Contractual Unconscionability Under Washington Law

One defense to the enforcement of a contract, or parts of a contract, is that the contract is unconscionable.  

​Under Washington law, whether a contract is unconscionable is a question of law, and the burden of proving unconscionability “lies upon the party attacking it.” Tjart v. Smith Barney, Inc., 28 P.3d 823, 830 (Wash.Ct.App. 2001). The law recognizes two types of unconscionability: substantive and procedural. Id. Either type may be “sufficient to void a contract.” Gandee v. LDL Freedom Enters., Inc., 293 P.3d 1197, 1199 (Wash. 2013). Substantive unconscionability means “an ‘unfairness of the terms or results.'” Tadych v. Noble Ridge Constr., Inc., 519 P.3d 199, 202 (Wash. 2022) (quoting Torgerson v. One Lincoln Tower, LLC, 210 P.3d 318, 322 (2009)). Such unfairness arises when contract terms are “one-sided or overly harsh,” “[s]hocking to the conscience,” “monstrously harsh,” or “exceedingly calloused,” and interfere with “existing statutorily established rights and the policies underlying those statutory rights.” Id. (quoting Gandee, 293 P.3d at 1199). Procedural unconscionability is “the lack of meaningful choice, considering all the circumstances surrounding the transaction including the manner in which the contract was entered, whether each party had a reasonable opportunity to understand the terms of the contract, and whether the important terms were hidden in a maze of fine print.” Satomi Owners Ass'n v. Satomi, LLC, 225 P.3d 213, 231 (Wash. 2009) (internal brackets and quotation marks omitted) (quoting Zuver v. Airtouch Commc'ns, Inc., 103 P.3d 753, 759 (Wash. 2004)).

Rosskamm v. Amazon.com​, C22-1553JLR (W.D. Wash. Jan 24, 2024).

In Tadych v. Noble Ridge Construction, Inc., 529 P.3d 199 (2022), the Washington State Supreme Court reviewed a contract dispute that arose out of a contract that reduced the statutory 6-year statute of limitations to 1-year.   Here is how our State's High Court analyzed these facts under a contractual unconsionability lens: 

¶18 Here, the Tadychs are laypersons, and Noble Ridge drafted the contract, including the one-year limitation provision. No indication exists that this one-sentence provision was bargained for, negotiated, or any separate consideration paid. The limitation provision was included within one of three paragraphs on warranties, 10 pages into a 14-page contract. The waiver is in no sense prominent and has little, if anything, to do with a warranty. It operates as the opposite of what would be considered a warranty.

CONCLUSION

¶19 A contract provision becomes substantively unconscionable when it eliminates otherwise established statutory rights and is one sided, benefiting the contract drafter, is also not prominently set out in the contract, is not negotiated or bargained for, and provides no benefit to the affected party. Based on this, we hold here that this limitation provision is void and unenforceable. We further hold that under chapter 4.16 RCW, the Tadychs’ suit is timely. We reverse the Court of Appeals and remand for trial.
​

Tadych v. Noble Ridge Construction, Inc., 529 P.3d 199 (2022).