Modern building.Modern office building with facade of glass
Representing Businesses and Business Owners Contact Us Now!
Published on:

FORT LAUDERDALE BUSINESS LITIGATION: UNCONSCIONABLE CONTRACTS

In business litigation, Florida courts will not enforce an agreement if the agreement is unconscionable. Under Florida law, “before a court may hold a contract unconscionable, it must find that it is both procedurally and substantively unconscionable.” Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278 (Fla. 1st DCA 2003). It is therefore important for businesses to understand that its negotiation process and substantive contract terms may be scrutinized by Florida courts in breach of contract actions if a defense of unconscionability is raised. Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

“The concept of unconscionability does not mean, however, that a court will relieve a party of his obligations under a contract because he has made a bad bargain containing contractual terms which are unreasonable or impose an onerous hardship on him.” Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278 (Fla. 1st DCA 2003). “It is only where it turns out that one side or the other is to be penalized by the enforcement of the terms of a contract so unconscionable that no decent, fair-minded person would view the ensuing result without being possessed of a profound sense of injustice, that equity will deny the use of its good offices in the enforcement of such unconscionability.’” Steinhardt v. Rudolph, 422 So. 2d 884 (Fla. 3d DCA 1982).

Under Florida law, courts will only find a contract to be unconscionable if it is both procedurally and substantively unconscionable. Bellsouth Mobility LLC v. Christopher, 819 So. 2d 171 (Fla. 4th DCA 2002). However, while both elements must be present, they do not have to be present to the same degree. Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014). In Basulto, Florida’s Supreme Court held that court should use a “sliding scale” approach when both procedural and substantive unconscionability are present to some degree. This sliding scale analysis employs “a balancing approach . . . allowing one prong to outweigh another provided that there is at least a modicum of the weaker prong.” SHEDDF2-FL3, LLC v. Penthouse S., LLC, 314 So. 3d 403 (Fla. 3d DCA 2020). “The more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa.” 12550 Biscayne Condo. Ass’n, Inc. v. NRD Investments, LLC., 46 Fla. L. Weekly D2401 (Fla. 3d DCA Nov. 10, 2021).

Procedural unconscionability relates to the manner in which a contract is made and involves consideration of issues such as the bargaining power of the parties and their ability to know and understand disputed contract terms. 12550 Biscayne Condo. Ass’n, Inc. v. NRD Investments, LLC., 46 Fla. L. Weekly D2401 (Fla. 3d DCA Nov. 10, 2021). A contractual provision is procedurally unconscionable if the alleged non-breaching party lacked “meaningful choice” about the provision in question. Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278 (Fla. 1st DCA 2003). To determine whether a contract is procedurally unconscionable, a court must look to the “circumstances surrounding the transaction” to determine whether the complaining party had a “meaningful choice” at the time the contract was entered. Kohl v. Bay Colony Club Condo., Inc., 398 So. 2d 865 (Fla. 4th DCA 1981). “Among the factors to be considered [while determining whether a contractual provision is procedurally unconscionable] are whether the complaining party had a realistic opportunity to bargain regarding the terms of the contract, or whether the terms were merely presented on a ‘take-it-or-leave-it’ basis; and whether he or she had a reasonable opportunity to understand the terms of the contract.”

A substantively unconscionable contract is one that “no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other.” Woebse v. Health Care & Ret. Corp. of Am., 977 So. 2d 630 (Fla. 2d DCA 2008). For substantive unconscionability, courts must determine whether the contractual terms are “so outrageously unfair as to shock the judicial conscience. Courts do not equate unconscionability with mere unreasonableness.” Belcher v. Kier, 558 So. 2d 1039 (Fla. 2d DCA 1990).

Ultimately, the overarching policy in Florida is that unconscionability is a highly disfavored defense. For example, in CC-Aventura, Inc. v. The Weitz Co., LLC, the United States District Court for the Southern District of Florida enforced a limitation-of-liability provision in a contract because there was no procedural or substantive unconscionability. 2009 WL 3326806 (S.D. Fla. Oct. 9, 2009). CC-Aventura held that the plaintiff was a sophisticated party who had multiple opportunities to knock out the objectionable terms. Moreover, CC-Aventura found no substantive unconscionability because “there is nothing inherently shocking or unfair about limitation-of-liability provision.” CC-Aventura, Inc. v. The Weitz Co., LLC, 2009 WL 3326806 (S.D. Fla. Oct. 9, 2009).

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.

Contact Information