business reliance on standard form contracts, and cause tremendous contractual instability.

The Idea of the “General Clause” in American Labor Law

Abstract European legal systems have long encompassed the concept of the “general clause”, particularly in contract and labor law. The general clause includes unwritten legal norms such as good faith and public morality, and these principles are duly incorporated in the process of construing civil and labor contracts. While the general clause itself is formally absent in common law systems, its principles have found their way into modern British and American law. Two primary examples include the doctrines of good faith and unconscionability. In a broader sense, the idea of introducing rather indeterminate legal norms to be construed and interpreted by judges appears to be well-suited to a common law system. However, as applied to American labor law, the very indeterminacy of these terms has had rather negative effects on the rights of employees and the labor unions that represent them. Specifically, this article examines the good faith requirement in collective bargaining under the National Labor Relations Act (NLRA) and the doctrine of unconscionability in employment arbitration agreements, and concludes that they both should be supplemented by more definite standards in order to effectively protect employees.

국제건설계약상 청구보증에 관한 영국법계 판례의 발전 - 비양심성 법리를 포함하여 -

청구보증은 국제 건설 계약과 선박 건조 계약에서 널리 사용된다. 그러나 청구보증이 악용될 경우 채무자의 유동성과 신용을 해치고 수익자의 청구보증권을 박탈하면 수익자의 유동성도 해치게 된다. 건설계약 준수 및 청구보증에 관한 법률이 영국법이나 영국법계 국가로 제정된 사례가 많아 이를 재검토하고 법리 개발을 도모할 필요가 있다. 우리는 국제 건설에서 청구보증의 활용 사례를 검토하고 청구보증의 요건, 청구보증의 독립적 추상성 및 예외, 청구보증의 지급 금지 당사자에 대한 영국 및 영국법계 국가, 특히 싱가포르의 개발을 검토하였다. 보증을 요구하기 위한 지불금지의 요건을 완화한다. 청구보증의 의뢰인인 건설회사나 조선회사의 입장에서 주로 법을 준수할 수 있는 권리의 의무를 충분히 이해하고 대처할 필요가 있으며, 수익자나 보증은행은 수익자에 대해 지급금지 또는 가처분하도록 할 필요가 있다.<BR> 비양심적인 행위는 청구보증 하에 수익자의 청구를 억제하기 위한 근거로 싱가포르 및 호주에서 잘 알려져 있다. 청구보증은 신청자가 수익자에게 지불해야 할 의무를 이행할 것을 보증하기 위해 보증인이 제공한다. 싱가포르 항소법원은 비양심성 법리의 배제조항을 청구보증 청구의 제한에서 인정하는 경향이 있으므로, 계약자는 비양심성 법리는 청구보증의 수익자에 대해 가능한 한 제한적으로 허용해야 한다.

Demystifying Unconscionability: An Historical and Empirical Analysis

The doctrine of unconscionability is encrusted with myths. First year law students are taught that the doctrine was created in the twentieth century. Unconscionability is often presented as a novel one, born in the Uniform Commercial Code’s adoption of Section 2-302 in the mid-twentieth century. Even those scholars who are willing to look a bit further afield than the twentieth century for the origins of the unconscionability doctrine typically only reach the mid eighteenth century. In addition to myths surrounding its origin, the doctrine has been presented as a dangerously vague and imprecise concept. Commentators and scholars have likewise characterized the doctrine as a license for courts to refuse, unpredictably and arbitrarily, to enforce some contracts. Some claim its application has the potential to destroy all of contract law. Beyond the fear mongering myths, another standard myth taught to first year law students is that to succeed on a claim of unconscionability a party must offer at least some proof of both procedural and substantive unconscionability. This article will thus attempt to dispel the following three myths about unconscionability: • It is a new, modern doctrine of law. • Its application is unpredictable and arbitrary. • To prevail a party must prove both procedural and substantive unconscionability. The best way to dispel myths is through facts. This article attempts to clear the clouds of confusion and fear surrounding the doctrine by turning to historical and empirical fact. Part I of this article looks to the ancient past and finds that the idea that justice, and hence the law, should grant a remedy to at least some people who enter into inequitable bargains is as old as philosophizing about justice itself (and certainly older than the mid-eighteenth century). Rather than a dangerous modern innovation, this principle of justice has ancient philosophical roots in Aristotle and ancient legal roots in Roman law. Part II of the article summarizes prior attempts to assess the doctrine of unconscionability through empirical research by summarizing the results of prior work and identifies the limited scope of those projects. Part III contains the results of the comprehensive empirical analysis of what appears to be happening in cases involving claims of unconscionability in the period 2013-2017. A comprehensive coding process was undertaken for all reported federal and state cases decided over this five-year period. The results of the data analysis of 463 federal and state cases suggest that whatever the casebooks and law review articles claim about the doctrine, its application in real courts on the ground is very predictable and simpler than a two-part requirement suggests. The article concludes with a proposal to reformulate the doctrine to conform better to both its historical roots and its application by courts in real cases.

Justice for Contracts

This Article develops a theory of just contractual relationships for a liberal society and demonstrates its manifestations in vast areas of modern contract law. As a liberal theory, properly-called, our account is premised on the canonical commitments of liberalism to self-determination and substantive equality. As a theory of contract law, it focuses on the parties’ interpersonal interaction, rather than on the justice of the social order as a whole. As a theory of just contractual relationships, it attends to the justness of both the formation of contracts and of their implications. After surveying and criticizing the leading competing theories of contractual justice, we explain how relational justice – namely: reciprocal respect for self-determination and substantive equality – both justifies the enforcement of contracts and prescribes a mandatory floor of contractual justice. This floor explains the rules that regulate the parties’ bargaining process in a way that goes beyond the traditional laissez faire mode of proscribing only the active interference of one party with the other’s free will. It thus accounts for the expansion of the law of fraud beyond the traditional categories of misrepresentation and concealment to include also affirmative duties of disclosure. The same conceptual expansion also underlies doctrines as diverse as unilateral mistake, duress, anti-price-gouging laws, and admiralty rules of salvage. Finally, concern for relational justice offers the most charitable explanation of unconscionability doctrine and some of its modern regulatory cognates. The justice of an on-going contract presents an additional challenge because the typically sequential contractual performance generates heightened interpersonal vulnerability. This is why modern contract law solidifies a cooperative conception of contract performance that goes beyond the mandatory floor of relational justice. The duty of good faith and fair dealing, which sets up the contractual rules of the game, stands at the core of this web of doctrines. The substantial performance doctrine in service contracts and the principle against forfeiture in applying the condition/promise distinction, as well as the burden to mitigate and the choice of the expectation interest as the default measure of recovery can likewise be interpreted as belonging to this cooperative framework. All these doctrines require contractual parties to assist each other up to a point. Here, relational justice is functioning not as a floor, but rather as an aspirational idea, one that informs contract law’s normative defaults.

Application to File Brief and Brief of Amici Curiae, Center for Responsible Lending, National Association of Consumer Advocates, Public Citizen, Inc., and Public Good Law Center in Support of Appellants

Amicus Brief submitted to the California Supreme Court in De La Torre v CashCall Inc., 5 Cal.5th 966 (Cal. 2018): The Ninth Circuit has asked this Court whether the interest rate on consumer loans of $2,500 or more can render the loans unconscionable under section 22302 of the California Financial Code. The answer – with the proviso that any unconscionability determination must be made in the context of the terms and circumstances of the loans in question – is yes. . . . When the legislature removed the interest rate cap on loans above $2,500, it did not impliedly repeal the historic principle that courts may intervene where a contract or provision is unduly oppressive or unconscionable. Rather, the legislature recognized that the statute’s unconscionability provision would remain a safeguard against the excesses of an unfettered free market. The doctrine of unconscionability, a “principle of equity applicable to all contracts generally,” applies to all provisions of all contracts. (See Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 820.) A loan’s interest rate, whether governed by a statutory rate cap or not, is no exception. The incorporation of Civil Code section 1670.5 into Financial Code section 22302 evinces a clear legislative intent that courts should police the consumer credit market for unduly oppressive contract terms. The legislative mandate of Finance Code section 22302 is clear: where the market for consumer loans fails to produce socially tolerable terms, the courts may step in. The attributes of the loans at issue in this case – their relatively large size, the length of the repayment period and, notably, their high interest rates – provide ample foundation for a finding that the loans are in fact unconscionable. For the current proceeding, however, it is enough to say this: The interest rate on consumer loans of $2,500 or more can – in the context of the other terms and circumstances of the loans – render the loans unconscionable under section 22302 of the California Financial Code.

European Unfairness and American Unconscionability: A Letter From a European Lawyer to American Friends

Abstract The Unfair Contract Terms Directive (UCTD) and the Common Law doctrine of unconscionability in the United States both pursue the same aim: they seek to protect consumers against abuse of power by traders who are in a position to exploit the asymmetry of the contracting process. However, both sets of rules rest on different premises. In particular, they allocate trust differently between courts and markets. This accounts for deep-running differences despite apparent similarities. This contribution analyses these similarities and differences by commenting on the unconscionability doctrine as expressed in the Draft Restatement of consumer contracts from a European point of view.

Unconscionability as a Sword: The Case for an Affirmative Cause of Action

Consumers are drowning in a sea of one-sided fine print. To combat contractual overreach, consumers need an arsenal of effective remedies. To that end, the doctrine of unconscionability provides a crucial defense against the inequities of rigid contract enforcement. However, the prevailing view that unconscionability operates merely as a “shield” and not a “sword” leaves countless victims of oppressive contracts unable to assert the doctrine as an affirmative claim. This crippling interpretation betrays unconscionability’s equitable roots and absolves merchants who have already obtained their ill-gotten gains. But this need not be so. Using California consumer credit law as a backdrop, this Note argues that the doctrine of unconscionability must be recrafted into an offensive sword that provides affirmative relief to victims of unconscionable contracts. While some consumers may already assert unconscionability under California’s Consumers Legal Remedies Act, courts have narrowly construed the Act to exempt many forms of consumer credit. As a result, thousands of debtors have remained powerless to challenge their credit terms as unconscionable unless first sued by a creditor. However, this Note explains how a recent landmark ruling by the California Supreme Court has confirmed a novel legal theory that broadly empowers consumers—including debtors—to assert unconscionability under the State’s Unfair Competition Law. Finally, this Note argues that unconscionability’s historical roots in courts of equity—as well as its treatment by the Uniform Commercial Code and the Restatements—reveal that courts already possess an inherent equitable power to fashion affirmative remedies against unconscionable contracts under the common law, even absent statutory authorization.

Substantive Unfairness as Unconscionable

Contrary to the conventional view that the doctrine of unconscionability requires procedural defects and is based on bargaining inequality, this paper argues that, in principle, substantive unconscionability alone shall be sufficient to constitute unconscionability and so vitiate a contract. It is also my contention that Aristotelian idea of contract of exchange as an act of voluntary commutative justice explains the two sources of unfairness. They are not understood by contemporary legal scholarship, namely, economic unfairness and involuntariness. Economic unfairness prevents gross disparity, which alone triggers unconscionability; it has been observed that when a transaction is truly stupid or one-sided, courts will set aside the contract as unconscionable. When a contract violates the autonomy of a party by hiding offensive or oppressive terms in a boilerplate, relief is given by both the Second Restatement of Contracts and European Directive. Yet, there is no doctrinal basis in our theoretical framework that justifies either one of the two reliefs. We stand a better chance of having a coherent doctrine of unconscionability by understanding what unfairness means and seeing contract of exchange as an act of voluntary commutative justice as in Aristotelian tradition.

Arbitration Clauses: The Louisiana Supreme Courtts Flawed Decision in Duhon v. Activelaf, LLC. And Why the Doctrine of Unconscionability Should Be Adopted in Louisiana

Louisiana should give credit where credit is due and recognize the doctrine of unconscionability. Louisiana is the only civil law jurisdiction in the United States. In order to preserve its unique heritage, Louisiana has been reluctant to adopt common law concepts. Because of this reluctance, some beneficial concepts have been rejected or overlooked, such as the doctrine of unconscionability. Common law states use the doctrine of unconscionability to analyze contracts of adhesion, or determine the enforceability of arbitration clauses. Louisiana, on the other hand, utilizes a four-factor test outlined in Aguillard v. Auction Management Corp. The four factors are: (1) the physical characteristics of the arbitration clause, (2) the distinguished features of the arbitration clause, (3) the mutuality of the arbitration clause, and (4) the relative bargaining strength of the parties. The Louisiana Supreme Court used these factors in its decision of Duhon v. Activelaf, LLC. The court failed to use all of the factors and conducted a faulty analysis. This Article discusses how an analysis of all four leads to the conclusion that the disputed arbitration contract is not adhesionary and is valid. This Article also discusses how the doctrine of unconscionability is quite compatible with the Louisiana Civil Code. The doctrine helps fill in the gaps of existing law, which is inadequate when dealing with mass, standard-form contracting.

When Some Are More Equal than Others: Unconscionability Doctrine in the Treaty Context

When Some Are More Equal than Others: Unconscionability Doctrine in the Treaty Context

(Mis)perceptions of Law in Consumer Markets

There are good reasons to believe that consumers’ behavior is sometimes influenced by systematic misperceptions of legal norms that govern product quality. Consumers might misperceive specific rules, such as those found in food safety regulations, as well as more general standards, such as the unconscionability doctrine or limitations on waivers of default substantive or procedural rights. When demand is affected by systematic misperceptions of legal norms, lawmakers may be able to maximize welfare by deviating from the legal standard that would be optimal in the absence of misperception. We use a formal model to characterize these optimal deviations under different legal regimes (with different types and magnitudes of sanctions). In particular, should the legal standard be adjusted to counteract or confirm the misperception? For instance, if consumers underestimate the level of legal protection is it desirable to raise the legal standard to counteract the misperception? Or should lawmakers lower the legal standard to confirm the misperception?

Restitution in the conflict of laws: characterization and choice-of-law in Australia

In various common law jurisdictions, the doctrine of unconscionability is increasingly being adopted as an explanatory principle of restitution. This equitable characterization at the municipal level has significant implications for private international law. In particular, the issues of characterization and choice-of-law are brought to the fore. This paper approaches those issues from an Australian perspective. Indeed, in the post-Brexit era, it may be expected that the courts of the United Kingdom will be looking more closely to other common law jurisdictions, notably Australia, New Zealand, Canada, and the United States. The paper proposes that restitutionary claims dependent on a defendant’s legal or equitable wrongdoing will in most cases be characterized in accordance with the operative cause of action. However, actions for money had and received and quantum meruit, which arise independently of contract or wrongs, warrant a unique characterization. For such claims, the traditional lex fori approach to equitable obligations is rejected and a methodology of assimilation by sufficiently close analogy is deemed unmaintainable. Existing choice-of-law rules are therefore unsuitable in the restitutionary context. This paper proposes the proper law is the choice-of-law rule for restitution. In practice, the forum court will examine the circumstances giving rise to the restitutionary obligation, which will reveal the law with the closest and most genuine connection to the claim.

Contracts and Automation: Exploring the Normativity of Automation in the Context of U.S. Contract Law and E.U. Consumer Protection Directives

Given a choice between two systems of contract rules, a court or legislature may have a normative obligation to adopt the rule that is more susceptible to coding and automation. This paper explores the ramifications of that normative proposition through the lens of multiple contract doctrines that traditionally involve “messy” judgments or multiple interacting judgments regarding which human beings are – arguably – capable of making finely nuanced analyses. Using the common law doctrine of unconscionability and Polish Civil Code Article 385 on unfair terms in consumer contracts, this paper explores the differences between contract rules that require human analysis versus those that can be applied with strong reliability by automated processes. Finally, the paper analyzes some of the potential pitfalls of this normative proposition in light of technological, economic, and moral/ethical concerns.