CONTRACTS II
Unconscionability
-An extreme example of unfairness, approaching or equaling economic duress
-Almost never works outside of David v. Goliath Corporation scenarios
-Don’t get carried away with it
-The general notion is that if two businesses are involved, unconscionability is a loser
-consumer wins against business. Sometimes.
WILLIAMS v. WALKER-THOMAS FURNITURE CO.
-The enforcement of a particularly brutal rent-to-own contract by which a lapse in payment on one article would force the forfeiture of all other rented and now-owned articles taken from the company. Returned to lower courts
-Court ducks the question
-Dissent suggests that this should be handled by legislation, agrees with lower courts in being wary of interfering with the contract in this way.
WEAVER v. AMERICAN OIL CO.
-Oil company includes a hold-harmless clause in agreement with gas station. Oil company employee sprays gas on station operator and burns him. Oil company attempts to dismiss suit based on hold-harmless clause. They fail, the contract is declared unconscionable.
-Bargaining power greatly uneven between oil company and station operator
-Station operator uneducated and presumed ignorant of the contract he signed
-Oil company never explained contract, merely put it in front of him and said “sign”
-Would be an unconscionable contract under UCC 2-302 if it was a sale of goods
-Dissent suggests that the station operator’s ignorance is no excuse, he had ample opportunity to read it
-p. 320-321 – ”It is not the policy of the law to restrict business dealings or to relieve a party of his own mistakes of judgment, but where one party has taken advantage of another’s necessities and distress to obtain an unfair advantage over him, and the latter, owing to his condition, has encumbered himself with a heavy liability or an onerous obligation for the sake of a small or inadequate present gain, there will be relief granted.
-There must be procedural as well as substantive unconscionability
-a common but not universal approach
Restatement $208 (p. 257)
-unconscionable stuff
HAINES v. ST. CHARLES SPEEDWAY, INC
-Racer gets injured by his own car while attempting to start it in a speedway. He had signed a release with very broad hold-harmless clauses but went ahead and sued the speedway anyway. Summary judgment given to the speedway in lower courts and affirmed here. Release is enforceable.
-Racer argues that he was faced with a contract of adhesion
-He was, but it was a legal one
-Racer argues that he is functionally illiterate and didn’t understand the release
-Court says it’s his problem to get someone to read it to him before signing
-Racer argues that he was put under pressure to sign it
-But produces no evidence of duress
-Racer had been doing this along time and was undoubtedly aware of the risks, cementing his liability
-p. 326 – “A contract of adhesion is a form contracted submitted by one party and accepted by the other on the basis of this or nothing.
R.2d $195 – you cannot waive liability for tort injury or recklessness
195(2) – as to negligence, there are certain factors required for unenforcability
ZAPATHA v. DAIRY MART, INC.
-Franchise operators claim unconscionable contract after franchise company terminates their agreement per the conditions of their original contract. They apparently did so because operators would not sign a new agreement some years after they signed the original one.
-The court will not declare that contracts which may be terminated at-will are de facto unconscionable
-Notice of termination in th
-even if it is highly highly unlikely that it would be
-Contracts of indefinite duration are not typically within the statute if it is possible that the obligations may be performed within one year
R.2d $130 has slightly different provisions.
C.R. KLEWIN, INC. v. FLAGSHIP PROPERTIES, INC.
-Developers want to change builders (and so doing, escape their contract with their current builders) by objecting on the grounds of the statute of frauds on the “to be performed in over one year” condition, claiming that there was no written and signed agreement.
-The schedule of performance was not defined, but the developers claim that the project was so large that it could not have possibly been completed in under one year.
-Court rules that all oral contracts of indefinite duration are excluded from cancellation on the grounds of the Statute of Frauds over-one-year condition.
-Farnsworth has particular trouble defining or defending any clear purpose of the one-year provision.
-Would it be a breach to perform in less than a year? Only in that case is the contract required to be in writing to be enforced. (Calamari & Perillo, not necessarily ironclad summary of binding law)
-In oral promise to work as employee for 5 years:
-If either party can terminate on 30 days notice, need not be in writing. R.2d 130 Illus. 6.
-If employee can quit at any time, the contract has to be in writing. R.2d 130 Illus. 7
Land Contracts:
-What has to be in the writing?
