Introduction

The doctrine of unconscionability has been widely adopted in the law of contract by many jurisdictions. It is a legal redress for a party who makes an unfair contract. In general, a contract is held to be unconscionable when the court believes that it contains one or more contractual terms which are substantially unfair to one party. A typical example is an add-on clause in a consumer credit sale which provides that all of the goods previously purchased by the buyer from the seller will be used as security for the debts incurred with the current purchase, and that a single default by the buyer could permit the seller to repossess all of the goods. Such a contractual term may be unenforceable in both the UK and the US, although the legal rules are based upon different grounds. In the US it contravenes Section 2–302 of the Uniform Commercial Code (UCC) and is treated as an unconscionable term. In the UK there is no doctrine of unconscionability in general contract law, but the legal consequence is the same for a different reason; the term violates Regulation 8 of the Unfair Terms in Consumer Contracts Regulations 1999. The same result can probably be reached in Germany for a breach of Article 138 of the German Civil Code (BGB).