The Consequences of Signing a One-Sided Contract: Enforceability and Leverage

The Consequences of Signing a One-Sided Contract

Unfair Does Not Always Mean Unenforceable

The Consequences of Signing a One-Sided Contract. Clients are often surprised to learn that signing a one-sided or “unfair” contract does not automatically render the agreement void or unenforceable. In New Jersey, courts enforce contracts as written unless the agreement violates a specific legal principle, such as unconscionability, duress, fraud, or public policy. A contract that is merely unfavorable or skewed in one party’s favor will generally be upheld, particularly when entered into by sophisticated business parties. The burden is on the party seeking to avoid enforcement to prove that the agreement is not only lopsided, but also substantively or procedurally unconscionable to a legally significant degree.

The assumption that a court will “fix” or refuse to enforce a harsh agreement is legally incorrect and strategically dangerous. Once a contract is signed, the focus shifts to enforcement—not fairness. That is why it is critical to evaluate the terms of any business agreement before execution and to understand both the enforceability and strategic leverage that such terms may produce in litigation.

Unconscionability Under New Jersey Law: A High Bar

New Jersey courts recognize the doctrine of unconscionability, but they do not apply it lightly. To succeed on this ground, the party seeking to invalidate the contract must demonstrate both procedural and substantive unconscionability. Procedural unconscionability refers to unfairness in the formation of the contract, such as deception, coercion, unequal bargaining power, or lack of meaningful choice.

Substantive unconscionability addresses the actual terms of the agreement—whether they are so harsh, oppressive, or one-sided as to “shock the conscience.”

This two-part test is drawn from longstanding New Jersey case law. New Jersey Courts have repeatedly stated that unconscionability requires more than a showing that the agreement was merely “unfair.” It must be oppressive to a degree that undermines the foundational fairness principles of contract law.

In commercial cases, where both parties are represented by counsel or possess meaningful business experience, courts are even less likely to find unconscionability. New Jersey jurisprudence consistently supports the enforcement of freely negotiated contracts, even when the terms strongly favor one party.

Adhesion Contracts and Unequal Bargaining Power

While the term “adhesion contract” is often used as shorthand for a one-sided or boilerplate agreement, it has a specific meaning under New Jersey law. An adhesion contract is a standardized agreement presented on a take-it-or-leave-it basis, with no opportunity for negotiation. These are commonly found in consumer transactions, insurance policies, and software license agreements.

In commercial litigation, however, courts are cautious about applying the adhesion doctrine unless there is a clear imbalance in sophistication or bargaining power. For example, a small business owner negotiating with a multinational corporation may raise legitimate concerns about lack of meaningful choice. But two businesses operating at arms’ length, both represented by counsel, are unlikely to succeed in challenging the contract based on adhesion or coercion alone.

Unilateral Terms May Be Enforceable, But They Shift Leverage

Certain contract provisions, while harsh, are enforceable unless barred by statute or clear public policy. These may include limitations on damages, waiver of jury trial rights, indemnification clauses, unilateral modification rights, restrictive covenants, or exclusive remedies. Courts generally uphold such provisions so long as they are not hidden, overly vague, or used in a deceptive manner.

For example, a limitation of liability clause that restricts recovery to the contract price, or that excludes consequential damages, is presumptively enforceable under New Jersey law unless it contravenes specific consumer protection statutes or was induced by fraud. The same is true for arbitration provisions, forum selection clauses, and class action waivers. Unless those clauses are procedurally unconscionable or violate statutory mandates, they will be upheld.

The real-world impact of these provisions is not just legal—it is tactical. A party entering into a one-sided contract often loses critical leverage in future disputes. If the agreement includes a broad indemnification clause, for example, the indemnifying party may be forced to fund litigation or absorb losses they never anticipated. Similarly, a unilateral termination clause may deprive one party of contractual rights with little recourse.

Mistake, Duress, and Fraud: Narrow Paths to Relief

In rare cases, a party may succeed in avoiding enforcement by proving legal mistake, economic duress, or fraudulent inducement. Each of these doctrines is narrowly applied in New Jersey.

A mutual mistake must concern a basic assumption on which the contract was made, and it must have a material effect on performance. A unilateral mistake, standing alone, is insufficient unless the other party knew or should have known of the mistake at the time of contracting.

Economic duress requires proof that a party’s agreement was the result of wrongful or unlawful pressure that left them with no reasonable alternative. Mere financial hardship or a tough negotiating position is not enough.

Fraud requires proof of a material misrepresentation, made with knowledge of its falsity, with intent to induce reliance, and that reliance resulted in damages. Importantly, failure to read the contract or to ask questions about its terms is not a defense. A party’s failure to conduct due diligence does not create a claim for fraud.

What Business Clients Should Take Away

Signing a one-sided contract may not give rise to a legal defense, but it does have consequences—both in court and at the negotiating table. Harsh provisions can impair claims, limit damages, reduce leverage, and shift risk. Once signed, even grossly unfair provisions are difficult to unwind.

This is particularly true in business-to-business transactions, where courts expect parties to understand the risks they are accepting. The law does not protect against bad bargains. It protects against legally defective ones.

Clients must review proposed agreements with a clear understanding of how those terms will function in litigation. Risk allocation, damage caps, indemnification provisions, and venue clauses are not abstract. They are enforceable terms that directly shape the outcome of future disputes. Entering into a contract without understanding those provisions is equivalent to waiving rights before knowing they exist.

Conclusion

New Jersey courts do not rewrite bad contracts. Unless a contract violates a specific legal principle, it will be enforced as written, even if it heavily favors one party. The best protection is not posturing for unconscionability after the fact. It is negotiating better terms, understanding the risks, and documenting all communications before the agreement is executed.

For more information about your legal rights or to schedule a consultation, please contact the Law Offices of Peter J. Lamont at www.pjlesq.com, call 201-904-2211, or email info@pjlesq.com.

Contact us today to discuss your business or legal matter. Put our 20+ years of legal experience to work for you.

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For detailed insights and legal assistance on topics discussed in this post, including litigation, contact the Law Offices of Peter J. Lamont at our Bergen County Office. We're here to answer your questions and provide legal advice. Contact us at (201) 904-2211 or email us at  info@pjlesq.com.

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About Peter J. Lamont, Esq.

Peter J. Lamont is a nationally recognized attorney with significant experience in business, contract, litigation, and real estate law. With over two decades of legal practice, he has represented a wide array of businesses, including large international corporations. Peter is known for his practical legal and business advice, prioritizing efficient and cost-effective solutions for his clients.

Peter has an Avvo 10.0 Rating and has been acknowledged as one of America's Most Honored Lawyers since 2011. 201 Magazine and Lawyers of Distinction have also recognized him for being one of the top business and litigation attorneys in New Jersey. His commitment to his clients and the legal community is further evidenced by his active role as a speaker, lecturer, and published author in various legal and business publications.

As the founder of the Law Offices of Peter J. Lamont, Peter brings his Wall Street experience and client-focused approach to New Jersey, offering personalized legal services that align with each client's unique needs and goals​.

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