Unconscionability Contract Law in Canada: What You Need to Know

Contracts are a fundamental aspect of business. They serve as legally binding agreements between two or more parties, outlining the terms and conditions of the agreement. Typically, contracts are created through negotiations between the parties involved, where each side has the opportunity to negotiate and agree upon the terms outlined in the contract.

However, sometimes one party may take advantage of the other, resulting in an unfair and oppressive contract. In such cases, the doctrine of unconscionability may come into play.

What is Unconscionability?

Unconscionability is a legal doctrine that refers to a contract that is so one-sided and unfair that it makes it unenforceable. Under Canadian law, unconscionability can be defined as a contract that is so oppressive that it shocks the conscience of the court.

In other words, if a court finds that a contract is so unfairly one-sided that it shocks the court`s conscience, the court can choose to declare the contract unenforceable.

When Does Unconscionability Apply?

Unconscionability can apply in many situations, but it is most commonly invoked in situations where there is a significant power imbalance between the parties involved. This could include situations where one party is in a position of authority, such as an employer or a landlord, and the other party is in a vulnerable position, such as an employee or a tenant.

Other situations where unconscionability may apply include contracts that are:

– Signed under duress or coercion

– Signed by someone who does not have the capacity to understand the terms of the contract

– Signed without proper disclosure of all material information

– So one-sided that they are unconscionable on their face

It`s important to note that every case is unique, and whether unconscionability applies depends on the specific circumstances of each case.

What Are the Consequences of Unconscionability?

If a court finds that a contract is unconscionable, it can choose to declare the contract unenforceable. In other words, the contract will not be binding on the parties and will not be enforced by the courts.

In some cases, the court may also award damages to the party that was unfairly treated. For example, if an employer forces an employee to sign an unconscionable contract, the court may award damages to the employee to compensate them for the harm they suffered.

Conclusion

Unconscionability is an important legal doctrine in Canada that helps to protect vulnerable parties from unfair and oppressive contracts. If you believe that you have been forced to sign an unconscionable contract, it`s important to seek the advice of a qualified lawyer who can help you understand your legal rights and options.