what is the difference between procedural and substantive unconscionability

Keep in mind that procedural unconscionability

is not the same as substantive unconscionability. The latter is based on actual terms or provisions in the contract that are deemed unconscionable, whereas the former means that the actual procedural steps taken when entering into the contract were found to be unconscionable.

Full Answer

What is procedural and what is substantive?

Today, substantive law defines rights and responsibilities in all court proceedings. In criminal cases, substantive law governs how guilt or innocence is to be determined, and how crimes are charged and punished. Procedural laws govern how court proceedings that deal with the enforcement of substantive laws are conducted.

Is the procedural law more important than the substantive law?

substantive law is unimportant. What I shall be suggesting is that the outcome of cases, whether criminal or civil, is in practice more likely to be affected by procedural rules than by any niceties of substantive law such as those that preoccupy textbook writers.

What does unconscionable mean in law?

When a court uses the word unconscionable to describe conduct, it means that the conduct does not conform to the dictates of conscience. In contract law an unconscionable contract is one that is unjust or extremely one-sided in favor of the person who has the superior bargaining power.

What does unconscionable mean?

The definition of unconscionable is outrageous or unreasonable. An example of unconscionable is a boyfriend who punches his girlfriend in the face during a dinner party; an unconscionable action. Not restrained by conscience; unscrupulous. Unconscionable behavior. Excessive, imprudent or unreasonable.

What is substantive unconscionability?

Substantive unconscionability refers to an overly harsh allocation of risks or costs that is not justified by the circumstances under which the contract was made. Both procedural and substantive unconscionability must be present before a contract or clause will be held unenforceable.

What is an example of procedural unconscionability?

Examples of Procedural Unconscionability Making statements to the disadvantaged party prior to signing the agreement which wholly contradict the language in the contract. Persuading a disadvantaged party to sign the agreement that he or she wouldn't otherwise have signed.

What are the two types of unconscionability?

Two general types of potentially unconscionable provisions are exculpatory clauses and disclaimers / limitations of warranty liability. Exculpatory clauses are clauses which release a party from liability for injuries that he causes.

What does procedurally unconscionable mean?

: unconscionability that derives from the process of making a contract rather than from inherent unfairness or unreasonableness in the terms of the contract — compare substantive unconscionability.

Do you need both procedural and substantive unconscionability?

In order for a court to determine that an agreement was unconscionable, there must be both procedural unconscionability and substantive unconscionability. Procedural unconscionability arises when the weaker party to a settlement agreement had no realistic alternative but to accept the agreement.

What are some examples of unconscionable contracts?

Examples of Unconscionable Contract TermsDamage limitations against the seller;Limitations on a consumer's right to seek court relief against the seller;Imposition of punitive penalties or fees on the consumer; and.Open-ended provisions that give the seller unilateral discretion to set or change price or other terms.

What is the two prong test for unconscionability?

The court uses a two prong test for unconscionability: (1) whether one of the parties had no meaningful choice, and (2) whether the contract terms unreasonably favored one party.

What are the elements of unconscionability?

What are the Elements of an Unconscionable Contract?Undue influence;Duress;Unequal bargaining power;Unfair surprise; or.Limiting warranty.

How do you determine if a contract is unconscionable?

If a contract is unfair or oppressive to one party in a way that suggests abuses during its formation, a court may find it unconscionable and refuse to enforce it. A contract is most likely to be found unconscionable if both unfair bargaining and unfair substantive terms are shown.

What is a procedural contract?

Procedural contracts may be understood as contracts in which parties regulate not merely their commercial relations but also the procedures by which disputes over those relations will be resolved.

Are all one-sided contracts are unconscionable?

An unconscionable contract is one that is so one-sided or so unfair that it shocks the conscience. The court usually deems such contracts unenforceable either in whole or in part, depending on if the entire contract is unconscionable, or if only certain terms or provisions identified therein are unconscionable.

Is marriage an unconscionable contract?

The marriage contract cannot be unconscionable. If one spouse is left destitute, the court may decide that the agreement is not valid, because it is unconscionable.

What is a procedural contract?

Procedural contracts may be understood as contracts in which parties regulate not merely their commercial relations but also the procedures by which disputes over those relations will be resolved.

What does unconscionable mean in law?

Unconscionable is an adjective that means without a conscience; unscrupulous; so unfair or unjust that it shocks the conscience. The adjective is frequently used in the context of contract law for contracts that have grossly oppressive and unfair terms. When a court finds a contract unconscionable, it is unenforceable.

What is an exculpatory clause?

An exculpatory clause is part of a contract that prevents one party from holding the other party liable for damages related to the contract.

Are contracts with minors voidable?

Voidable Contracts For most contracts, the general rule is that while it's not illegal to enter into a contract with a minor, the contract is voidable at the discretion of the minor. Voidable contracts are usually valid contracts and are binding unless the child cancels it.

What is substantive unconscionability?

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.

What is the doctrine of unconscionable?

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:

What is unconscionable in a contract?

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: 1 If one party has significant bargaining power over the other party 2 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 3 If any illegal conduct is identified in the contract 4 If duress or coercion exist

What is the difference between duress and coercion?

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.

What is duress in contract law?

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.

Is a contract void if it involves gambling?

For example, if the contract involves illegal gambling, then this contract will be deemed void and unenforceable.

Is illegality a separate doctrine?

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.

What is procedural unconscionability?

Procedural unconscionability is a term used to describe the very unfairness that makes a contract an unconscionable one. Procedural unconscionability refers to the disadvantage suffered by the misinformed party upon consenting, against what would have been his better judgment, to extremely unfair terms. There are two main factors that make up procedural unconscionability: oppression and surprise. The oppression comes from one party’s overwhelming power over the other that enables him to take advantage of the other party. Surprise exists when the misinformed party supposedly agrees to what are, in actuality, hidden terms designed to defraud him.

What is substantive unconscionability?

Substantive unconscionability is a term used to describe the terms of a contract in that the terms, or “substance” of the contract, are unfair. Substantive unconscionability is found when the terms of a contract are oppressive or cruel to the extreme. Substantive unconscionability is found in cases wherein the terms of the contract themselves would ...

What are some examples of unconscionable conduct?

An example of unconscionable conduct can be found in a case wherein one trucker helped another trucker with a start-up business, then failed to receive the compensation he was initially promised. Randall Lemke owned a trucking business in Wisconsin that ultimately went bankrupt. Thereafter, in the spring of 1992, businessman George Arrowood approached Lemke for help in starting his own trucking business: M&G Trucking, Inc. Lemke agreed on the condition that he would receive half of the company’s profits for three years.

Why is unconscionability considered unenforceable?

Because of how unreasonable an unconscionable contract is, the contract is considered by law to be unenforceable. This is because it would not be fair for the person who drafted the contract to benefit from his deliberate deception. It would also be equally unfair not to let the other party out of a contract that was drafted for the purpose of deceiving him.

What is unconscionable language?

For example, unconscionable language consists of terms or phrases that the average person would not understand. This lack of understanding would then be glossed over by the perpetrator in his attempt to have the other party sign a contract that he would not have agreed to, had he more fully understood what he was signing.

Why does unconscionability exist?

Unconscionability must exist at the time the contract is drafted in order for the contract to be declared void, and for the drafter to be punished accordingly. There are no set guidelines insofar as determining whether a contract is unconscionable.

When is a contract considered unconscionable?

A contract is considered unconscionable when the person drafting the contract was acting with unconscionable conduct at the time the contract was being drafted. The fact that events may transpire later on that provide one party with more of an extreme benefit than the other is irrelevant, and do not make for an unconscionable contract. ...

What are some examples of procedural unconscionability?

There are several examples of procedural unconscionability, as noted above. However, many additional circumstances can amount to procedural unconscionability; such examples are as follows: 1 Making statements to the disadvantaged party prior to signing the agreement which wholly contradict the language in the contract 2 Persuading a disadvantaged party to sign the agreement that he or she wouldn’t otherwise have signed 3 Downplaying significant contractual terms to the disadvantaged party 4 If one party threatens the other party with violence toward him or his family or friends, i.e., duress 5 If one party forces the other party into signing the agreement, i.e., coercion 6 If one party includes a limited liability clause indicating that it will not be liable for breach of contract, even if the advantaged party is the cause of the breach

What is Unconscionability in a Contract?

Generally, if you sign a contract, you will be required to perform what is expected of you under the contract. However, there are several exceptions and defenses that can invalidate the contract. Therefore, if a contractual dispute arises based on the unconscionable terms of the contract (substantive unconscionability), the unconscionable procedures used to enter into the contract (procedural unconscionability), or the illegality of the contract (illegal conduct or fraudulent activity), the court can do any one of the following:

Is procedural unconscionability the same as substantive unconscionability?

Keep in mind that procedural unconscionability is not the same as substantive unconscionability. The latter is based on actual terms or provisions in the contract that are deemed unconscionable, whereas the former means that the actual procedural steps taken when entering into the contract were found to be unconscionable.

Is a contract void if it never existed?

Other courts might determine that the entire contract is void, particularly for instances of illegality, duress, and coercion. If this is the case, the parties will be free to walk away as if the contract never existed in the first place.

Does Nevada have a sliding scale for unconscionability?

Some states requires that a court find both procedural and substantive unconscionability in order to render a contractual provision void. Particularly, the state of Nevada will use a sliding scale for unconscionability, and has stated that the more procedurally unconscionable the contract is, the more apt it will be to find the contract void. Therefore, it will usually look at the procedural concept rather than the substantive terms of the agreement.