Contract Law is one of the most dense and difficult to navigate area of the law. For this reason, sometimes people may agree to contractual terms because they have little to no choice in the matter. For example, when seeking treatment in a hospital, failure to consent to terms of treatment may result in no treatment at all. Health Insurance policies are another good example of these seemingly one sided agreements. It is incredibly unlikely in either of these situations, that the contracting party will have the ability or opportunity to consult an attorney and negotiate the terms more favorably.
However, there are cases in which these one sided agreements may be overcome. Courts have identified a number of criteria for determining whether contract terms are unconscionable, and thus unenforceable. A contract may be considered legally unconscionable if there has been:
- The use of printed form or boilerplate contracts drawn skillfully by the party in the strongest economic position, which establish industry wide standards offered on a take it or leave it basis to the party in the weaker economic position. This is also sometimes referred to as the principle of contra proferentum.
- A significant cost-price disparity or excessive price.
- A denial of basic rights and remedies to a buyer of consumer goods.
- The inclusion of penalty clauses. Penalties are not allowed under contract law cases.
- The circumstances surrounding the execution of the contract, including its commercial setting, its purpose and actual effect.
- The hiding of clauses which are disadvantageous to one party in a mass of fine print or in places which are inconspicuous to the other party in signing the contract.
- Phrasing clauses in language that is incomprehensible to a non-lawyer or that divert his attention from the problems raised by them or the rights given up through them.
- An overall imbalance in the obligations and rights imposed by the bargain.
- Exploitation of the underprivileged, unsophisticated, uneducated and the illiterate.
- Inequality of bargaining or economic power.
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