While it is not terribly unusual to see a defense of “unconscionability” raised in an action for breach of contract, it is quite rare for a court to find that a contract is “so outrageous as to warrant holding it unenforceable” because it is substantively unconscionable.
The rare case recently arose in the Commercial Part of the Supreme Court in Nassau County. In Day Op of North Nassau, Inc. v. Viola, 16 Misc.3d 1122(A), 2007 WL 2305035 (Nassau Co. Aug. 1, 2007), Justice Ira B. Warshawsky found a provision of a shareholders’ agreement that would have terminated a shareholder’s ownership interest without cause to be unconscionable and unenforceable. The case provides useful lessons for counsel both from a contract-drafting perspective and with respect to strategies in implementing and enforcing contracts.
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