Unconscionability Essay

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1.0 Introduction According to Black Law Dictionary, unconscionability is a doctrine under which court may deny enforcement of unfair or oppressive contracts because of procedural abuse or substantive abuse arising out of the contract formation, such as terms which violate reasonable expectations of parties or which involve gross disparities in price; either abuse can be the basis for a finding of unconscionability. The general principle for unconscionability is, when one party by some reason of some conditions or circumstances is placed at a special disadvantage regarding an unfair and unconscientious advantage is taken, the court will set aside the transaction on the ground of ‘unconscionable conduct’. It is undeniable that doctrine of unconscionability is a basis for undue influence and both of these doctrines share a lot of similarities. However, the main issue that arises is: whether the doctrine of unconscionability is appropriate to form the underlying basis for a claim of voidable contract on the ground of undue influence. 2.0 Elements for unconscionability In order to answer the issue which is stated above, it is pertinent to discuss the elements of the two doctrines. First we need to discuss the elements of unconscionability. In the case of Fry v Lane , the court suggested that there are three elements to establish unconscionability. First, one party must be at a special disadvantage to the other, for instance, poverty, ignorance or lack of advice. Secondly, this weakness must be exploited by the other party in some morally culpable manner. Thirdly, the resulting transaction must not be merely harsh or improvident, but overreaching and oppressive. When the terms of the contract are so oppressive and outrageous that it... ... middle of paper ... ... I am of the view that the doctrine of unconscionability is not appropriate to form an underlying basis for voidable contract on the ground of undue influence. This is because both of the doctrines embrace different elements and principles and therefore the doctrine of unconscionability is not appropriate to be submerged in the doctrine of undue influence within section 16(3)(a). Both doctrines have evolved quite separately to meet the justice of different factual situations. It is suggested that Malaysia should import a wider ground of doctrine of unconscionability which is independent from the doctrine of undue influence into the Malaysian Contract Law in order to overcome contractual fairness. Quoted by Gopal Sri Ram J in the case of Saad Marwi, Malaysia should adopt the English doctrine of unconscionability and apply it in a broad and liberal way as in Canada.

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