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Strand v. U.S. Bank National Association ND3/31/2005
There was no issue raised in Weber about the necessity of showing both procedural and substantive unconscionability. The language quoted was merely a general description of the doctrine of unconscionability. In Construction Assocs., however, we impliedly held that some measure of both procedural and substantive unconscionability must be shown to allow a court to refuse to enforce the unconscionable provisions. See Construction Assocs., 446 N.W.2d at 242-44 (separately addressing both procedural and substantive unconscionability in affirming the trial court's refusal to enforce certain contract provisions).
[ ] Courts in other jurisdictions have reached varying results on this issue. Some courts hold that a showing of either procedural or substantive unconscionability is sufficient to invalidate a contract. See Luna v. Household Fin. Corp. III, 236 F. Supp. 2d 1166, 1174 (W.D. Wash. 2002). Other courts have held that procedural unconscionability by itself is not enough, but substantive unconscionability by itself may be. See Maxwell v. Fidelity Fin. Servs., Inc., 907 P.2d 51, 58-60 (Ariz. 1995); see also Gillman v. Chase Manhattan Bank, NA, 534 N.E.2d 824, 828-29 (N.Y. 1988) (noting that a "determination of unconscionability generally requires a showing that the contract was both procedurally and substantively unconscionable when made," but recognizing that "there have been exceptional cases where a provision of the contract is so outrageous as to warrant holding it unenforceable on the ground of substantive unconscionability alone"). The majority of courts, however, have held that a showing of some measure of both procedural and substantive unconscionability is required, and courts are to employ a balancing test looking at the totality of the circumstances to determine whether a particular provision is unconscionable and unenforceable. See Roussalis v. Wyoming Med. Ctr., Inc., 4 P.3d 209, 246 (Wyo. 2000) ("most courts require a quantum of both and take a balancing approach in applying them"); 1 James J. White & Robert S. Summers, Uniform Commercial Code ยง 4-7 (4th ed. 1995) ("Most courts take a "balancing approach" to the unconscionability question, and to tip the scales in favor of unconscionability, most courts seem to require a certain quantum of procedural, plus a certain quantum of substantive, unconscionability"). [ ] One leading commentator has summarized:
The concept of unconscionability was meant to counteract two generic forms of abuses: the first of which relates to procedural deficiencies in the contract formation process, such as deception or a refusal to bargain over contract terms, today often analyzed in terms of whether the imposed-upon party had meaningful choice about whether and how to enter into the transaction; and the second of which relates to the substantive contract terms themselves and whether those terms are unreasonably favorable to the more powerful party, such as terms that impair the integrity of the bargaining process or otherwise contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law, fine-print terms or provisions that seek to negate the reasonable expectations of the non-drafting party, or unreasonably and unexpectedly harsh terms having to do with price or other central aspects of the transaction.
It has been said that this formulation requires a showing that the contract was both procedurally and substantively unconscionable when made. It has often been suggested that a finding of a procedural abuse, inherent in the formation process, must be coupled as well with a substantive abuse, such as an unfair o
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