Substantive Unconscionability: Everything You Need to Know
Substantive unconscionability is the unconscionability of the actual terms and provisions in a contract which is different from procedural unconscionability.3 min read
Substantive unconscionability refers to the unconscionability of the actual terms and provisions in a contract. This is different from procedural unconscionability, which refers to the actual procedures taken when entering into the contract.
Such procedural unconscionability can result from difference in age, intelligence, bargaining power, etc. While these two doctrines are different, they do in fact relate to one another, as procedural unconscionability will usually result in unconscionable substantive terms in the contract.
Substantive Unconscionability: An Overview
This doctrine can be used in a legal dispute as a defense to a breach of contract claim. Therefore, if a plaintiff brings a contractual dispute against the defendant for breach of contract, the defendant can argue that the terms identified in the contract are unconscionable. Courts will usually look at several factors in order to determine if a term or provision is, in fact, unconscionable. Such factors include:
- If one party has significant bargaining power over the other party
- If one of the parties included hidden language in the contract, whether it be language included in a different provision, verbiage that was included in much smaller font than the remainder of the contract, or language that is overly complex and hard to understand
- If any illegal conduct is identified in the contract
- If duress or coercion exist
Keep in mind that illegality in a contract is an entirely separate doctrine; however, courts will still use this as a factor in determining if the defendant did, in fact, breach the contract. While a defendant can bring the substantive unconscionability defense into play, he or she can also indicate that the contract was illegal if any wrongful or illegal conduct took place on behalf of the other party.
Duress or coercion are usually factors taken into account for the doctrine of procedural unconscionability, but courts will still look to such factors in any contractual dispute to determine if the contract itself is enforceable. Duress occurs if one party threatens the other party into signing the agreement. Coercion exists if one party was forced into signing the agreement. While such terms seem interchangeable, they are quite different in terms of how courts determine if a contract is valid or not.
For example, if John threatens to physically injure Sue if she doesn’t sign the agreement, then this constitutes duress. If John doesn’t threaten Sue but continues trying to persuade or force her to sign the agreement by making other false promises, then this constitutes coercion.
Understand Contract Law Before Entering into an Agreement
You should do your best to fully understand all of the contractual rights under the agreement before entering into it. Ensure that you are aware of contract law, and what rights you have if a contractual dispute arises between you and the other party.
Understand the elements of entering into a contract. Such elements include the offer, acceptance, consideration, mental capacity, substantive legal subject matter, consent, and mutual understanding. If during the procedural steps of entering into a contract, you are offered something, you must accept it. If you accept the offer but want to modify the terms of the initial offer, then this constitutes a counter-offer. Once you do eventually accept the offer, there must be consideration. This is the easiest element to prove, as even a simple promise to do something constitutes consideration.
Next, you need to make sure that you and the other party are mentally competent. This might seem odd, but in addition to both parties being mentally capable of entering into the agreement, both parties must be at least 18 years of age. Anyone under the age of 18 isn’t considered mentally competent.
Thereafter, you need to ensure that the subject matter identified in the contract is legal. For example, if the contract involves illegal gambling, then this contract will be deemed void and unenforceable.
Consent is the next element in a contract. Did both parties consent? Were you coerced into signing the agreement? Did you enter into it under duress? This is where these concepts come in.
The last element is mutual understanding. Do you and the other party both understand your rights and responsibilities under the contract? Is there hidden language? Is there technical jargon that you don’t understand?
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