Quiz 8 Flashcards
R2 208 Unconscionable Contract or Term.
If a contract or term is unconscionable at the time the contract is made a court may:
- refuse to enforce the contract,
- or may enforce the remainder of the contract without the unconscionable term,
-or may limit the application of the unconscionable term to avoid an unconscionable result.
UCC 2-302 Unconscionable Contract or Clause
(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may
-refuse to enforce the contract,
-or it may enforce the remainder of the contract without the unconscionable clause,
-or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
What is Procedural unconscionability?
- Includes All of the surrounding circumstances, including sharp bargaining practices
- Lack of a meaningful choice
- Unfair surprise
- Bargaining naughtiness
Examples of procedural unconscionability
> Opportunity to read and understand terms
- Education level
- Use of fine print
- Convoluted language
> Inequality of bargaining power
What is Substantiative Unconscionability?
- Unreasonably harsh K terms Oppression
- Unduly harsh terms as viewed in light of surrounding circumstances, commercial norms
Mutual Mistakes (Rules combined)
(1) Mistake (belief not in accord with the facts) or both parties at time the K was made
(2) As to a basic assumption on which the K was made
(3) Material effect of the bargain
(4) Risk of the mistake not allocated to the adversely affected party
(a) by the agreement
(b) conscious ignorance
(c) by court as reasonable under circumstances
Unilateral Mistakes (Combined)
(1) Same requirements as mutual mistake (except mistake is by one party) and
(2) In addition,
(a) Enforcement of the K would be unconscionable, or
(b) The other party had a reason to be unconscionable, or
(c) The other party had reason to know of the mistake or caused by mistake
- relief when K voidable for mistake, See R2 158, 376
R2 151 Mistake Defined
A mistake is a belief that is not in accord with the facts
R2 152 When Mistake of Both Parties Makes a Contract Voidable
(1) Where a mistake of both parties at the time a K was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in R2 154
(2) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way for reformation, restitution, or otherwise.
R2 153 When Mistake of One Party Makes a Contract Voidable
Where a mistake of one party at the time a contract was made as to a basic assumption
on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him
the contract is voidable by him if he does not
bear the risk of the mistake under the rule stated in § 154, and 192
(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or
(b) the other party had reason to know of the mistake or his fault caused the mistake.
R2 154 When a Party Bears the Risk of a Mistake
A party bears the risk of a mistake when
(a) the risk is allocated to him by agreement of the parties, or
(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
(c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.
R2 158 Relief Including Restitution.
(1) In any case governed by the rules stated in this Chapter, either party may have a claim for relief including restitution under the rules stated in §§ 240 and 376.
(2) In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties’ reliance interests.
R2 376 Restitution When Contract is Voidable
A party who has avoided a contract on the ground of lack of capacity, mistake, misrepresentation, duress, undue influence or abuse of a fiduciary relation is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance.
R2 205 Duty of Good Faith and Fair Dealing
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.
UCC 1-303 Course of Performance, Course of Dealing, and Usage of Trade (simplified)
COP - Course of Performance: Sequence of conduct between the parties to a particular transaction
COD - Course of Dealing: Previous Transactions
UOT - Usage of Trade: Practice or Method of Dealing
