Can an Illinois court refuse to enforce this clause as unconscionable, and does the challenger have to prove both kinds?
No, one kind is enough. 810 ILCS 5/2-302 lets the court, as a matter of law, refuse to enforce a contract found unconscionable at the time it was made, enforce the remainder without the unconscionable clause, or limit its application, after affording the parties a reasonable opportunity to present evidence of its commercial setting, purpose and effect. The supreme court rejected the requirement that both procedural and substantive unconscionability be found before a contract or contract provision will be held unenforceable: a finding of unconscionability may be based on either procedural or substantive unconscionability, or a combination of both (Kinkel, following Razor). Procedural unconscionability refers to a term so difficult to find, read or understand that the plaintiff cannot fairly be said to have been aware he was agreeing to it, and takes into account a lack of bargaining power; substantive unconscionability refers to terms inordinately one-sided in one party's favour.
The trap
Because either branch suffices, presentation defects can be dispositive: in Razor a consequential-damages exclusion the consumer buyer never saw and could not have seen before signing was held procedurally unconscionable and on that ground unenforceable, and Kinkel held a class-action waiver unconscionable "under the circumstances of this case" (not because it sat in an arbitration clause, but because it was in a contract of adhesion that failed to tell the customer the cost of arbitrating and gave no cost-effective way to pursue a small claim), so Kinkel is the either-or rule applied to adhesion-plus-cost facts, not a holding that one-sidedness alone suffices. The remedy is also surgical (§ 2-302 lets the court excise the clause and enforce the rest), and that is what Kinkel did: it held 'the offending clause is severable from the arbitration clause', said 'We dó not hold that class action waivers are per se unconscionable' and that unconscionability 'must be determined on a case-by-case basis, considering the totality of the circumstances', and affirmed the appellate court's judgment, which had reversed the circuit court. So an aggressive term risks being cut out of an agreement that otherwise survives.
6 authorities
- statute810 ILCS 5/2-302enactment date not established
The words that state the rule
Sec. 2-302. Unconscionable contract or clause. (1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
The words that state the rule
Subsequent to the appellate court’s ruling in the present case, this court decided the case of Razor v. Hyundai Motor America, 222 Ill. 2d 75 (2006), in which we rejected the requirement that both procedural and substantive unconscionability must be found before a contract or a contract provision will be found to be unenforceable. A finding of unconscionability may be based on either procedural or substantive unconscionability, or a combination of both.
The words that state the rule
Procedural unconscionability refers to a situation where a term is so difficult to find, read, or understand that the plaintiff cannot fairly be said to have been aware he was agreeing to it, and also takes into account a lack of bargaining power. Frank's Maintenance, 86 Ill.App.3d at 989 , 42 Ill.Dec. 25 , 408 N.E.2d 403 . Substantive unconscionability refers to those terms which are inordinately one-sided in one party's favor.
The words that state the rule
In sum, we hold that under the circumstances of this case, the waiver on class actions is unconscionable. It is not unconscionable merely because it is contained in an arbitration clause. It is unconscionable because it is contained in a contract of adhesion that fails to inform the customer of the cost to her of arbitration, and that does not provide a cost-effective mechanism for individual customers to obtain a remedy for the specific injury alleged in either a judicial or an arbitral forum. We further hold that the offending clause is severable from the arbitration clause. We dó not hold that class action waivers are per se unconscionable.
The words that state the rule
The unconscionability of class action waivers must be determined on a case-by-case basis, considering the totality of the circumstances. For the foregoing reasons, we affirm the judgment of the appellate court, which reversed the judgment of the circuit court, and remanded the cause to the trial court for further proceedings. Appellate court judgment affirmed.
- statute810 ILCS 5/2-302enactment date not established
The words that state the rule
(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.