What Elements Must Be Shown To Prove That A Contract Is Unconscionable?
In Florida, there are two elements that help prove that a contract is unconscionable. From a legal standpoint, the two main elements are procedural in nature and substantive in nature. What does that mean? The first criteria that has to be met by the side that is arguing that the contract is unconscionable is that there is very limited or no options to negotiate the contract. That’s called an adhesion contract. From a practical standpoint, that means it’s a take it or leave it situation. For instance, if blank forms are sent out to you sign by the other party, but you ask to amend form number four, and they tell you to sign the contract in full without any amendments or addendums or you don’t get it at all, that’s the first criteria. That’s considered procedural in nature.
In regard to the substantive element, you have to be able to show that the obligations of the arguing party significantly outweighs the benefits. Any time there is a contract, there are certain entitlements you get and obligations you give. If the giving is substantially one-sided and the entitlements are meager, that may in fact meet the second criteria. Having said that, if you have an arm’s length transaction where both sides had the ability to think about it and execute due diligence, and one side just signed a bad contract, that’s not enough to make it unconscionable. There has to be very limited options. One party gets much more than the other party.
An interesting aspect about the criteria or elements that have to be met in unconscionable contracts is that the elements don’t have to be met in equal amounts. It doesn’t have to be 50% of not having the option to negotiate, while the other 50% of it is one-sided. The entitlements and obligations could be a minimal part of the contract. Basically, it has to be a take it or leave it approach to be deemed unconscionable.
Will Damages Be Awarded If The Courts Deem A Contract Unconscionable?
If the courts deem a contract unconscionable, the courts may possibly award damages. The argument of an unconscionable contract usually takes form as an affirmative defense. That means that a party can sue and say, “We had this contract and the defendant was supposed to do X, Y, and Z, but they did not do those things, so I am entitled to damages. Either they have to perform X, Y, Z, or I have to get money or some other type of remedy.” The other side can say, “No. I never agreed to X, Y, and Z. Or, X, Y, and Z is illegal because it would cause me to partake in some type of criminal conduct.” Even if the defendant says that they executed the contract, and there’s nothing patently illegal about it. The contract may not be enforceable because it’s unconscionable.
In an affirmative defense, the defense is usually relegated to either costs or attorney’s fees. Typically, it’s not to the point where you would get independent damages based on the other side giving you an unconscionable contract. Now, if there is fraud, and it is unconscionable at the same time, a judge or jury may award damages. Generally, however, the remedy is that you don’t have to perform if the contract is found to be unconscionable. The other side wouldn’t be punished for presenting an unconscionable contract, unless there is fraud involved.
Does My Business Need An Attorney If We Have A Dispute Involving An Unconscionable Contract?
If you have already negotiated a contract, and all of a sudden realize as a business owner that you shouldn’t have executed that contract, you should enlist an attorney. There may be other defenses related to unconscionability. Nonetheless, if you are going to contest a contract that has already been executed, it would be a foolish move to try to defend it on your own. An attorney understands the nuances to successfully convince the other side or judge that the contract cannot or will not be enforced. An experienced attorney might be able to get some type of relief for the client.
Even if you are not be able to get the entire contract deemed unconscionable, that doesn’t mean that the services of an attorney are useless. Maybe certain terms can be renegotiated with the other side to the point where you can live with the terms. Therefore, it’s a good idea to talk to an attorney. At the very least, it’s wise to set up a consultation to determine whether the contract is enforceable and/or if there are any defenses. There might be more than just unconscionability, so it’s a good idea to talk to an attorney.
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