Every business relies on contracts to function. In this sense, contracts are at the heart of what a business does. However, not every contract turns out to be enforceable in the end. There are a number of reasons that a contract can fail; One such theory concerns the legal principle of unconscionability. If you are unfamiliar with this concept, you need to understand the basics to avoid problems in the future.
What unconscionability seeks to avoid is an inherently unfair contract. When two parties enter into a contract, it is presumed that both will benefit somehow. Yet, in some cases, one party can receive an uneven benefit, or one of the parties may not really benefit at all. This is what is referred to as an unconscionable contract. In general, this type of issue is rare, but the possibility always exists.
One of the difficult things about unconscionable contracts is that they are hard to spot at first. An agreement can seem perfectly fair on its face, but the way the terms play out ends up being lopsided. Due to this, it is crucial that you work with an experienced attorney practicing business law from the start.
To realize whether a contract is truly unconscionable, you have to dig deep into the details. The first step is to see whether there are any blatantly unfair terms in the contract. Also, be on the look out for terms that are not well defined, or are out of place. Extremely small print or buried terms are also warning signs. Finally, be on guard when the other party applies undue pressure to sign a contract. Each of these alone may not be sufficient to amount to unconscionability, but it all depends on the unique facts of the case.
Before entering a contract, you can prepare yourself to avoid these issues. Make sure that you have a clear copy of the original contract at all times. You should also be sure to understand each and every term that is listed in the document. Lastly, you can try to renegotiate with the other party to create a valid contract. Of course, you can always speak to a business law attorney to help with the process.
If you feel that you are a party to an unconscionable contract, you need to take immediate action. Again, you should try communicating with the other party to see if the situation can be resolved. In some cases, the party may be willing to change the terms, or to cancel the contract altogether. If this doesn't work, you will need to retain a business attorney to help you with contract litigation.
During the litigation stage, unconscionability can arise in one of two ways. Some parties use this as a defense to a lawsuit for breach of contract. Others raise it as a proactive request to the court to cancel a contract. The court can respond by voiding the contract in part or whole, or by modifying the terms.
Unconscionabilty is a complicated topic. A lot of different information is required to convince a court to declare a contract invalid. A business law attorney's assistance is key to a successful resolution.
For assistance with contract matters in Utah, contact Terry Spencer at T.R. Spencer Law Office.