Can we get this clause struck as unconscionable in Nebraska?
Almost certainly not in a commercial deal, and you must plead it. Myers v. Nebraska Investment Council states the whole Nebraska test: “The unconscionability of a contract provision presents a question of law”; “the term “unconscionable” means manifestly unfair or inequitable”; “A contract is not substantively unconscionable unless the terms are grossly unfair under the circumstances that existed when the parties entered into the contract”; “In a commercial setting, however, substantive unconscionability alone is usually insufficient to void a contract or clause”; “A court must also consider whether the contract formation was procedurally unconscionable”; “An essential fact in determining unconscionability is the disparity in respective bargaining positions of parties to a contract”; and “In general, we have been reluctant to rewrite contracts between parties experienced in business, as opposed to contracts between consumers and skilled corporate parties.” The bargaining-power element is where cases die, Ray Tucker & Sons, Inc. v. GTE Directories Sales Corp.: “We agree with the district court that the record contains no evidence of a disparity in the parties' respective bargaining positions, which is an essential fact upon which any determination of unconscionability depends.” It is a shield, not a sword: Arthur v. Microsoft Corp. holds “The doctrine of unconscionability set forth in § 2-302 is not a basis for the award of money damages.” And it must be raised in the pleadings, Guaranteed Foods of Nebraska, Inc. v. Rison: “We are also of the opinion that the issue of unconscionability must be pleaded in order to be considered by the court”, and if “the issue was neither raised nor litigated as a defense in the trial court” it “can be neither urged nor considered for the first time on appeal”. It is not confined to sales of goods: Ficke v. Wolken applied it to an ORAL promise to convey land (“To determine if a contract is substantively unconscionable, we view the contract at the time it was made”), and rejected the challenge for want of evidence of value at the right date. Only one Nebraska appellate decision has refused to enforce a commercial clause under the two-prong Code test: Adams v. American Cyanamid Co., where “Having found the exclusion both substantively and procedurally unconscionable, we decline to enforce it.” It did so as advance direction for a remand rather than as the ground of its disposition, “Since the issue is likely to arise again on remand, we provide direction for the lower court by determining in advance whether American Cyanamid’s limitation of remedies is unconscionable.” The Supreme Court has separately held a marital property settlement unconscionable under § 42-366, which makes it “not binding” on the court: Dobesh v. Dobesh found the agreement “unconscionable insofar as it requires alimony payments of $400 per month” and affirmed the trial court's award of $1 annually in its place.
The trap
The trap is not in your clause, it is in your record and your pleading. Substantive one-sidedness alone is worthless in a commercial deal, and Nebraska will not infer bargaining disparity: Ray Tucker refused to take judicial notice of it because it was contested, and faulted the absence of evidence about alternative suppliers and about whether the clause was ever negotiated. Guaranteed Foods failed on the pleading point alone, and Adams records the same rule as the reason the defendant there could not complain on appeal. Second trap: value is measured at FORMATION. Ficke's challenger lost because he proved the land's present value rather than its value in 2003, and the timing is repeated in the law we hold: “at the time it was made” in Ficke, “at the time the contract was made” and “at the time of contracting” in § 76-835.01. Third: a specific statute beats the general doctrine. SFI Ltd. Partnership 8 v. Carroll upheld a residential lease clause because a statute already imposed the same liability, “Where a specific statute holds a tenant responsible for fire damages caused by his or her negligence, we cannot hold a lease provision doing so void as against public policy or unconscionable”, and warns that “Courts should be cautious in holding contracts void on the ground that the contract is contrary to public policy; to be void as against public policy, the contract should be quite clearly repugnant to the public conscience.” Fourth, the remedial asymmetry, which is easy to get backwards: at common law a Nebraska court “can- not find the clause unconscionable and cannot rewrite the con- tract to exclude it” (Intervision Sys. Techs. v. InterCall), but every Nebraska unconscionability STATUTE expressly authorises severance and Dobesh v. Dobesh held a settlement agreement unconscionable as to one term, treating it as not binding and affirming the court's own substitute award rather than severing the clause. Fifth, three things a lawyer from another state will look for and not find in Nebraska: the phrase “procedural and substantive unconscionability” has never been used in any Nebraska opinion; Restatement (Second) of Contracts § 208 has never been cited; and there is no sliding scale. Sixth, what a reviewer will cite as “the Nebraska test” is express dicta: T.V. Transmission, Inc. v. City of Lincoln said “we need not and do not decide whether a defense based upon the unconscionability of a contract extends to transactions other than for the sale of goods”, and Adams later observed “Although the test is stated in T.V. Transmission, we have not found a Nebraska case that has applied it.”
31 authorities
The words that state the rule
A contract is not substantively unconscionable unless the terms are grossly unfair under the circumstances that existed when the parties entered into the contract.
The words that state the rule
The unconscionability of a contract provision presents a question of law. See Melcher v. Boesch Motor Co., 188 Neb. 522 , 198 N.W.2d 57 (1972). When considering whether an agreement is unconscionable, this court has stated that the term “unconscionable” means manifestly unfair or inequitable.
The words that state the rule
In a commercial setting, however, substantive unconscionability alone is usually insufficient to void a contract or clause.
The words that state the rule
A court must also consider whether the contract formation was procedurally unconscionable.
The words that state the rule
An essential fact in determining unconscionability is the disparity in respective bargaining positions of parties to a contract.
The words that state the rule
In general, we have been reluctant to rewrite contracts between parties experienced in business, as opposed to contracts between consumers and skilled corporate parties.
- case571 N.W.2d 64Ray Tucker & Sons, Inc. v. GTE Directories Sales Corp.Neb.decided 1997read it at the source ↗
The words that state the rule
We conclude that it is unnecessary to reach the issue of unconscionability in this case because the record contains no evidence relating to this issue. We agree with the district court that the record contains no evidence of a disparity in the parties’ respective bargaining positions, which is an essential fact upon which any determination of unconscionability depends.
- case571 N.W.2d 64Ray Tucker & Sons, Inc. v. GTE Directories Sales Corp.Neb.decided 1997read it at the source ↗
The words that state the rule
For example, there is no evidence concerning the availability of yellow pages advertising from sources other than GTE, or the availability, relative cost, and efficacy of other types of advertising which Tucker & Sons could have utilized. Likewise, there is no evidence regarding whether Tucker & Sons ever attempted to negotiate the elimination of the limitation of liability clause in previous contracts. The district court correctly concluded that it could not take judicial notice of the relative bargaining power of the parties. In *467 its petition, Tucker & Sons claimed that the limitation of liability clause was unconscionable because it “lacked equal bargaining power in the drafting of said clause, and lacked equal bargaining power in the negotiation of the terms and provisions of said clause.” In its answer, GTE denied Tucker & Sons’ allegation. The relative bargaining power of the parties was therefore a contested factual issue which could not have been the subject of judicial notice either in the district court or on appeal, since a court may not take judicial notice of disputed facts. See In re Interest of N.M. and J.M., 240 Neb. 690 , 484 N.W.2d 77 (1992). We therefore conclude that the district court did not err in finding that there was an inadequate factual basis upon which to find the limitation of liability clause unconscionable.
The words that state the rule
The doctrine of unconscionability set forth in § 2-302 is not a basis for the award of money damages.
The words that state the rule
As certain courts have noted, this provision of the Uniform Commercial Code was not intended to create a cause of action and cannot be used as a basis for damages.
- case299 N.W.2d 507Guaranteed Foods of Nebraska, Inc. v. RisonNeb.decided 1980read it at the source ↗
The words that state the rule
We are also of the opinion that the issue of unconscionability must be pleaded in order to be considered by the court.
- case299 N.W.2d 507Guaranteed Foods of Nebraska, Inc. v. RisonNeb.decided 1980read it at the source ↗
The words that state the rule
the issue was neither raised nor litigated as a defense in the trial court, and hence can be neither urged nor considered for the first time on appeal
The words that state the rule
We conclude that under the circumstances presented here, the exclusion is procedurally unconscionable. Having found the exclusion both substantively and procedurally unconscionable, we decline to enforce it.
The words that state the rule
Generally, the issue of unconscionability is divided into substantive unconscionability and procedural unconscionability.
The words that state the rule
None of the factors is conclusive; rather, unconscionability is determined under the totality of the circumstances.
The words that state the rule
Although the test is stated in T.V. Transmission, we have not found a Nebraska case that has applied it.
The words that state the rule
However, in view of the fact that the issue is not properly before us, we need not and do not decide whether a defense based upon the unconscionability of a contract extends to transactions other than for the sale of goods, 14 S. Williston, A Treatise on the Law of Contracts § 1632B (3d ed. 1972), nor do we need concern ourselves with what the precise elements of such a defense might be.
The words that state the rule
Where a specific statute holds a tenant responsible for fire damages caused by his or her negligence, we cannot hold a lease provision doing so void as against public policy or unconscionable.
The words that state the rule
Courts should be cautious in holding contracts void on the ground that the contract is contrary to public policy; to be void as against public policy, the contract should be quite clearly repugnant to the public conscience.34 We find no such repugnancy.
The words that state the rule
To determine if a contract is substantively unconscionable, we view the contract at the time it was made.
- case872 N.W.2d 794Intervision Sys. Techs. v. InterCallNeb. Ct. App.decided 2015read it at the source ↗
The words that state the rule
Here, both parties are commercial entities and we have no record of a disparity in bargaining power. The terms of the contract are unambiguous, the entire contract is only four pages long, and the print above the parties’ signatures reads, “CUSTOMER HAS READ AND AGREES TO BE BOUND BY THIS AGREEMENT, INCLUDING THE TERMS AND CONDITIONS ATTACHED HERETO.” Accordingly, we can- not find the clause unconscionable and cannot rewrite the con- tract to exclude it.
The words that state the rule
The conscionability of the provision became a matter of law for the court. § 2-302, U. C. C. It is commented, under that section, that: “The basic test is whether in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. . . . The principle is one of the prevention of oppression and unfair surprise . . . and not of disturbance of allocation of risks because of superior bargaining power.”
- statuteNeb. Rev. Stat. § 76-835.01enactment date not established
The words that state the rule
(b) Whenever it is claimed, or appears to the court, that a contract or any contract clause is or may be unconscionable, the parties, in order to aid the court in making the determination, shall be afforded a reasonable opportunity to present evidence as to: (1) The commercial setting of the negotiations; (2) Whether a party has knowingly taken advantage of the inability of the other party reasonably to protect his or her interests by reason of physical or mental infirmity, illiteracy, or inability to understand the language of the agreement or similar factors; (3) The effect and purpose of the contract or clause; and (4) If a sale, any gross disparity, at the time of contracting, between the amount charged for the real estate and the value of the real estate measured by the price at which similar real estate was readily obtainable in similar transactions, but a disparity between the contract price and the value of the real estate measured by the price at which similar real estate was readily obtainable in similar transactions does not, of itself, render the contract unconscionable.
The words that state the rule
We find that the agreement between the parties is unconscionable insofar as it requires alimony payments of $400 per month. We further find that, considering the economic circumstances of the parties, including specifically that *200 each is trying to rearrange his or her life after a serious financial comedown, the trial court did not abuse its discretion in awarding alimony of $1 annually until Bonnie dies or is remarried.
The words that state the rule
With regard to the meaning of “unconscionable,” we have interpreted that word to mean “manifestly unfair or inequitable.”
The words that state the rule
Usually, the issue should not be determined before the plaintiffs have an opportunity to present evidence of disparity in their bargaining positions and that the provisions unreasonably favored the defendant.
The words that state the rule
And the pleadings and attachments conclusively refute any disparity between the parties’ bargaining positions.
The words that state the rule
Since the issue is likely to arise again on remand, we provide direction for the lower court by determining in advance whether American Cyanamid’s limitation of remedies is unconscionable.
The words that state the rule
The issue was not raised at any of these points, and the defendant can *356 hardly complain on appeal that it was prejudiced.
- statuteNeb. Rev. Stat. § 76-835.01enactment date not established
The words that state the rule
The court, upon finding as a matter of law that a contract or contract clause was unconscionable at the time the contract was made, may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable clause, or limit the application of any unconscionable clause in order to avoid an unconscionable result.
The words that state the rule
In that situation § 42-366(2) provides in part that “the terms of the agreement . . . shall be binding upon the court unless it finds, after considering the economic circumstances of the parties and any other relevant evidence produced by the parties . . . that the agreement is unconscionable.” The general law is settled. If the agreement between the parties is not unconscionable, the agreement binds both the parties and the court. See Paxton v. Paxton, 201 Neb. 545 , 270 N.W.2d 900 (1978). If the agreement is unconscionable, it is not binding, and the court may make orders for the disposition of the property and maintenance.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.