American Contract Law for a Global Age, 2017a

In determining reasonableness or fairness, the primary concern must be with
the terms of the contract considered in light of the circumstances existing when the
contract was made. The test is not simple, nor can it be mechanically applied. The
terms are to be considered “in the light of the general commercial background and
the commercial needs of the particular trade or case.” Corbin suggests the test as
being whether the terms are “so extreme as to appear unconscionable according to
the mores and business practices of the time and place.” 1 ARTHUR LINTON CORBIN,
CORBIN ON CONTRACTS § 128 (1963). We think this formulation correctly states the
test to be applied in those cases where no meaningful choice was exercised upon
entering the contract.
Because the trial court and the appellate court did not feel that enforcement
could be refused, no findings were made on the possible unconscionability of the
contracts in these cases. Since the record is not sufficient for our deciding the issue
as a matter of law, the cases must be remanded to the trial court for further
proceedings.
So ordered.
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Arthur Allen Leff, Unconscionability and the Code: The Emperor’s New Clause,
115 U. PA. L. REV. 485 (1967):
Let us begin the story the way so many good stories begin, with ritual
incantation: to make a contract one needs (i) parties with capacity, (ii) manifested
assent, and (iii) consideration. This is all very simple. If these criteria are met, a party
to the resulting nexus who has made promises is obligated to carry them out, unless
he can maintain successfully one of the standard contract-law defenses, such as fraud,
duress, mistake, impossibility or illegality. These “defenses” might be classified in
divers ways to serve various analytical purposes. For our particular needs, however,
there is a simple way of grouping them which is signally illuminating: some of these
defenses have to do with the process of contracting and others have to do with the
resulting contract. When fraud and duress are involved, for instance, the focus of
attention is on what took place between the parties at the making of the contract.
With illegality, on the other hand, the material question is instead the content of the
contract once “made.” The law may legitimately be interested both in the way
agreements come about and in what they provide. A “contract” gotten at gunpoint
may be avoided; a classic dicker over Dobbin may come to naught if horse owning is
illegal. Hereafter, to distinguish the two interests, I shall often refer to bargaining
naughtiness as “procedural unconscionability,” and to evils in the resulting contract
as “substantive unconscionability.”
If reading [UCC § 2-302] makes anything clear it is that reading this section
alone makes nothing clear about the meaning of “unconscionable” except perhaps that
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328 CHAPTER V: CONTRACT DEFENSES