What defines 'substantive fairness' in contract law?

Substantive fairness in contract law refers to the notion that the terms of a contract should be just and reasonable, balancing the interests of both parties involved. An unconscionable contract typically indicates that one party has taken advantage of the other, leading to an agreement that is grossly unfair. This often means that a reasonable person would find the terms unacceptable, as they disproportionately favor one party, disregarding the principles of equity.

Therefore, when an agreement is deemed unconscionable, it highlights a lack of substantive fairness. This understanding of fairness is crucial because it aims to prevent exploitation and ensure that contractual obligations are not only legally enforceable but also ethically sound, reflecting a level playing field for both parties. By recognizing these principles, the legal system seeks to maintain a balance between freedom of contract and the protection of individuals from unjust agreements.