Private Law Theory

ABSTRACT
Racially discriminatory contracts should be paradigmatically unconscionable in contract law. The unconscionability doctrine permits a court to refuse to enforce an unfair contract. Classically interpreted, the doctrine narrowly conceptualizes an unfair contract as an extremely nonstandard contract obtained by manipulating or circumventing the disadvantaged party’s decision-making abilities. But racial discrimination can be the market norm, and bargaining disadvantages occasioned by racial discrimination are not usually incapacitating. Racially discriminatory contracts are thus typically not unconscionable, and when they are, it is only incidentally and for reasons having little to do with their discriminatory character.

The unconscionability doctrine’s failure to reach discriminatory contracts is problematic. Declining to apply the unconscionability doctrine to racially discriminatory contracts suggests that exploiting racial inequality is a suitable form of bargaining, and that racial discrimination is objectionable merely because of the negative externalities it produces. Statutory antidiscrimination law’s fixation on comparators and classifications is also underinclusive. Unconscionability’s overly narrow vision of contractual equality thus distorts the moral character of racial discrimination and facilitates legal enforcement of racially discriminatory contracts.

Although numerous states have loosened unconscionability’s classical requirements, the classical interpretation still usually supplies the basic framework for unconscionability. But there are indications of a promising alternative. Drawing on recent arbitration jurisprudence, this Article advances a ‘basic interests’ approach to the unconscionability doctrine. Under this approach, the doctrine would ask whether contract enforcement is consistent with treating the parties as equals—not just with respect to their capacities for choice, but with respect to their basic interests and inalienable rights. Racially discriminatory contracts would paradigmatically fail to meet this standard.

Tsuruda, Sabine, Race, Unconscionability, and Contractual Equality (November 26, 2024), Harvard Civil Rights – Civil Liberties Law Review (forthcoming).