Massachusetts Real Estate License Practice Test

Which type of contract is considered unfair and may not be enforced by the court?

1. Unilateral Contract

2. Unconscionable Contract

3. Bilateral Contract

4. Voidable Contract

The correct answer is: Unconscionable Contract

An unconscionable contract is deemed unfair due to the significant imbalance in the terms and the ability of one party to impose its will on another. This often arises in situations where there is a lack of meaningful choice for one party, usually because of extreme bargaining power disparities, or where the terms of the contract are overwhelmingly unjust. Courts may refuse to enforce such contracts to uphold principles of fairness and equity in legal agreements. In contrast, a unilateral contract involves a promise made by one party in exchange for the act of another party and can be enforced if the act is performed. A bilateral contract consists of mutual promises between two parties and is generally enforceable as long as both parties fulfill their obligations. Lastly, a voidable contract is one that can be upheld or canceled at the option of one party due to certain conditions (such as misrepresentation or undue influence), but it remains valid until one party chooses to void it. Thus, an unconscionable contract stands out as explicitly problematic, often not recognized by courts due to its inherently unfair nature.