Unconscionability

     While courts will not inquire into the adequacy of consideration (see Commentary.Consideration and estoppel), they may permit a party escape from a contract, or from a term or terms of a contract, if the bargaining process failed to provide one party with an opportunity for meaningful choice (a standard somewhat short of duress or misrepresentation) and the impact of the contract or contract terms is unreasonably favorable to the other party .  This is the doctrine of unconscionability, reflected in U.C.C. 2-302 and in the common law.  Williams v. Walker-Thomas Furniture is the classic case on unconscionability.  Stirlen v. Supercuts is one of many recent cases considering whether contract clauses compelling arbitration of disputes are unconscionable and suggests the broader question of whether alternative dispute resolution is quite the nirvana that some of its early proponents proclaimed.   K. D.  v. Educational Testing Service, which emphasizes the distinction between a contract of adhesion and a contract that is unconscionable, will rekindle your memories of taking the LSAT.      

    In some cases an individual who signs a written contract fails to read some or all of the contract, is illiterate and therefore cannot read the contract, or reads the contract but does not understand some of its terms.  Williams v. Walker-Thomas Furniture was probably one of those cases, and no doubt many of you have signed a contract some or all of which you have not read or did not understand.   In most such cases the written contract is a standardized agreement presented by a merchant to an individual consumer and is not subject to negotiation or alteration prior to execution. R.2d Contracts 211 offers a rule permitting the individual consumer to escape from a term in a standardized agreement if the consumer was unaware of the term at the time he or she signed the contract and the merchant had reason to know that the individual consumer would not have assented to the term had the consumer been aware of the term.  As you might imagine, adoption of this rule by drafters of the R.2d Contracts was controversial.  This approach to standardized agreements has generally not been followed by the courts notwithstanding evidence of a significant amount of illiteracy or limited literacy among the adult population of the United States.  With some exceptions, failure to read or understand a term in a contract is not a defense to enforcement of the term.  For a fuller discussion of rules of contract formation and interpretation in the context of adult illiteracy, see A. White and C. Mansfield, Literacy and Contract, 13.2 Stanford Law & Policy Rev. 233 (2002).

     Supplementary reading:  Farnsworth 4.26 - 4.29.