Page 31 Flashcards
What is unconscionability?
The court refuses to enforce a contract that is UNFAIR or OPPRESSIVE because of procedural abuses during formation or overreaching terms (unconscionability must exist at the time contract was made, not because of later events)
What is the result of unconscionability?
- it can make a contract void, or
- the offending oppressive clause can be excused
What are the two different types of unconscionability?
Procedural and substantive
What is procedural unconscionability?
Unconscionable bargaining process. Unfair surprise because party has superior bargaining power over the other, or no knowledge because of inconspicuous print/unintelligible language/no opportunity to read contact
What is an example of procedural unconscionability?
Party writing the contract includes a term knowing it is unfair and that the party won’t notice it and doesn’t bring attention to it
What are the two different views about duty to read a contract?
- traditional view: party is charged with knowledge whether he read it, understood it, or knew about it
- modern rule: parties only bound by provisions that are not unfairly surprising
What is substantive unconscionability?
The terms of the contract are oppressive, unduly harsh, and unfair
What is a possible remedy for unconscionability?
Blue pencil power of the court
What is the blue pencil power of the court as a remedy for unconscionability?
If the court finds unconscionability, they can do anything necessary to make the contract fair. Ie: rewrite the offending clause, strike it, avoid the whole agreement
What is reformation?
Records are rectified to conform to the actual agreement of the parties. This corrects typos and inadvertent errors
What are the different things that could result in reformation?
- mistake
- misrepresentation
- duress
What is needed to make a reformation for a mistake?
There must be an agreement between the parties to put it into writing and variance between the previous agreement and the record
Can misrepresentation happen just by half truths?
Yes, like if a mechanic told you your brakes were dangerous, then you sell your vehicle and the buyer asks about the brakes you say you just had them checked. You’re suggesting they are OK even though you didn’t technically lie.
What are times that reformation cannot be used?
- if it would stop the rights of a BFP
- if used against a donor of a gratuitous gift
- if there has been ratification
- SOF doesn’t apply to reformation
- negligence doesn’t bar reformation
