Abuses of the Bargaining Process

Question 1

Duty to Read

Answer 1

Do you have one? Not really, but it is not a defense

Question 2

Reasonable Expectations Doctrine

Answer 2

Court will enforce the reasonable expectations of a contract IF it is (1) a contract of adhesion and (2) technical language was hidden in contract

Question 3

Duress

Answer 3

Duress makes a contract void if it is an “improper threat” - see restatement §175

Question 4

Improper Threat

Answer 4

From duress - if a threat is (a) a tort/crime (b) criminal prosecution (c) bad faith threat to sue (d) breach of duty of good faith -> this is §176

Question 5

Fraud

Answer 5

Lying, typically

Question 6

Misrepresentation

Answer 6

Lying or omitting information; “a representation which is not in accord with the facts” §159; also §161 an omission that is equivalent to an assertion if you let a party continue with false information (maybe you lost your job while closing on a house – gotta tell bank)

Question 7

Undue Influence

Answer 7

Can void contract if person in power (think clergy) uses influence improperly

Question 8

Unconscionability forms and effect

Answer 8

Procedural and Substanative: Need both or a lot of procedural to void contract

Question 9

Procedural unconscionability

Answer 9

(a) contract of adhesion AKA oppression + (b) bargaining “naughtiness” AKA surprise

Question 10

Substantive unconscionability

Answer 10

A one-side nature “so as to shock the conscience”
If you have (1) and (2) then you may have an unconscionable contract; minority of courts will say a lot of (1) can count however

Question 11

Who decides if something is unconcionable?

Answer 11

The judge (not the jury) - it is a matter of law

Question 12

Defenses to Unconscionability under UCC

Answer 12

(1) commercial setting, (2) purpose, and (3) effect are the three factors considered by the court

Question 13

Bad Faith

Answer 13

In the UCC, it is “honesty in fact” and “fair dealing” – while you don’t necessarily need to do the work for the other party, if you know someone is under the wrong impression or has bad facts, you have an obligation to say so. But would be analysis-dependent. Any example of “You tricked me!” is probably bad faith

Question 14

Public Policy - Not complying with licensing requirement

Answer 14

181 (a) if it has a regulatory purpose (b) clearly outweighed by the public policy considerations

Question 15

Public Policy - Restraint of trade types

Answer 15

Ancillary restraint and direct restraint

Question 16

Direct restraint of trade

Answer 16

Between competitors, typically just not enforceable

Question 17

Ancillary restraint

Answer 17

Part of other agreement, like a non-compete contract after selling business

Question 18

Court Considerations for Ancillary Restraint

Answer 18

(a) is restraint greater than reasonable (b) anti-competitive OR hardship to promisor AND public

Question 19

Public Policy - Gambling

Answer 19

Will court enforce a contract for an illegal activity like gambling? No. Leave sides as you found them, no matter who lodges what complaint