Can the other side get out of this contract in Virginia by calling it unconscionable?
Almost certainly not: Virginia's threshold is the highest formulation in common use. "While the jurisdiction undoubtedly exists in the courts to avoid a contract on the ground that it makes an unconscionable bargain, nevertheless an inequitable and unconscionable bargain has been defined to be 'one that no man in his senses and not under a delusion would make, on the one hand, and as no fair man would accept, on the other.' The inequality must be so gross as to shock the conscience" (Management Enterprises, Inc. v. Thorncroft Co., quoting Smyth Brothers v. Beresford, 128 Va. 137 (1920)). Thorncroft shows what that threshold does in practice: the trial court had held a release unconscionable and ordered the $15,000 paid for it returned, and the Supreme Court of Virginia reversed that holding, because "Even though the trial court considered Thorncroft's payment of $15,000 to Management Enterprises in return for its release of these rights as exorbitant, the record does not reveal an inequality so gross as to shock the conscience", and "Accordingly, we hold that the release is not unconscionable." That did not end the case: the Court reversed and remanded, because the trial court had not decided whether Thorncroft could rescind the "hunting lease" for fraud and duress, and if Thorncroft is not entitled to rescission "the release agreement shall be binding upon the parties." The facts are what make that holding usable, because they are what $15,000 bought: the released "hunting lease" gave the holder "the right to hunt, fish, and trap on" the owner's "property for 32 years", plus "the right to chain, lock, erect barriers or other movement restrictors on the property; the right to erect blinds on the property; and, the right to use rights of way, roads, and low water boundaries", against an exclusivity promise and an acknowledgement that the holder would "expend substantial money and resources to develop and manage a game program" there.
The trap
Do not import the procedural/substantive vocabulary that most states use: Virginia's commercial test is a single question about the degree of inequality, and a price a court itself calls exorbitant is not enough to meet it. The two-prong test a reader will find quoted most often in Virginia (gross disparity in value plus overreaching or oppressive influences making the process unfair, proved by clear and convincing evidence) appears in Court of Appeals decisions on marital property-settlement and premarital agreements, none of which is quoted here, and it is not the rule Thorncroft applies to a commercial bargain.
5 authorities
The words that state the rule
Next, Management Enterprises argues that the trial court erred by holding that the release agreement is unconscionable and, therefore, null and void and that Thorncroft is entitled to recover the $15,000 payment made to Management Enterprises. We stated in Smyth Brothers v. Beresford, 128 Va. 137 , 104 S.E. 371 (1920), the principles that we apply when determining whether a contract is unconscionable: While the jurisdiction undoubtedly exists in the courts to avoid a contract on the ground that it makes an unconscionable bargain, nevertheless an inequitable and unconscionable bargain has been defined to be ‘one that no man in his senses and not under a delusion would make, on the one hand, and as no fair man would accept, on the other.’ The inequality must be so gross as to shock the conscience.
The words that state the rule
Even though the trial court considered Thorncroft’s payment of $15,000 to Management Enterprises in return for its release of these rights as exorbitant, the record does not reveal an inequality so gross as to shock the conscience. Accordingly, we hold that the release is not unconscionable.
The words that state the rule
As we have already observed, the “hunting lease” gave Management Enterprises the right to hunt, fish, and trap on Thorn-croft’s property for 32 years. Additionally, the “hunting lease” conferred upon Management Enterprises numerous other rights including: the right to chain, lock, erect barriers or other movement restrictors on the property; the right to erect blinds on the property; and, the right to use rights of way, roads, and low water boundaries. Thorncroft recognized that Management Enterprises would “expend substantial money and resources to develop and manage a game program on the [property].” Also, Thorncroft agreed that it would not give permission to “individuals, groups of individuals, clubs or corporations to hunt, fish, or trap” on the property during the term of the “hunting lease.”
The words that state the rule
In view of our holdings, we will reverse the judgment and remand the matter for further proceedings because the trial court did not decide whether Thorncroft was entitled to the remedy of *474 rescission of the “hunting lease” on the basis of fraud and duress as alleged in its pleadings.
The words that state the rule
If Thorncroft is not entitled to rescission of the “hunting lease,” then the release agreement shall be binding upon the parties. Reversed and remanded.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.