Substantive Unfairness as Unconscionable

39 Pages Posted: 5 Sep 2018

See all articles by Hao Jiang

Hao Jiang

City University of Hong Kong School of Law; Tulane Law School

Date Written: August 26, 2018

Abstract

Contrary to the conventional view that the doctrine of unconscionability requires procedural defects and is based on bargaining inequality, this paper argues that, in principle, substantive unconscionability alone shall be sufficient to constitute unconscionability and so vitiate a contract. It is also my contention that Aristotelian idea of contract of exchange as an act of voluntary commutative justice explains the two sources of unfairness. They are not understood by contemporary legal scholarship, namely, economic unfairness and involuntariness. Economic unfairness prevents gross disparity, which alone triggers unconscionability; it has been observed that when a transaction is truly stupid or one-sided, courts will set aside the contract as unconscionable. When a contract violates the autonomy of a party by hiding offensive or oppressive terms in a boilerplate, relief is given by both the Second Restatement of Contracts and European Directive. Yet, there is no doctrinal basis in our theoretical framework that justifies either one of the two reliefs. We stand a better chance of having a coherent doctrine of unconscionability by understanding what unfairness means and seeing contract of exchange as an act of voluntary commutative justice as in Aristotelian tradition.

Keywords: Substantive Unfairness; Economic Unfairness; Involuntariness; Voluntary Commutative Justice

Suggested Citation

Jiang, Hao, Substantive Unfairness as Unconscionable (August 26, 2018). Available at SSRN: https://ssrn.com/abstract=3239098 or http://dx.doi.org/10.2139/ssrn.3239098

Hao Jiang (Contact Author)

City University of Hong Kong School of Law ( email )

5/F Yeung Kin Man Building G-5360
Tat Chee Ave
Kowloon, Kowloon
Hong Kong

Tulane Law School ( email )

6329 Freret St.
New Orleans, LA Louisiana 70118
United States

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