What is the test for an unconscionable loan agreement?
British Columbia, Canada
The following excerpt is from Connor Financial Services International Inc. v. Laughlin, 2015 BCSC 587 (CanLII):
The Laughlins argue that the loan agreement was unconscionable. I agree that it was. Many times our Court of Appeal has expressed the test as follows for setting aside an agreement on the ground of unconscionability. A party must establish inequality in the position of the parties arising from the ignorance, need, or distress of the weaker which left him in the power of the stronger, and must establish proof of substantial unfairness in the bargain. See McNeill v. Vandenberg, 2010 BCCA 583 at para. 15, as one relatively recent instance where that expression of the test was adopted in that court.
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