Unconscionable Contracts and Contracts of Adhesion in California: When a Court Will Not Enforce One-Sided Terms

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

An unconscionable contract is one that was both unfairly formed and unreasonably one-sided. If a California court finds that a contract or clause was unconscionable when it was made, it may refuse enforcement, cut the clause, or limit how the clause applies. (Civ. Code, § 1670.5, subd. (a).) The bar is high, and an ordinary bad bargain is not enough. Kolmogorov Law, P.C. litigates these disputes for businesses that signed a form and businesses whose form is challenged.

Call (909) 235-6116 or contact us online to discuss a one-sided term your business wants out of, or a challenge to your own standard terms.

What an unconscionable contract is under Civil Code section 1670.5

The statute is short. It applies when the court finds, as a matter of law, that a contract or any clause of it was unconscionable at the time it was made. The court may then refuse to enforce the contract. It may enforce the remainder without the clause, or limit the clause so as to avoid an unconscionable result. (Civ. Code, § 1670.5, subd. (a).)

Two details in that text matter. The test looks at the day the contract was made, not at how the deal turned out. And the court makes the finding as a matter of law, so the judge decides.

The two-part test: unfair process and unfair terms

The California Supreme Court describes unconscionability as an absence of meaningful choice for one party, together with terms that are unreasonably favorable to the other. The doctrine has a procedural element and a substantive element. The first focuses on oppression or surprise due to unequal bargaining power. The second focuses on overly harsh or one-sided results. (Sanchez v. Valencia Holding Co. (2015) 61 Cal.4th 899, 910.)

Both elements must be present, though not in the same degree. Courts apply a sliding scale: the more oppressive the term, the less evidence of an unfair process is required, and the reverse. (Ibid.)

The same decision sets the bar high. The party asserting unconscionability bears the burden of proof. An ordinary bad bargain is not enough, and a party cannot escape a contract by complaining afterward that the deal was unfair. (Id. at p. 911.)

Oppression means unequal bargaining power that produced no real negotiation and no meaningful choice. Surprise means the term was hidden in a long printed form drafted by the party now trying to enforce it. (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.)

Contract of adhesion: the take-it-or-leave-it form

A contract of adhesion is a standard form prepared by the stronger party and offered with no real chance to bargain.

Adhesion starts the analysis. It does not finish it. In Sanchez, the adhesive nature of the contract was enough to establish some degree of procedural unconscionability, and the court then examined each challenged term for unfairness. (Sanchez, supra, 61 Cal.4th at p. 915.) A form contract with fair terms is enforced like any other.

Can a business claim unconscionability?

It can. Section 1670.5 applies to all contracts and is not limited to sales governed by the Commercial Code. (A & M Produce, supra, 135 Cal.App.3d at pp. 484-485.)

The same court described the obstacle. Courts tend to see a business owner as having more commercial understanding and more economic strength than a consumer, so a business usually has a harder time proving surprise or unequal bargaining power. The court declined to turn that into a rule. An experienced company can still be surprised by a term in a printed form, and even a large one may have little bargaining power against a particular counterparty. (Id. at pp. 489-490.)

The facts show what carried the claim. A relatively small farming company bought a machine from a large diversified manufacturer on the manufacturer's preprinted form. The form disclaimed warranties and excluded consequential damages. The court upheld a finding that both terms were unconscionable. The terms were not negotiable and the bargaining power was lopsided. The form also allocated commercial risk in an unreasonable way. (Id. at pp. 489-493.)

How the question reaches a business

A bakery signs a five-year equipment lease on the lessor's form. Small type on the back waives every defense to payment, even if the equipment never works.

A staffing vendor's master agreement lets the vendor raise rates on notice. The customer is locked in for three years, with a termination fee equal to all remaining payments.

Each dispute asks how the term was presented and how far it tilts.

What the court can do, and what evidence it hears

When unconscionability is claimed, the parties must be given a reasonable opportunity to present evidence of the clause's commercial setting, purpose, and effect. (Civ. Code, § 1670.5, subd. (b).) The drafter can use it to explain why the term exists.

A court that finds one clause unconscionable can cut it and enforce the rest, or refuse the whole agreement. Our page on severability clauses explains how that choice is made.

Some terms fail on other grounds. A clause that excuses a party's own fraud is against the policy of the law, as our page on exculpatory clauses and Civil Code section 1668 explains. Caps on damages are covered on our page about limitation of liability clauses. Whether a user agreed to online terms at all is covered on our page about clickwrap and browsewrap terms.

If your business signed the one-sided form

Start with how the contract reached you. Who sent it, and was there time to review it? Did you ask for changes, and what was the answer? Could you have bought the same thing elsewhere on better terms?

Then isolate the clause that does the harm, because the statute lets a court deal with a single term. We read the contract first, because other defenses to a contract claim may be stronger than this one.

If your form contract is under attack

Useful proof includes negotiated changes made for other customers, competing suppliers the customer could have used, and the place and prominence of the term on the page. So does the business reason for the clause. A challenge to an arbitration clause is raised on a motion to compel arbitration, though a clear and valid delegation clause can send the challenge to the arbitrator.

What to bring to the first meeting

The signed contract, order forms, and any terms it incorporates by reference.
Emails and drafts showing what was negotiated, requested, or refused.
The demand letter, complaint, or motion that raises the clause.
A short account of what the clause has cost, or would cost, in practice.

Frequently asked questions

A vendor's contract has terms so one-sided we never would have agreed if we had read them. Can a California court refuse to enforce it?

Sometimes. Under Civil Code section 1670.5, a California judge may refuse to enforce a contract or clause that was unconscionable when made. You would need to show an unfair process, such as a hidden term in a form you could not negotiate, and terms that are unreasonably harsh. Regret after signing is not enough, because the doctrine does not reach an ordinary bad bargain.

What makes a contract unconscionable in California?

Two things together. The process must have involved oppression or surprise, meaning no real choice or a term buried in a form. The terms must also be overly harsh or unreasonably favorable to the other side. California courts weigh the two on a sliding scale, so a very harsh term needs less proof of an unfair process.

Is a contract of adhesion enforceable in California?

It can be. A contract of adhesion is a standard form offered on a take-it-or-leave-it basis. The California Supreme Court has said that the adhesive character of a contract establishes some procedural unconscionability, and that this does not by itself prevent enforcement. A court then asks whether a particular term is also unreasonably one-sided.

We are a small company and signed a large supplier's standard form with no chance to change anything. Does that alone make the contract unenforceable?

No. Lack of negotiation helps with the procedural half of the California test, but you must also prove that the specific term is unreasonably harsh. A California appellate court has upheld an unconscionability finding for a small business on those two showings together. Expect the supplier to offer evidence of the term's commercial purpose.

Who decides whether a contract is unconscionable?

The judge. California's statute speaks of the court finding unconscionability as a matter of law, and it directs the court to let both sides present evidence about the clause's commercial setting, purpose, and effect before ruling. The party attacking the clause carries the burden of proof on the issue.

Talk to a California breach of contract attorney

If your business is fighting a one-sided clause, or your own contract terms are being challenged, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is a business litigation firm in Irvine, California, that represents companies and their owners in business, commercial, and intellectual property disputes, in court and in arbitration.

This page provides general information about California law and is not legal advice. Outcomes depend on the contract, how it was formed, and the court.