Unconscionability

"If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination. (I.C.A. § 554.2302) "

In Davis Mobile Homes, L.L.C. v. U.S. Bank National Association, 2012 WL 5356132 (Iowa Ct.App. 2012), the court upheld the enforcement of a one-year limitation on filing legal actions contained in a deposit account agreement, concluding that such provision was not unconscionable under the circumstances. In Davis Mobile Homes, the court in reaching its conclusion relied on the following generally-recited five factors for determining whether a contract provision is unconscionable: (i) assent; (ii) unfair surprise; (iii) notice; (iv) disparity of bargaining power; and (v) substantive unfairness. Id. The court ultimately concluded in looking at each factor that the provision in question was not unconscionable simply because it was disadvantageous to one party or even if it was a contract of adhesion (holding the doctrine must be applied to prevent only unduly harsh or oppressive terms, not to rescue parties from bad bargains). Id.