Unconscionability in the Law and Practice of Franchising

This study examined the operation of unconscionability in the law of franchising and the nature of existence of unconscionability in practice of franchising. Franchising is relatively a new branch of commercial law and practically opened to various forms of abuses by the franchisors and franchisees. Meanwhile, unconscionability has a rather uncertain scope within the general sphere of contract law. It is therefore, important to also identify the true nature of franchising, the development of unconscionability and its relationship with the relevant contractual theories and other doctrines or notions, the probabilities of unconscionable practices in franchising and the totality of the whole spectrum of the idea of unconscionability from the legal perspectives. Applying the qualitative approach by means of inductive reasoning using the historical research method, this study found that franchising resulted from the commercial practices or conveniences rather than any legal tradition. It is multidimensional in nature, which incorporates, among other, the concept of contract law, a notion of licence and some features of usufruct. Unconscionability is the most proper doctrine to deal with the abuses and unfair practices that occur in franchising. In fact, there are probable occurrences of unconscionable practices in franchising in Malaysia based on the empirical studies of actual cases. As unconscionability is still evolving and the formulation of another parameter could still be contemplated, a new parameter is proposed in this research whereby the broad doctrine of unconscionability encompasses fairness, good faith, fair dealing and undue influence, while inequality of bargaining power and honesty in certain circumstances become the supporting factors in proving unconscionability. From this research, it is concluded that unconscionability is the situation whereby the contract is entered into, negotiated and obtained. As the contract is a bargain, when the bargain is unconscionable it becomes unconscionable bargain. Unconscionability is an essential doctrine in the law of contract and the formulation of the new parameters of unconscionability in the contract law is also applicable to the law of franchising. The parameters can assist in promoting conscionability in the franchise business environment locally and internationally

Sound the Alarm: Limitations of Liability in Alarm Service Contracts

Home and business owners increasingly rely on alarm systems to protect against theft and property damage. When a burglary or fire occurs and an alarm service customer discovers that the alarm company negligently failed to call the police or fire department, the customer understandably would expect redress for the company’s failure to provide its service. Many customers would be surprised, though, to discover that an alarm company’s liability is often contractually limited to a relatively token amount unrelated to the cost of the service, even when the alarm company is negligent. Some states view these limitations of liability as exculpatory clauses and determine their enforceability based on whether they are unconscionable or violate public policy. Other states view them as liquidated damages and apply a penalty test to determine their enforceability. This Note addresses the differences between these two approaches in the context of the unique remedy difficulties inherent in alarm service contracts. This Note then argues that the prevailing policy rationales for enforcing alarm service provisions that limit a party’s liability for its own negligence are misguided and advocates that these provisions should not be enforced as a matter of public policy

A Complainant-Oriented Approach to Unconscionability and Contract Law

This Article draws attention to a conceptual point that has been overlooked in recent discussions about the theoretical foundations of contract law. I argue that, rather than enforcing the obligations of promises, contract law concerns complaints against promissory wrongs. This conceptual distinction is easy to miss. If one assumes that complaints arise whenever an obligation has been violated, then the distinction does not seem meaningful. I show, however, that an obligation can be breached without giving rise to a valid complaint. This Article illustrates the importance of this conceptual distinction by focusing first on the doctrine of substantive unconscionability. I claim that the doctrine can be best explained by the way in which a party who engages in exploitative behavior may lose her moral standing to complain. It is because such a party has lost her moral standing to complain that the law, through unconscionability doctrine, bars her from bringing a legal complaint. This explanation avoids the oft-issued charge of paternalism and it also offers benefits over an alternative state-oriented account developed recently by Seana Shiffrin. Using the conceptual distinction behind this account of unconscionability, this Article further argues that recent theoretical debates about the relationship between contract law and morality have been largely misconceived. Those debates have focused on whether contract law and morality impose parallel obligations. Once one appreciates the difference between imposing obligations and recognizing complaints, the comparison looks quite different. Contract law recognizes valid complaints against broken promises, much as morality recognizes moral complaints