Delaware is a contractarian jurisdiction and, as a result, claims for unconscionability are rarely successful. This recent decision from the Complex Commercial Litigation Division of the Delaware Superior Court demonstrates the difficulties, even at the pleadings stage, that face sophisticated parties asserting unconscionability claims.
In response to a complaint asserting breach of a services contract during the height of the COVID-19 pandemic, the contractual counterparty (“Arrive”) filed counterclaims, including a claim for unconscionability. On the counterclaim defendant’s motion to dismiss, the Court examined the transaction to determine if it was either substantively or procedurally unconscionable.
Substantive unconscionability concerns whether the terms of the contract “evidence a gross imbalance that ‘shocks the conscience.’” The Court found no substantive unconscionability because Arrive’s counterclaim failed to indicate what terms of the contract were unconscionable. The Court then moved onto procedural unconscionability, which looks to the parties’ relative bargaining power. In finding no procedural unconscionability, the Court pointed to Arrive’s size and customer base, which indicated that Arrive was a sophisticated party and “not one in an unequal bargaining position.” Finally, the Court rejected Arrive’s argument that the pandemic put Arrive in an unequal position, finding that while the pandemic “undoubtedly caused complications for Arrive”, it did not render the contract negotiations procedurally unconscionable. Accordingly, the Court dismissed the unconscionability counterclaim.
