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Thursday, May 29, 2008

Pondering Unconscionability

Diligently avoiding grading the last of my exams, I ran across a couple of interesting-looking papers recently distributed by the Social Science Research Network -- each of which grapples with the ever-slippery concept of unconscionability.

OmriOmri Ben-Shahar, immediate past president of the AALS Contracts Section, late of the University of Michigan Law School and bound for a new post at the University of Chicago Law School, prescibes How to Repair Unconscionable Contracts.  Here's the abstract:

Several doctrines of contract law allow courts to strike down excessively one-sided terms. A large literature explored which terms should be viewed as excessive, but a related question is often ignored - what provision should replace the vacated excessive term? This paper begins by suggesting that there are three competing criteria for a replacement provision: (1) the most reasonable term; (2) a punitive term, strongly unfavorable to the overreaching party; and (3) the maximally tolerable term. The paper explores in depth the third criterion -- the maximally tolerable term -- under which the excessive term is reduced merely to the highest level that the law considers tolerable. This solution preserves the original bargain to maximal permissible extent, but brings it within the tolerable range. The paper demonstrates that this criterion, which received no prior scholarly notice, is quite prevalent in legal doctrine, and that its adoption is based on powerful conceptual and normative underpinnings.

Lima_3Meanwhile, from the home of the 2009 ABA Business Law Section's Spring Meeting and the 2010 Winter Olympics (Hmm, I wonder which will be a bigger financial boon for BC), University of British Columbia Faculty of Law doctoral student Augusto C. Lima (center) offers When Harry Met Kreutziger: A Look into Unconscionability Through the Lenses of Culture.  Here's the abstract:

When addressing unconscionability, the legal academy focuses almost exclusively on the transaction between the parties, analyzing the parties themselves only in passing, if at all. More importantly, the current writing on unconscionability does not analyze the parties in the context of their culture. In cases like the famed Harry v. Kreutziger[, 9 B.C.L.R. 166 (C.A. 1978)], now marking its 30th anniversary, the appropriate resolution to the unconscionability argument should rest not only on the transaction itself, but also on the culture of the parties and the effect that culture may have had on their dealings. By failing to conduct such a cultural analysis, the academy and courts have not only continuously provided little guidance to future litigants, but also failed to treat culturally like cases alike. The cultural approach shares outcomes with two more established approaches to unconscionability: the paternalistic and the economic approaches. The cultural view of unconscionability may result in contracts being rescinded in many (but not all and not for the same reasons) of the situations in which paternalism would have them rescinded. On the other hand, the cultural view also shares outcomes with the economic approach: unconscionability, applied through a cultural analysis, will also be a narrow doctrine of exceptional application (but for practical reasons, not purposely, as intended by the economic approach).

Happy reading!

[Keith A. Rowley]

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