American Software v. Ali: Analysis of Unconscionable Contract Terms

This case study examines the legal dispute in American Software, Inc. v. Melane Ali, focusing on an employment contract and commission structure. Ali, a former account executive, sued for unpaid commissions on software sales completed during her employment but paid after her voluntary resignation. The central issue is whether a contract provision terminating commission rights 30 days after voluntary termination is unconscionable. The trial court initially ruled in Ali's favor, finding the provision unconscionable, but the appellate court reversed, determining the contract was not unconscionable, either procedurally or substantively. The appellate court emphasized Ali's awareness of the contract terms, her ability to negotiate, and the absence of oppression or unfair surprise. The court's decision underscores the importance of the timing of payment and the allocation of risk within the contract. The court found that the contract was not substantively unconscionable because it was not so unfair or oppressive in its mutual obligations so as to shock the conscience. The court found that there was not an overly harsh allocation of risks, as there were risks to both parties in the bargain.