law-contract of adhesion | one-sided | unconscionable | contrary to public policy | boilerplate contract | consideration
| mutuality of obligation | validity of and enforceability of arbitration clauses | enforcing forum selection clause |
CHALLENGES TO VALIDITY AND ENFORCEABILITY OF CONTRACT, CONTRACTUAL PROVISIONS
Disparity in bargaining power is most commonly described as occurring when one party has no choice but to
accept an agreement limiting the liability of another party. Allright, Inc. v. Elledge, 515 S.W.2d 266, 267 (Tex. 1974).
In Hernandez’s affidavit, he claimed that he was not able to obtain any legal advice, he does not have formal
business school training, he was unaware of the “contract provision when [he] signed it,” and that “the documents”
were presented to him on a “take-it-or-leave-it” basis. But a bargain is not negated because one party may have
been in a more advantageous bargaining position. In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 679 (Tex. 2006).
Rather, we consider whether a contract results in unfair surprise or oppression. Id. The forum-selection clause in the
Restructuring Agreement was in all capital letters and was similar to the clause in the Master Agreement.
Additionally, parties to a contract have an obligation to protect themselves by reading what they sign and, absent a
showing of fraud, cannot excuse themselves from the consequences of failing to meet that obligation. In re
Prudential, 148 S.W.3d at 134. Hernandez’s statements do not evidence overreaching or trickery by Lyon. They
show a transaction where Lyon offered to do business on a specified basis and MNI accepted.
In re Lyon Financial Services, Inc., No. 07-0486, 257 S.W.3d 228 (Tex. June 20, 2008)(per curiam) (orig. proc.)
(mandamus, forum selection clause, motion to dismiss improperly denied)
As additional evidence of unfairness and overreaching, MNI points to the clause permitting Lyon to litigate its claims
in either Texas or Pennsylvania while limiting MNI to seeking relief in Pennsylvania. MNI also claimed that the
inclusion of the forum-selection clause created an adhesion contract with Lyon. Parties have the right to contract as
they see fit as long as their agreement does not violate the law or public policy. Id. at 129. In the arbitration context,
arbitration clauses generally do not require mutuality of obligation so long as adequate consideration supports
the underlying contract. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 757 (Tex. 2001).
MNI has not made any claim that either the Master Agreement or Restructuring Agreement were not supported by
adequate consideration. However, we must also decide if the forum-selection clause was “so one-sided that it is
unconscionable under the circumstances when the parties made the contract.” In re Palm Harbor Homes, 195 S.W.
3d at 678. As previously discussed, the circumstances under which the contracts were made do not show that the
clause is so one-sided as to be unconscionable. Further, even if we assume that the agreement constituted a
contract of adhesion, as MNI contends, we have held on numerous occasions that adhesion contracts are not per
se unconscionable or void. Id.; In re AdvancePCS Health L.P., 172 S.W.3d 603, 608 (Tex. 2005); In re Oakwood
Mobile Homes, Inc., 987 S.W.2d 571, 574 (Tex. 1999).
In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006) (“The test for substantive unconscionability is
whether, given the parties’ general commercial background and the commercial needs of the particular trade or
case, the clause involved is so one-sided that it is unconscionable under the circumstances existing when the
parties made the contract.” (internal quotation marks omitted)).
Source: In Re Fleetwood Homes of Texas, LP, 257 S.W.3d 692 (Tex. 2008) (orig. proc.)(arbitration clause enforced,
no waiver)