What constitutes an unconscionable transaction in contract law?
Ontario, Canada
The following excerpt is from Schofield v. Schofield, 2021 ONSC 2285 (CanLII):
[87] An unconscionable transaction arises in contract law where there is an overwhelming imbalance in the power relationship between the parties or an “inequality in bargaining power”. Consent to the contract/transaction will be considered legally ineffective if it can be shown that there was such a disparity in the relative positions of the parties that the weaker party was not in a position to choose freely. This circumstance may arise when the person: “may be intellectually weaker by reason of disease of the mind, economically weaker or simply situationally weaker because of temporary circumstances […] The comparative weakness or special relationship is, in every case, a fact to be proven.”: Norberg v. Wynrib, 1992 CarswellBC 155 (S.C.C.), paras. 30, 33 & 34.
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