Should We Refuse To Sign A Contract If It Is Found Unconscionable?
Not all contracts warrant a refusal to sign them because there is a difference between contracts that are patently illegal and unconscionable. There are differences between other types of contracts that may void the agreement. If a contract could be unenforceable or voidable by one party because the terms are unconscionable, a business owner or client may still be able to live with the particular terms even though a judge or jury would deem it unconscionable.
What Steps Should I Take If The Other Party Refuses To Renegotiate A Contract That Is Wholly Or Partially Unconscionable?
If the other party refuses to renegotiate a contract that is wholly or partially unconscionable, the options you have will depend on the nature of the relationship and the problem. If it’s something that the client can live with, even though it may technically be unconscionable, it may not be worth it to breach the obligations that the client has. You have to determine what the client’s goals are, and what terms they are or are not willing to perform. If it looks like that is something that the other side is going to have an issue with, then the best course of action is to approach the other side and let them know you understand that this contract was executed by both sides.
You can tell them that you understand that it’s not illegal in nature for a variety of other reasons, but it may be voidable because of the fact that it is unconscionable. You can inform them that they don’t have to perform some of the terms or obligations in the contract because it is unconscionable. Try to see if you can negotiate that after the contract has been executed. Sometimes that is successful. If not, you can go to court, file an action, and get a declaratory judgment. Have a judge determine whether it is unconscionable before you actually have an issue and the other side files a suit for breach. If that’s the case, then the other side will know that they can’t bring an action because the judge has already determined that the contract is unconscionable.
The third option is kind of wait and see approach. Wait for the other side to sue. Then, raise an affirmative defense that you have a legal contract from all other perspectives, but it’s unconscionable in nature. Even though it’s been executed, you don’t have to perform.
How Does An Unconscionable Contract Compare To An Illegal Contract?
An illegal contract will have terms that indicate that if performed, it would constitute some type of criminal offense or result in some type of civil action. For example, if you have a contract with someone in the state of Florida that obligated both sides to take action in illegal gambling, that can make the contract illegal. If you form your own lottery, and you are not the state of Florida or have any exempt provisions that allows gambling, a judge will not enforce the contract and award damages if the other side doesn’t perform. The judge will rule that what you agreed to was patently illegal. Therefore, it’s not enforceable since you have illegality built into the performance of the terms.
An unconscionable contract means it is legal from all other standpoints. It doesn’t cause any type of criminal or civil misconduct. That’s not the case with a contract that asks to perform some type of criminal action or obligation. Some contracts are unenforceable if you contracted with a minor or somebody who doesn’t have the actual ability. It’s not a good idea to contract with minors because you can’t enforce a contract against a minor.
An unconscionable contract is not voidable by either side. As such, it should be enforceable, but it can be slanted towards one side versus the other. It’s so slanted that a judge may say that it’s unconscionable because it heavily favors one side even though it’s legal from all other aspects
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