Thursday, October 6, 2011
Unconscionability: Should the court refuse to enforce the contract because it was unconscionable?
UNCONSCIONABILITY AS DEFENSE TO CONTRACT
The unconscionability of a contract is a question of law for the court. Ski River Dev., Inc. v. McCalla, 167 S.W.3d 121, 136 (Tex.App.—Waco 2005, pet. denied). In Texas, the party asserting unconscionability has the burden of proving both procedural and substantive unconscionability. Id.
To determine procedural unconscionability, courts examine “the contract formation process and the alleged lack of meaningful choice.” BDO Seidman, LLP v. J.A. Green Dev. Corp., 327 S.W.3d 852, 858–59 (Tex. App.—Dallas 2010, no pet.).
Substantive unconscionability, on the other hand, concerns the fairness in the contract provisions themselves. See In re Halliburton Co., 80 S.W.3d 566, 571 (Tex. 2002). The grounds for substantive unconscionability must be “sufficiently shocking or gross to compel the court to intercede, . . . and the same is true for procedural abuse—the circumstances surrounding the negotiations must be shocking.” McCalla, 167 S.W.3d at 136.
SOURCE: Houston Court of Appeals - 01-08-01029-CV - 9/22/11