Can this contract or clause be struck down in Montana as unconscionable?
Yes, under a two-part common-law test the Montana Supreme Court applies across ordinary contracts (not just sales of goods): a provision “can be unconscionable and therefore unenforceable if ‘when considered in its context, [it] is unduly oppressive, unconscionable or against public policy.’” Global Client Solutions, LLC v. Ossello, quoting Iwen v. U.S. West Direct, and going on: “Unconscionability in Montana contract law is a concept adapted from the Uniform Commercial Code, and requires a determination that the contractual term is unreasonably favorable to the drafter, and there is no meaningful choice on the part of the other party but to accept the provision.” For sales of goods specifically, the UCC supplies a parallel codified version: “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” (§ 30-2-302(1), MCA), and the parties “shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect” before the court rules (§ 30-2-302(2)). The test does real work rather than sitting on the page. Global Client Solutions applied it to a debt-settlement company's arbitration clause and struck the clause down, holding that “[t]his arbitration provision unreasonably favors Global to the detriment of Ossello and is therefore unconscionable and unenforceable”, and concluded that the district court “did not err in reserving to itself the determination of arbitrability, nor did it err in declaring that the arbitration provision is unconscionable and therefore not enforceable against Ossello.” Iwen had done the same seventeen years earlier on the same reasoning: “One need only look at the language of the arbitration provision itself to determine that it is unreasonably favorable to U.S. West Direct, the drafter.”
The trap
Unconscionability is decided AS A MATTER OF LAW by the court, not a jury (§ 30-2-302(1)'s own opening words), but § 30-2-302(2) still entitles the resisting party to put on evidence of commercial context first; a court that rules without giving that opportunity has skipped a statutory step. The common-law Iwen/ Global Client Solutions test requires BOTH prongs, drafter-favoring terms AND no meaningful choice, not either alone; a one-sided term the other party could simply have walked away from, or negotiated, is a weaker unconscionability case even if the substance looks harsh. Note how close the leading case was: Global Client Solutions divided five to two, with a three-justice concurrence and a two-justice dissent, so the margin on which the arbitration clause fell was one vote. The authorities cited here do not establish how Montana courts draw the line between PROCEDURAL unconscionability (the bargaining process) and SUBSTANTIVE unconscionability (the terms themselves) as separately labeled doctrines: Global Client Solutions frames the test as a single two-part inquiry rather than the procedural/substantive split some other states use, and this rule does not import that split without confirming it is how Montana actually organizes the doctrine.
6 authorities
- statuteMont. Code Ann. § 30-2-302enactment 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.
- statuteMont. Code Ann. § 30-2-302enactment 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.
The words that state the rule
Under Montana law, a contract provision can be unconscionable and therefore unenforceable if “when considered in its context, [it] is unduly oppressive, unconscionable or against public policy.” Iwen, ¶ 27.5 Unconscionability in Montana contract law is a concept adapted from the Uniform Commercial Code, and requires a determination that the contractual term is unreasonably favorable to the drafter, and there is no meaningful choice on the part of the other party but to accept the provision.
The words that state the rule
This arbitration provision unreasonably favors Global to the detriment of Ossello and is therefore unconscionable and unenforceable.
The words that state the rule
For the foregoing reasons, we conclude that the District Court did not err in reserving to itself the determination of arbitrability, nor did it err in declaring that the arbitration provision is unconscionable and therefore not enforceable against Ossello.
The words that state the rule
One need only look at the language of the arbitration provision itself to determine that it is unreasonably favorable to U.S. West Direct, the drafter.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.