Can the other side get out of this clause by calling the contract unconscionable or a contract of adhesion?
Not easily, on the Minnesota authority read here. An adhesion contract is one drafted unilaterally by a business enterprise and forced upon an unwilling and often unknowing public for services that cannot readily be obtained elsewhere; even though a contract is on a printed form and offered on a take-it-or-leave-it basis, those facts alone do not make it one: there must be a showing that the parties were greatly disparate in bargaining power, that there was no opportunity for negotiation, and that the services could not be obtained elsewhere (Schlobohm). In a commercial sale, the Supreme Court held that where the parties were both merchants and there was no great disparity in their bargaining strength and the claim is for commercial loss, there is nothing that makes it unconscionable to enforce the allocation of risk the parties wrote (Franz).
The trap
Both holdings are tied to their facts and neither supplies a general Minnesota test. Schlobohm decides an adhesion argument about a health-spa membership; Franz decides the unconscionability of a consequential-damages exclusion between two merchants, under Minn. Stat. § 336.2-719(3), which Franz quotes in full in its footnote 4, and the Court expressly refused to extend it to consumer transactions involving relatively commonplace products such as automobiles and trucks. So neither case establishes procedural and substantive unconscionability as named elements in Minnesota, and no sentence here should be read that way. The statutory hook usually cited for unconscionability in a sale of goods, Minn. Stat. § 336.2-302, is not among the statutes available here and its text is not verified; it appears only as a parenthetical the Court used in passing in Onvoy.
7 authorities
- case534 N.W.2d 261International Financial Services, Inc. v. FranzMinn.decided 1995read it at the source ↗
The words that state the rule
We emphasize, however, that our decision is grounded in a commercial setting involving a contract between two merchants of relatively equal bargaining power and is not intended to establish that a consequential damage bar survives a failure of the limited repair remedy in consumer transactions that involve relatively commonplace or uncomplicated products such as automobiles and trucks.
The words that state the rule
By definition, an adhesion contract is drafted unilaterally by a business enterprise and forced upon an unwilling and often unknowing public for services that cannot readily be obtained elsewhere. See generally Jones v. Dressel, Colo., 623 P.2d 370, 374 (1981); Chandler v. Aero Mayflower Transit Co., 374 F.2d 129, 135 (4th Cir.1967). It is a contract generally not bargained for, but which is imposed on the public for necessary service on a "take it or leave it" basis. Even though a contract is on a printed form and offered on a "take it or leave it" basis, those facts alone do not cause it to be an adhesion contract. There must be a showing that the parties were greatly disparate in bargaining power, that there was no opportunity for negotiation *925 and that the services could not be obtained elsewhere.
- case534 N.W.2d 261International Financial Services, Inc. v. FranzMinn.decided 1995read it at the source ↗
The words that state the rule
Under the circumstances of this case, where the parties were both merchants and there was no great disparity in their bargaining strength and where the claim is for commercial loss, there is nothing that makes it unconscionable to enforce the allocation of risk incorporated into the parties’ contract. The consequential damages exclusion is valid and enforceable.
- case534 N.W.2d 261International Financial Services, Inc. v. FranzMinn.decided 1995read it at the source ↗
The words that state the rule
(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.
The words that state the rule
The rule we adopt today, allowing courts to retain jurisdiction over credible claims that a contract is void, leaves room for consumers to escape obvious abuses of power in contracting. See, e.g., Minn.Stat. § 336.2-302 (2002) (allowing courts to refuse to enforce an unconscionable contract).
The words that state the rule
In our view, there was no disparity in bargaining power. Schlobohm voluntarily applied for membership in Spa Petite and acceded to the terms of membership. There was no showing that Spa Petite's services were necessary or that the services could not have been obtained elsewhere.
The words that state the rule
We conclude that there was absent any disparity of bargaining power under these circumstances and that the contract was not one of adhesion.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.