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Unfair contract terms in New York: which clauses a court may not enforce

Updated By The editorial teamNot reviewed by an attorney — based on the official sources below

In short

New York courts usually hold you to a contract you signed, even if it's one-sided. But the law steps in for certain terms. A gym or pool can't make you waive its liability for its own negligence (General Obligations Law § 5-326), and a landlord can't either (§ 5-321). A court may refuse to enforce an unconscionable term in a sale of goods (UCC § 2-302) and won't enforce an unreasonably large 'liquidated damages' penalty (UCC § 2-718). Consumer contracts must be in plain language (§ 5-702), and in court, a business can't rely on consumer contract terms printed smaller than 8-point type (CPLR § 4544).

Read on for the details, the exceptions and the sources.

In plain words

Unconscionable
So unfair, given how the deal was made and what it says, that a court refuses to enforce it.
Liability waiver
A clause saying a business isn't responsible if you get hurt or lose property, even through its own carelessness.
Liquidated damages
An amount fixed in the contract that one side pays if it breaks the deal. It must be a reasonable estimate, not a penalty.
Void
Of no legal effect — the clause is treated as if it weren't there.

The full answer

As a starting point, New York enforces contracts as written, and not reading a contract is usually not a defense. But several laws make specific kinds of clauses unenforceable or limit how a business can use them:

  • Liability waivers at gyms, pools, and places of amusement or recreation that charge a fee: a clause exempting the owner from liability for its own negligence is void (General Obligations Law § 5-326).
  • Lease clauses exempting a landlord from liability for its negligence in operating or maintaining the property are void (General Obligations Law § 5-321).
  • Unconscionable terms in sales of goods: a court may refuse to enforce the contract, strike the clause, or limit it (UCC § 2-302).
  • Penalties: a term fixing an unreasonably large amount of liquidated damages is void as a penalty (UCC § 2-718(1)).
  • Plain language: consumer contracts and residential leases must be clear, use everyday words and be divided into captioned sections. A business that doesn't comply owes your actual damages plus $50, but the contract stays valid (General Obligations Law § 5-702). This rule doesn't apply to agreements over $250,000.
  • Small print: in a consumer contract or residential lease, any part printed smaller than 8 points (5.5 points for all-capital type), or not clear and legible, can't be used as evidence by the party that prepared it (CPLR § 4544).
  • Automatic renewals: a service, maintenance or repair contract's automatic renewal clause can't be enforced unless the provider sent written notice 15 to 30 days before your deadline to cancel (General Obligations Law § 5-903).

Exceptions and special cases

  • Business-to-business contracts get less protection: the plain-language and small-print rules apply to consumer transactions and residential leases, not ordinary business deals.
  • Unconscionability is hard to prove. Courts look at both how the deal was made (pressure, hidden terms, no real choice) and how one-sided the terms are, and they use it rarely. UCC § 2-302(2) gives both sides a chance to present evidence about the contract's commercial setting and purpose.
  • Arbitration clauses: a written agreement to arbitrate is generally valid and enforceable under federal law, except on grounds that would undo any contract (9 U.S.C. § 2). Read these clauses carefully before signing.
  • Waiving statutory rights: some laws say their protections can't be signed away — for example, a freelancer's rights under the Freelance Isn't Free Act (General Business Law § 1415(1)) and a buyer's right to cancel a door-to-door sale (Personal Property Law § 428(3)).
  • Unfair business practices: the Attorney General can act against unfair, deceptive or abusive practices, and you can sue over deceptive practices for your actual damages or $50, whichever is greater (General Business Law § 349).

What to do now

  1. Find the exact clause

    Read the whole contract, including anything 'incorporated by reference' (terms on a website or the back of the page). Note the clause number and wording.

  2. Match it to a rule above

    Is it a liability waiver at a gym, a penalty, tiny print, an automatic renewal without notice? If one of these laws applies, cite it by section.

  3. Raise it in writing

    Tell the business, in a short letter or e-mail, that you believe the clause is unenforceable and why. Keep a copy.

  4. Complain

    If a business uses unfair or deceptive terms with consumers, file a complaint with the Attorney General.

  5. Use it as a defense

    If you're sued based on the clause, raise these laws in your answer or at the hearing. For large amounts or arbitration clauses, get a lawyer's advice.

Figures that change

  • Minimum print size in consumer contracts and residential leases: 8 points (5.5 points for all-capital type) (as of 2026-10-30; N.Y. Civil Practice Law and Rules)
  • Penalty for a consumer contract not in plain language: Actual damages plus $50 (as of 2026-10-30; N.Y. General Obligations Law)

Frequently asked questions

I signed a gym waiver. Can I still sue if I'm hurt because of their carelessness?

A gym, pool or recreation business that charges a fee can't use a waiver to escape liability for its own negligence — General Obligations Law § 5-326 makes such a clause void. Whether you have a claim still depends on the facts, and injury claims have their own deadlines.

My contract says I owe a $5,000 'cancellation fee.' Is that legal?

It depends on whether the amount is a reasonable estimate of the other side's real loss. For sales of goods, a term fixing unreasonably large liquidated damages is void as a penalty (UCC § 2-718(1)); courts apply a similar idea to other contracts. Ask the business to explain how the fee was calculated.

The print in my contract is tiny. Does that help me?

Possibly. In consumer contracts and residential leases, any part printed smaller than 8-point type (5.5 for all capitals) or not clear and legible can't be used in court by the party that prepared it (CPLR § 4544).

Can a company make me go to arbitration instead of court?

Usually, if you agreed in writing. The Federal Arbitration Act makes written arbitration agreements valid and enforceable except on grounds that would cancel any contract (9 U.S.C. § 2).

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Official sources

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This page is general information based on the official sources listed, current as of the update date. It is not legal advice and does not replace a review of your own situation; if a case is already in court, a deadline is close, the amount is large, or there are criminal, immigration or family-law consequences, talk to a lawyer or legal aid.