Can the other side get out of this clause as unconscionable in Kansas?
Rarely, and not on bargaining power alone. The section itself supplies no test: in Wille v. Southwestern Bell Telephone Co. the Supreme Court said that "The UCC neither defines the concept of unconscionability nor provides the elements or perimeters of the doctrine", and set out ten factors courts have identified "as aids for determining its applicability to a given set of facts", boilerplate drawn by the stronger party on a take-it-or-leave-it basis, a significant cost-price disparity or excessive price, denial of basic rights and remedies to a buyer of consumer goods, penalty clauses, the circumstances of execution including commercial setting, purpose and effect, hiding disadvantageous clauses in fine print or inconspicuous places, incomprehensible or distracting phrasing, an overall imbalance in the obligations and rights imposed by the bargain, exploitation of the underprivileged, unsophisticated, uneducated and illiterate, and inequality of bargaining or economic power. The Court also fixed the floor. It adopted a commentator's reading of the official comment, that "mere disparity of bargaining strength, without more, is not enough to make out a case of unconscionability", and then stated its own conclusion: "The cases seem to support the view that there must be additional factors such as deceptive bargaining conduct as well as unequal bargaining power to render the contract between the parties unconscionable." Under UCC article 2, if the court as a matter of law finds the contract or any clause of it to have been unconscionable at the time it was made, it may refuse to enforce the contract, enforce the remainder without the unconscionable clause, or so limit the application of the clause as to avoid any unconscionable result; and when unconscionability is claimed or appears, the parties must be afforded a reasonable opportunity to present evidence as to the clause's commercial setting, purpose and effect (K.S.A. 84-2-302). In a consumer transaction the Kansas consumer protection act adds a separate and broader prohibition: no supplier shall engage in any unconscionable act or practice in connection with a consumer transaction, and such an act violates the act whether it occurs before, during or after the transaction; the unconscionability of an act or practice is a question for the court, which shall consider circumstances of which the supplier knew or had reason to know, including those listed in K.S.A. 50-627(b)(1)-(7).
The trap
The two tests do different work, and neither is a complaint about a bad bargain: Wille holds the doctrine "is directed against one-sided, oppressive and unfairly surprising contracts" and not against the consequences of "uneven bargaining power or even a simple old-fashioned bad bargain" (the published text breaks that word across a page marker, so it is quoted either side of the break), and on its own facts, a limitation of liability in a telephone company's directory contract, the Court affirmed enforcement. K.S.A. 84-2-302 is measured at the time the contract was made and gives both sides a right to put in evidence about commercial setting, purpose and effect, which makes it a poor issue to resolve on the papers. K.S.A. 50-627 is not limited to the moment of contracting (it reaches acts before, during or after the transaction), and its listed circumstances include taking advantage of a consumer's inability to protect their interests, a price grossly exceeding the price at which similar property or services were readily obtainable in similar transactions by similar consumers, the consumer's inability to receive a material benefit, no reasonable probability of payment in full, a transaction excessively one-sided in favour of the supplier, a misleading statement of opinion likely to be relied on, and, except as K.S.A. 50-639 provides, an attempt to exclude, modify or limit the implied warranties or any remedy for their breach.
13 authorities
- statuteK.S.A. 84-2-302enactment date not established
The words that state the rule
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.
- statuteK.S.A. 84-2-302enactment date not established
The words that state the rule
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.
- statuteK.S.A. 50-627enactment date not established
The words that state the rule
No supplier shall engage in any unconscionable act or practice in connection with a consumer transaction. An unconscionable act or practice violates this act whether it occurs before, during or after the transaction.
- statuteK.S.A. 50-627enactment date not established
The words that state the rule
The unconscionability of an act or practice is a question for the court. In determining whether an act or practice is unconscionable, the court shall consider circumstances of which the supplier knew or had reason to know, such as, but not limited to the following that:
- statuteK.S.A. 50-627enactment date not established
The words that state the rule
(2) when the consumer transaction was entered into, the price grossly exceeded the price at which similar property or services were readily obtainable in similar transactions by similar consumers;
- statuteK.S.A. 50-627enactment date not established
The words that state the rule
(1) The supplier took advantage of the inability of the consumer reasonably to protect the consumer's interests because of the consumer's physical infirmity, ignorance, illiteracy, inability to understand the language of an agreement or similar factor;
- statuteK.S.A. 50-627enactment date not established
The words that state the rule
(3) the consumer was unable to receive a material benefit from the subject of the transaction; (4) when the consumer transaction was entered into, there was no reasonable probability of payment of the obligation in full by the consumer;
- statuteK.S.A. 50-627enactment date not established
The words that state the rule
(5) the transaction the supplier induced the consumer to enter into was excessively onesided in favor of the supplier; (6) the supplier made a misleading statement of opinion on which the consumer was likely to rely to the consumer's detriment; and
- statuteK.S.A. 50-627enactment date not established
The words that state the rule
(7) except as provided by K.S.A. 50-639, and amendments thereto, the supplier excluded, modified or otherwise attempted to limit either the implied warranties of merchantability and fitness for a particular purpose or any remedy provided by law for a breach of those warranties.
The words that state the rule
The UCC neither defines the concept of unconscionability nor provides the elements or perimeters of the doctrine. Perhaps this was the real intent of the drafters of the code. To define the doctrine is to limit its application, and to limit its application is to defeat its purpose.
The words that state the rule
Although the doctrine of unconscionability is difficult to define precisely courts have identified a number of factors or elements as aids for determining its applicability to a given set of facts. These factors include: (1) The use of printed form or boilerplate contracts drawn skillfully by the party in the strongest economic position, which establish industry wide standards offered on a take it or *759 leave it basis to the party in a weaker economic position (Henningsen v. Bloomfield Motors, Inc., supra; Campbell Soup Co. v. Wentz, 172 F. 2d 80 ); (2) a significant cost-price disparity or excessive price; (3) a denial of basic rights and remedies to a buyer of consumer goods (Williams v. Walker-Thomas Furniture Company, 350 F. 2d 445 ; 18 ALR 3d 1305 ); (4) the inclusion of penalty clauses; (5) the circumstances surrounding the execution of the contract, including its commercial setting, its purpose and actual effect (In re Elkins-Dell Manufacturing Company, 253 F. Supp. 864 , [E. D. Pa.]); (6) the hiding of clauses which are disadvantageous to one party in a mass of fine print trivia or in places which are inconspicuous to the party signing the contract (Henningsen v. Bloomfield Motors, Inc., supra); (7) phrasing clauses in language that is incomprehensible to a layman or that divert his attention from the problems raised by them or the rights given up through them; (8) an overall imbalance in the obligations and rights imposed by the bargain; (9) exploitation of the underprivileged, unsophisticated, uneducated and the illiterate (Williams v. Walker-Thomas Furniture Company, supra); and (10) inequality of bargaining or economic power.
The words that state the rule
Important to this case is the concept of inequality of bargaining power. The UCC does not require that there be complete equality of bargaining power or that the agreement be equally beneficial to both parties (1 Anderson, §2-302:11, p. 401). As has been pointed out: “[The language of the comment to § 2-302 means] . . . that mere disparity of bargaining strength, without more, is not enough to make out a case of unconscionability. Just because the contract I signed was proffered to me by Almighty Monopoly Incorporated does not mean that I may subsequently argue exemption from any or all obligation: at the very least, some element of deception or substantive unfairness must presumably be shown.” (78 Yale L. J., supra, pp. 766-767.) The cases seem to support the view that there must be additional factors such as deceptive bargaining conduct as well as unequal bargaining power to render the contract between the parties unconscionable. In summary, the doctrine of unconscionability is used by the courts to police the excesses of certain parties who abuse their right to contract freely. It is directed against one-sided, oppressive and unfairly surprising contracts, and not against the con *760 sequences per se of uneven bargaining power or even a simple old-fashioned bad bargain (1 Anderson, supra, § 2-302.11, p. 401).
The words that state the rule
Each case of this type must necessarily rest upon its own facts but after examining the terms of the contract, the manner of its execution and the knowledge and experience of appellant we think the contract was neither inequitable nor unconscionable so as to deny its enforcement.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.