Albert Moore, Attorney at Law

What Are Unconscionable Contracts? What Are Some Examples?

In the state of Florida, unconscionable contracts are contracts that rise to the level where a judge or jury may find that they are unenforceable. Unconscionable contracts are not illegal per se. Even though there are some statutory references to unconscionable contracts, the statutes do not define what unconscionable means in the context of contractual rights. When it comes to unconscionable contracts, case law is referenced and different elements, such as procedural and substantive elements, can apply. However, even though the contract may be legal in all other forms and manners, it is so one-sided that the other side should not be bound by some, if not all, of the terms in the contract.

What Are A Few Red Flags Businesses Can Look Out For Before Signing A Contract?

In regard to unconscionable contracts, the cases indicate that it’s a contract that shocks the conscience. In other words, it’s so biased that there is an issue. Typically, it is sometimes a consumer protection-oriented defense to non-performance of a contract. This is not always the case. However, most of the time, if you are dealing with a consumer versus a business, the consumer is usually going to make that argument, not the business. There are contracts between businesses where one side can say that they were taken advantage of because of the language in the contract. Certainly, if you are dealing with another business, you should always have an attorney that practices in the area of business law to review the contract if you have any questions.

One of the biggest red flags is having a contract that appears to be pro forma. The contract looks like it’s been typed as a formality, and has really small boilerplate language that cannot be read unless it’s with a magnifying glass. However, just because it may be boilerplate, that doesn’t mean that the terms are not enforceable. As a result, every word in the contract needs to be read. It should also be seen by a skilled attorney.

If you are looking for unconscionable, unfortunately, that defense is usually thrown out after the contract has been executed. If you see something that looks entirely one-sided where there is no room for negotiations, you may want to beware of that in the first place. You won’t have to argue that it’s unconscionable because you or your attorney recognized that the contract is partial and patently unfair. As such, unconscionability will not come into play during negotiations. It’s sort of a technical standpoint that is used after a contract has been negotiated.

What Can Someone Do To Avoid Breaching A Contract If It Has Been Found Unconscionable?

The unconscionable aspect, from a technical standpoint, comes into play after the contract has already been executed. It’s not something that happens beforehand. The fact that you determine it’s unconscionable afterward is kind of how it all plays out in a practical matter anyway. If someone were to come into my office and say, “I have this contract. I am unable to perform or unwilling to perform my terms because this contract is unconscionable due to X, Y, or Z, or it’s unfair,” I would take a look at it. One of the things that you can do is inform the other side that the contract is unconscionable, and that you are not going to live up to the terms of the contract. You may also live up to some of the terms in the contract, but not all of them because some of the terms are unconscionable, while others are conscionable.

If the two parties can kind of hash it out and be willing to do X, Y and Z, that is the most inexpensive and easiest way to go about resolving that circumstance. You can negotiate after the contract has been signed. Typically, it’s beforehand. However, if it’s something that can be argued as unconscionable, then the one party may be able to convince the other party that a judge or jury may, in fact, determine the contract to be unconscionable and unenforceable. Consequently, negotiations can take place from that perspective.

In Florida, if a party deems a contract unconscionable, they can file a suit and ask for a declaratory judgment. A declaratory judgement basically says that we know that there is an issue. However, you have to meet certain criteria to get a declaratory judgment. Assuming, you meet the criteria, you tell the judge that you want them to declare your rights and obligations. The obligations should be less than what the contract asks for because it is unconscionable in nature. You can definitely file suit and go that route if you determine that the contract is unconscionable.

A third way is to let it play out and take a defensive action. You don’t file suit. However, it is always a good idea to notify the other side that you are not going to perform as opposed to not performing without a warning. You can let them know that you are not performing or negotiating. If they want to sue you, you can defend it on the argument that it’s unconscionable. You can also tell them that they will be responsible for paying you attorney’s fees and costs if you win. The other side may decide not to pursue it. Those are the three most common options to avoid a breach in an unconscionable contract.

For more information on Unconscionable Contracts/Agreements In FL, a case evaluation is your next best step. Get the information and legal answers you are seeking by calling (772) 242-3600 today.

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