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Unconscionability

Unconscionability

The test for unconscionability of a bargain was set out by the Court of Appeal in Do v Nichols 2016 BCCA 128 which followed the previous BC appeal decision of Loychuck v Cougar Mountain Adventures Ltd. 2012 BCCA 122:

“The language used to express the test for unconscionability has varied over the years, but a plea that a contract is unconscionable invokes relief against an unfair advantage gained by an unconscientious use of power by a stronger party against a weaker.

In such a claim the material ingredients are proof of inequality in the position of the parties arising out of the ignorance, need, or distress of the weaker, which left him or her in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger.

On proof of those circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable.”

In McNeill v Vandenberg 2010 BCCA 583 the court stated that in order to set aside a bargain for unconscionability, a party must establish:

  1. inequality in the position of the parties arising from the ignorance, need, or distress of the weaker, which left him or her in the power of the stronger; and
  2. proof of substantial unfairness in the bargain.

In Principle Investments, Ltd. v Thiele Estate(1987 , 12 BCLR) (2d) 258 at 263 the court stated:

Two elements must be established before a contract can be set aside in the grounds of unconscionability:

  1. The first is proof of inequality in the position of the parties arising out of some factors such as ignorance, need, or distress of the weaker, which leaves him or her in the power of the stronger.
  2. The second element is proof of substantial unfairness in the bargain obtained by the stronger person. The proof of the circumstances creates a presumption of fraud which the stronger must repel by proving the bargain was fair, just and reasonable.

The onus lies in the party seeking to establish to the bargain was unconscionable.

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