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The Unconscionability of Unconscionability

-- By MikeSteinthal - 17 Feb 2025

Here is an Idea

In introductory contract law courses, students are taught that consumers are bound by the terms and conditions they agree to when they sign up for any service. This presumption is removed from reality and ultimately harmful to individuals, to the benefit of corporations. The world would be better off if we applied legal realism to this context, stopped pretending that individuals read their contracts, and stopped holding people accountable to these terms.

Here is how I came by it

In my first semester of law school contracts course, we read a series of cases in the syllabus unit “Unconscionability.” This segment of the course was designed to provide students with an introduction to the contours of consumer adhesion contracts. In daily life, individuals are constantly purchasing goods and signing up for services. This is particularly true in the internet context, where most websites require people to create accounts in order to use them. When registering for any of these services, one undoubtedly is prompted to agree to the "terms and conditions" of that website, often clicking a small box to affirm that the new user has read through, understands, and consents to be bound to those terms and conditions.

Of course, nobody actually reads those terms and conditions. But for legal purposes, we are taught, that doesn't matter. The law here creates a "legal fiction," a departure from reality solely for legal purposes. Professor Gillis, who taught my first semester contracts class, described the fiction aptly. I will paraphrase her wonderful explanation of the legal fiction here: "The law imagines the user who just purchased their new software, or who just started registering for an online account, pausing at the step in the process where they are confronted with the terms and conditions, and must decide whether to click on the "I accept" box. Before clicking, the user prints out every last page of terms, binds them together to create a manuscript, saunters over to her armchair by her fireplace, kicks her feet up on her ottoman, lets out a sigh, and begins leafing through. She reads each page, annotating the margins, taking note of all the duties, obligations, and responsibilities contained therein. Finally, she thinks to herself, "_Am I amenable to these terms_?"; Only if that answer is a resounding “_Yes_!”, then she continues on with her account or software registration, confident in her legal situation and positioning.”

If that story sounds comical, it is. But it captures the state of contract law, and its presumption that users read, digest, comprehend, and affirmatively consent to be bound by the terms and conditions of every product and service they consume.

Here is what causes me to have confidence in this idea

In an ideal contract, the two parties to the contract, or more likely, their lawyers, fight tooth and nail over every clause. Each word is litigated, haggled, and argued over until a mutually acceptable version is produced. This bargaining negotiation ensures that the final contract serves the interests of both parties. Otherwise, as rational economic actors, they would not agree to it.

The legal fiction in consumer contracts departs immensely from this negotiation-oriented conception of contract law. However, it binds the user to the ultimate contract just the same. There are many reasons why this is inappropriate.

Unlike in the bargained-for context, consumers ordinarily do not understand their position in the matter. Without legal training, they simply lack the ability to understand the terms of the contract itself, and do not understand their own position in these legal matters to a sufficient extent such that they could meaningfully argue on their own behalf. Consider a mandatory arbitration clause. If a consumer doesn’t understand what arbitration is and how agreeing to it restricts their opportunities, how could they possibly negotiate with a company’s legal team about it?

Furthermore, even if a consumer had the wherewithal to understand the substance of a contract, and wanted to effectuate change to the contract’s clauses, there is an enormous power imbalance at play. Most consumers do not have the time, money, or resources of a corporation available to mobilize towards demanding better terms.

Finally, if a consumer wants, or needs, to use this particular company’s product or service, they lack alternatives. In the bargained-for contract scenario, both parties negotiate with the understanding that if the scales tip too far in either direction, the other party can freely leave and find a better option elsewhere. That is not so in the consumer context. Consumers who want to use a particular product effectively must accept the company’s terms and conditions. Often, competitors will offer the same boilerplate terms and conditions, leaving the consumer with no meaningful alternative.

There are myriad issues with this legal fiction.

Here is where it might lead you

It is taught in introductory Contracts courses that the doctrine of unconscionability creates a protection for consumers from these adhesion contracts. Unconscionability refers to the discretionary ability for judges to evaluate whether a contract provision is so imbalanced, so detrimental to a consumer, that it must be deleted from the contract entirely.

Unconscionability is not an appropriate solution. It does not resolve any of the issues mentioned. All it does is create a high water mark, beyond which companies can not go. It says nothing about the vast realm of contractual clauses binding on consumers that fall short of stirring a judges’ conscience. It is unfair for consumers to be bound to the terms of enormous legal documents that they almost certainly will not read, so long as those terms do not erode substantive and procedural rights so drastically that they sufficiently tug the heartstrings of the justice system.

Instead, this legal fiction should be eliminated in its entirety.

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