Can a Texas court refuse to enforce this clause as unconscionable?
Yes, if this is a contract for the sale of goods (§ 2.302 is the Article 2 provision, and under § 2.102 that chapter applies to transactions in goods), and the remedy is surgical. 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, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable clause, or so limit the application of the unconscionable clause as to avoid an unconscionable result. When it is claimed or appears that a contract or clause may be unconscionable, the parties must be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect.
The trap
Two timing points decide most arguments. Unconscionability is measured at FORMATION, so a clause that merely turns out badly after a breach is not thereby unconscionable. And the ultimate question is one of law for the court, but it 'is dependent upon the existence of facts which allegedly illustrate unconscionability' (El Paso Natural Gas), so the fact record still has to be made. The third point is drafting-relevant: because the court may strike the offending clause and enforce the rest, an aggressive term risks being excised while the agreement it sat in survives. Severability is not the drafter's choice here.
3 authorities
- statuteTex. Bus. & Com. Code § 2.302enacted 1967-09-01
The words that state the rule
(a) 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. (b) 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.
- case964 S.W.2d 54El Paso Natural Gas Co. v. Minco Oil & Gas Co.Tex. App.—Amarillodecided 1998read it at the source ↗
The words that state the rule
We are told that the ultimate question as to whether an agreement is unconscionable is one of law. Id. at § 2.302, cmts. 1 & 3; Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 820 (Tex.App.San Antonio 1996, no writ). This suggests that our review of the matter is de novo. Yet, it cannot be forgotten that the decision of whether some agreement is or is not unconscionable is dependent upon the existence of facts which allegedly illustrate unconscionability. And, as to the existence of those facts, our review is not de novo. In other words, we cannot review the record, divine our own inferences from the evidence contained therein, resolve conflicts in same, or decide what evidence to believe and what not to believe. The power to do those things, that is, to find facts, lies with the trial court. Once it has exercised that power, we must then defer to the findings made. And, as long as the findings enjoy sufficient evidentiary support, they cannot be disturbed, even though we may have construed the evidence differently. Nevertheless, this does not prevent us from assessing whether the findings made illustrate unconscionability for, again, that is a question of law.
- statuteTex. Bus. & Com. Code § 2.102enacted 1967-09-01
The words that state the rule
Unless the context otherwise requires, this chapter applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this chapter impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.