What is the test for unconscionability?

At most, the adjectives chosen – all of which emphasize that something out of the ordinary should be present – should be regarded simply as shorthand ways of emphasizing that something substantially more than bargaining imbalance simpliciter and a precise measuring of the benefits of the transaction in a meticulous search for any slight difference in relative advantage and disadvantage, is required. Without this emphasis, the fundamental underpinnings of the traditional notions of freedom of contract, based on the idea that one can bargain in a self-interested way so long as bargaining process standards (no fraud, duress, undue influence, misrepresentation, etc.) are observed, would be significantly undermined. As noted by Cromwell J. in obiter in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494 at paragraph 74, the doctrine of unconscionability by its nature “impose[s] limits on the freedom of contract.” Generally speaking, however, restrictions on freedom of contract are process-related and do not extend into regulating the substance of a transaction that is a result of a process that is not tainted by fair process concerns.

The evaluation of the merits of the transaction is generally for the parties, not the courts, to determine. The point was put this way by LeBel J., dissenting (but not on this point) in obiter in Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303: