Court Opinion

ID: 9640992
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:20:21.25477+00
Date Added: 2024-06-11T18:10:34.409033
License: Public Domain

OLSZEWSKI, Judge,
concurring.
We concur in the result reached by the majority, but write separately in order to clarify a distinction in the law of unconscionability which the arguments of appellant Metalized Ceramics for Electronics (MCE) have obscured.
While the quasi-equitable doctrine of unconscionability defies precise definition, courts and commentators have recognized that it comprises two distinct aspects: one procedural, and the other substantive. See generally James J. White & Robert S. Summers, Uniform Commercial Code §§ 4-1 to 4-9 (3d ed. 1988). Procedural unconscionability, which our Supreme Court has described as “an absence of meaningful choice on the part of one of the parties,” relates to the process by which the parties enter into the challenged contract. Witmer v. Exxon Corp., 495 Pa. 540, 551, 434 A.2d 1222, 1228 *249(1981); Denlinger, Inc. v. Dendler, 415 Pa.Super. 164, 177, 608 A.2d 1061, 1068 (1992). Substantive unconscionability, on the other hand, relates to the result of that process; i.e., the court reviews the terms of the contract to determine whether they are “unreasonably unfavorable to the other party.” Witmer, 495 Pa. at 551, 434 A.2d at 1228. Both aspects should be present for a contract to be deemed unconscionable. See id. (“Unconscionability has generally been recognized to include [a procedural element] together with [a substantive element].” (citation omitted, emphasis supplied)); Denlinger, 415 Pa.Super. at 177, 608 A.2d at 1068 (noting that the test for unconscionability is two-fold).
MCE contends that its contract with appellee National Ammonia Company (National) was unconscionable because of a clause which provided that MCE waived all claims of defects by accepting delivery. In support of this claim, MCE presents three separate arguments: 1) the clause at issue was inconspicuous, 2) the clause unfairly destroyed its remedies in case of breach, and 3) MCE’s inability to inspect the shipments before acceptance left it with no meaningful choice.
Applying the distinction outlined above, we find that the first of these arguments presents a claim of procedural unconscionability. MCE essentially asserts that regardless of the actual terms of the clause, it did not meaningfully choose to agree to them because the clause was inconspicuous.
Similarly, we note that MCE’s second argument is addressed squarely to the terms of the clause at issue, and thus presents a claim of substantive unconscionability. MCE in essence contends that because it unfairly limited MCE’s remedies in case of breach, this clause was unreasonably favorable to National.
As to the last of the three arguments, we find that MCE here confuses the procedural and substantive aspects of unconscionability. MCE argues that because it could not possibly comply with the contractual terms, the contract left it without a meaningful choice. The relevant inquiry with regard to the “absence of meaningful choice,” however, is not *250whether the agreed-upon terms could be performed, but rather whether “the party signing the contract [ ] lacked a meaningful choice in accepting the challenged provision.” Denlinger, supra. Thus, we find that the facts which MCE argues do not mesh with the law that it cites in support.
The majority has read MCE’s argument on its facts, i.e., as an attack on the terms of this clause. We continue that analysis by noting that even if it were interpreted in accordance with the case law cited instead (i.e., as a claim of procedural unconscionability), this argument would still fail. Our review of the record reveals that it supports the trial court’s finding that both parties had commercial alternatives available to them. Opinion (Sept. 14, 1994) at 6-7.
MCE’s manufacturing processes involve the bonding of metal layers to ceramic substrates, which must be conducted in atmospheres of pure nitrogen and hydrogen. Originally MCE had purchased these two gases separately; at some point, however, the company made a business decision to buy anhydrous ammonia instead. As nitrogen and hydrogen are the only elements present in this form of ammonia, MCE hoped to fulfill its requirements for those gases more economically by buying the ammonia and breaking it down into nitrogen and hydrogen. N.T. (July 15,1994) at 7-9,16. MCE conceded at the hearing below that it knew of other companies that could have supplied it with anhydrous ammonia. Id. at 17. Moreover, even if National had been the only source of anhydrous ammonia, MCE also conceded that it still had the option of continuing to purchase nitrogen and hydrogen separately. Id. at 25-26. Therefore, the record would not support a claim that MCE had no meaningful choice but to enter into this contract and accept its provisions.