Can the other side get out of this clause by calling it unconscionable?
Only by proving both halves. Unconscionability includes both an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favourable to the other party, and the party asserting unconscionability of a contract bears the burden of proving that the agreement is both procedurally and substantively unconscionable (Taylor Building, quoting Lake Ridge Academy and Williams v. Walker-Thomas Furniture Co.). Unconscionability is a ground for revocation of a contract, and a determination whether a written contract is unconscionable is an issue of law; a trial court's decision on a motion under R.C. 2711.02 to stay litigation in favour of arbitration must be reviewed de novo where the issue is whether the arbitration agreement or clause is unconscionable as a matter of law. That does not extend to the facts: where a trial court makes factual findings supporting its determination, such as findings about the circumstances surrounding the making of the contract, those findings are reviewed with great deference.
The trap
Aiming at the wrong document loses the point. In Taylor Building the appellate court had found the whole contract void and unenforceable in its entirety because several provisions besides the arbitration clause were unfair; the Supreme Court held that was incorrect, and that a party challenging an arbitration provision under R.C. 2711.01(A) must show that the arbitration clause itself is unconscionable, with unconscionability arguments about the rest of the contract left to the arbitrator in the first instance. Applying that, the Court concluded the arbitration agreement was not unconscionable, affirmed in part and reversed in part and remanded - so the decision is as much an example of a clause surviving as of a test being stated. The corollary matters to a drafter: the unfair terms elsewhere in the form are not what saves or sinks the clause under challenge.
9 authorities
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
The *359 party asserting unconscionability of a contract bears the burden of proving that the agreement is both procedurally and substantively unconscionable.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
Accordingly, we agree with the Ohio and federal courts that have applied a de novo standard of review to a determination whether an arbitration agreement alleged to be unconscionable is enforceable.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
The appellate court in this case incorrectly determined that the entire contract was unconscionable based in part on that court’s view that several provisions in addition to the arbitration clause were unfair.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
Unconscionability includes both “ ‘an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.’ ” Lake Ridge Academy v. Carney (1993), 66 Ohio St.3d 376, 383 , 613 N.E.2d 183 , quoting Williams v. Walker-Thomas Furniture Co. (C.A.D.C.1965), 350 F.2d 445, 449
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
Similarly, when a party challenges an arbitration provision as unconscionable pursuant to R.C. 2711.01(A), the party must show that the arbitration clause itself is unconscionable.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
Arbitration agreements are “valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.” R.C. 2711.01(A). Unconscionability is a ground for revocation of a contract.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
A determination of whether a written contract is unconscionable is an issue of law. See Ins. Co. of N. Am. v. Automatic Sprinkler Corp. of Am. (1981), 67 Ohio St.2d 91, 98 , 21 O.O.3d 58 , 423 N.E.2d 151 ; see also Bolton v. Crockett Homes, Inc., 5th Dist. No. 2004CA00051, 2004-Ohio-7318 , 2004 WL 3251302 , ¶ 8 (unconscionability of arbitration clause in home-construction agreement is a question of law). Courts review questions of law de novo.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
When a trial court makes factual findings, however, supporting its determination that a contract is or is not unconscionable, such as any findings regarding the circumstances surrounding the making of the contract, those factual findings should be reviewed with great deference.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
For all of these reasons, we hold that a trial court’s decision on a motion pursuant to R.C. 2711.02 to stay litigation in favor of arbitration must be reviewed de novo when the issue to be decided is whether the arbitration agreement or clause is unconscionable as a matter of law. The court of appeals erred by determining the issue of unconscionability regarding the parties’ entire contract, rather than just the arbitration clause. For the reasons discussed above, we conclude, unlike the court of appeals, that the arbitration agreement is not unconscionable. {¶ 70} Accordingly, the judgment of the court of appeals is affirmed in part and reversed in part, and the cause is remanded to the trial court for further proceedings not inconsistent with this opinion. Judgment affirmed in part and reversed in part, and cause remanded.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.