From Here to Eternity - The Right to Enforce Unconscionable Contracts

Robert N. Loughran - Associate
May 20 2021

You may recall the 1953 film From Here to Eternity directed by Fred Zinnemann. As illustrated in a recent decision from the Supreme Court of Appeals of West Virginia, the title could describe the length of time a contract is enforceable.

In Horizon Ventures of West Virginia v. American Bituminous Power Partners, L.P., (“AMBIT”), the parties signed a contract in 1987, under which Horizon provided consulting services to AMBIT and AMBIT agreed to pay $50,000 per year for the services “as long as [AMBIT] continued to produce power.” After over thirty years of acting under the agreement, AMBIT decided to not pay because the “agreement has no value to [AMBIT] at this time….” Horizon filed suit for breach of contract.

A lower court concluded that the contract was “so one-sided and favorable to [Horizon] that the lack of a unilateral escape clause, including notice and/or consequential provisions stemming from unilateral withdrawal, and a requirement of payment into what amounts to eternity but for cessation of business, regardless [of] the bargaining position of the parties, is so outrageous and oppressive that public policy mandates that the contract be disbanded rather than enforced.”

On appeal, the appeals court reversed the circuit court and stated, “the freedom to contract is a substantial public policy that should not be lightly dismissed.” Therefore, in some cases no matter how onerous the contract’s terms are, if the terms were the result of a fair bargain, the terms must be enforced. As William Lamb, British Prime Minister from 1835-41 stated, “the whole duty of government is to prevent crime and to preserve contracts.”

The moral of this case: courts are not quick to dispose of their duty to preserve contracts. Therefore, it is important to seek competent counsel who can advise you before signing a contract. Otherwise, ‘til death do us part, maybe for more than just marriage.