CanadaWhat makes a standard-form contract term unconscionable under Canadian law?
A standard-form contract term is unconscionable in Canada if it is both procedurally unfair (e.g., no meaningful opportunity to negotiate or understand the term) and substantively unfair (e.g., grossly one-sided or oppressive), as confirmed by the Supreme Court in Uber v. Heller.
What the Law Says
Canadian common law—not statute—governs unconscionability of standard-form contracts. No federal or provincial statute defines unconscionability for general contracts; it is a judge-made doctrine rooted in equity and fairness.
Unconscionability is assessed using a two-part test: (1) procedural unconscionability — involving inequality in bargaining power, lack of meaningful choice, or absence of understanding; and (2) substantive unconscionability — involving terms that are overly harsh, one-sided, or shock the conscience.
This doctrine applies especially to contracts of adhesion — standard-form agreements where one party dictates terms and the other has no realistic ability to negotiate.
What Courts Have Said
The Supreme Court of Canada reaffirmed and clarified the doctrine of unconscionability in Uber Technologies Inc. v. Heller, emphasizing that courts must look at both process and substance when evaluating standard-form terms.
The Court held that an arbitration clause requiring a food delivery driver to arbitrate disputes in the Netherlands — with USD $14,500 in up-front fees — was unconscionable because it was both procedurally unfair (no negotiation, unequal bargaining power) and substantively unfair (effectively blocked access to justice).
What to Do
Review the contract for signs of inequality in bargaining power (e.g., take-it-or-leave-it terms, fine print, no negotiation opportunity)
Assess whether the challenged term is excessively one-sided or deprives one party of meaningful legal recourse
Consider whether the term shocks the conscience or undermines fair dealing — e.g., waiving statutory rights, imposing prohibitive costs, or selecting distant dispute forums
If challenging the term, argue both procedural and substantive unconscionability — courts require both elements
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.