What are Unconscionable Contracts

An unconscionable contract is unenforceable. It is immaterial whether a waiver is explicit or implicit. Procedural unconscionability also gives rise to an unconscionable contract if one of the parties is in a vastly superior bargaining position.

An unconscionable contract may also contain substantive unconscionability if the terms of the contract are excessively harsh or would be oppressive to implement. An unconscionable contract can also result if the party selling the goods marks up the price tremendously and attempts to hide how great the mark up is.

Whether a contract is conscionable or unconscionable can only be determined by a judge and never by a jury.

The Secret to Undue Influence

A contract can be challenged by one of the parties to the contract if they claim their assent was not genuine because they were subject to undue influence. Undue influence is said to exist if an inordinate amount of pressure is placed upon a party to enter into a contract against their best interests. Undue influence cannot be invoked by a party simply because they are in a detrimental contract.

Undue influence is usually only claimed in the event that the party is in a relationship wherein another person is able to influence their decisions. Normally undue influence can only be successfully claimed by a minor or an elderly person who has a guardian responsible for overseeing their legal or financial obligations.

Other relationships in which undue influence may arise include attorney-client relationships, doctor-patient relationships, and the relationships between the beneficiaries of a trust and the individual responsible for managing the trust.

An occurrence of undue influence can be difficult to establish conclusively in court. There is sometimes an automatic presumption of undue influence by the courts. A presumption of undue influence can be established if the party in the superior position influenced the dependent party to agree to a contract that benefited the superior party.

If the dependent party challenges a party that they were influenced to create by their guardian, the courts are likely to issue a presumption of undue influence because they believe that if the contract did not arise due to undue influence, then the dependent would not be challenging the contract.

The guardian involved in a court case in which the genuineness of assent in a contractual dispute involves a presumption of undue influence often bears the responsibility of disproving the charge filed against them by their ward. The undue influence charge is often repudiated by presenting evidence that the ward inquired about the terms of the contract or was afforded the opportunity to consult with an independent party that did not have a direct stake in the contractual negotiations that are being challenged.

The guardian can disprove that there has been an occurrence of undue influence even if there was a benefit conveyed to the guardian if they can demonstrate that the ward received a full disclosure of the benefit that the guardian would derive from the contract. If the guardian can prove that full disclosure was presented to the ward, that the ward obtained independent analysis of the benefits that all involved parties would receive, then the presumption of undue influence can be disproven.

In the event that undue influence is found to have existed by the courts, the courts will declare the contract to be voidable by the ward. Undue influence, however, cannot be claimed by a ward that acted upon the innocent advice of their guardian yet was harmed by the contract in a way that did not benefit the guardian.

Discover the Exceptions to General Rule Here

During the contract drafting process every attention must be paid to ensuring that an illegal contract is not created. As a result, individuals responsible for contract drafting employ several safeguards to attempt to decrease the probability that they create an illegal contract.

Some of these preventative methods include using boilerplate language, which are terms used in a majority of contract drafting negotiations, as well as employing lawyers or people with a legal background in the contract drafting. However, even when these safeguards are employed, illegal contracts can still result.

Even if illegality is found to exist in a contract, it may still be enforceable in pari delicto, then a legal contract will not be ruled to exist.

If the violation of the law in question is not of a serious nature, then the illegal contract may be enforced as if it were a legal contract. If the compensation that would have to be provided in the event the contract was declared illegal would be out of proportion to the infraction of the concerned law, then the contract may be enforced as if it were a legal contract. The agreement may also be treated as a legal contract if the court determines that there would be an unjust enrichment to one of the parties in the event that the contract drafting was set aside.

If a contract is ruled to be illegal after actions have been done by one of the parties which cost money, the idea of quantum meruit may come into play. Under quantum meruit, which means “as much as deserved,” an individual may be able to recoup expenses in proportion to their outlay of money for services performed in an illegal contract if they performed the actions under the belief they were executing a legal contract.

Unlike in a legal contract, quantum meruit does not entitle the individual invoking it to hold the other person liable for the terms of the contract. This legal concept only allows the individual to recoup their losses.

Fast Overview on Fraudulent Misrepresentation

Fraudulent misrepresentation can be shown where the party engaging in fraud had knowledge that not sharing the information would compel action by the other party. The omission of material facts can only be considered a fraudulent misrepresentation if it was intentional and the information was known to the accused.

Fraudulent misrepresentation by silence may result during a long contract negotiation if one of the parties to the contract withholds material information they learned during the negotiation process.

Knowing the Exculpatory Clause

An exculpatory clause is a clause of a contract in which one of the parties releases the other party from liability for their actions. An exculpatory clause may or may not be considered contrary to the public interest depending upon what field the party seeking the release of liability typically operates.

A contractual clause which limits liability is not automatically grounds that the contract will be declared unenforceable during a contract dispute. Limited liability clauses are permitted in many contracts. The only time they may become an issue is if the contract dispute involves an exculpatory clause that seeks to invalidate the liability claim regardless of which party is at fault.

An exculpatory claim in which the liability for all personal injury or monetary damage will frequently be upheld if the party seeking relief is a private business, such as an amusement park, health club, or general recreational facility. Relief is often granted from suits filed against parties that are not considered essential to the public good or involved in public health. For these types of companies, exculpatory clauses are generally held to be enforceable.

A contract dispute with a public utility company, a bank, or a company which carries public goods in which an attempt is made to invoke an exculpatory clause is usually bound for failure. The courts have generally invalidated exculpatory clauses in these contracts because of the belief that allowing these companies to escape liability would be detrimental to the public good.

If a lease contains an exculpatory clause it may be enforceable or unenforceable depending on the purpose for which the property is leased. If an exculpatory clause is present when there is a contract dispute regarding the lease of a commercial property, the exculpatory clause will usually be enforced.

If the property is residential, the exculpatory clause in the contract dispute will usually be considered unenforceable by the courts. This distinction is made because it is generally considered more detrimental to the public good to inflict harm against individuals than is harming a commercial enterprise.

Simple Overview of Exculpatory Clause

Contracts that are adjudicated to be contrary to public policy may result in portions of the contract being declared unenforceable.

Exculpatory Clause

An exculpatory clause is a provision of a contract that releases one party of the contract from all liability no matter who is at fault. Exculpatory clauses are normally permitted to remain in effect if the contracted party is engaged in an enterprise that is not considered essential to the public good, such as the operation of a recreational facility. However, with a clause that releases a company from liability which functions in a business that is considered essential to the public good, the courts w

What You Need to Know About Withdrawing Acceptance

An offer and acceptance is the analysis of a traditional approach in contract law that is used to determine whether an agreement is valid between two parties. The term “agreement” consists of an offer by a party or individual (known as the “offeror”) to another entity known as the “offeree.”

The two sides enter negotiations based on the contract and its explicit stipulations. When the two sides agree on the intricacies associated with the agreement, a contract becomes realized.

When an offeree accepts the stipulations of an agreement or a contract, they are held responsible for fulfilling the intended roles of their agreement. If the offeree withdraws acceptance, depending on the form of the agreement, they will be held liable to fulfill the underlying terms of the agreement. There are instances where the offeree will be able to terminate the agreement, but a violation or a reneged stipulation must be present in the agreement.

What are the Capacity to Enter into Contracts

A person is assumed to have the capacity to enter into a contract. An intoxicated person, minor, or mentally incapable person has two options available to them after entering into a contract which affects the validity of the contract into which they have entered. The first option they have is to disaffirm a contract. Disaffirming a contract reveals a desire by an individual to no longer be bound by the contract. The disaffirmation can be verbal or active.

The other action that can affect the validity of a contract is ratification. Ratification reveals a willingness to be bound by the terms of the contract. As with disaffirmation, ratification can be verbal or active. If a person continues to use an item after they would otherwise be released from the contract, they have ratified the contract by action.

Ratification takes precedence over disaffirmation. If a person attempts to disaffirm a contract from which they have already received substantial benefit, the courts will not allow them to disaffirm the contract. The fact that the individual has benefitted from the contract is considered proof of acceptance to being bound by the contract.

It is impossible for anyone to disaffirm a contract they entered into in order to obtain essential services. Contractual obligations for necessary services cannot be avoided under any circumstance.

Uncover the Facts Behind A Mistake of Fact

A mistake of fact which affects the genuineness of the assent given to the terms of a contract may be bilateral or unilateral. Mistakes of fact apply when the party concerned was operating under a mistaken understanding of the facts involved in the contract.

A mistake of fact is unilateral when only one party is mistaken. A bilateral mistake of fact occurs when both parties to the contract are operating under a mistaken reality. Bilateral mistakes are also known as mutual mistakes or common mistakes.

A mistake of fact that is unilateral in nature is not normally a reason to set aside a contract or a reason that will allow a plaintiff in a civil trial to seek damages. A unilateral mistake of fact will result in an enforceable voidable contract.

For example, a contract would be voidable at Luke’s discretion if Ben took advantage of Luke’s unilateral mistake regarding the purchase of a painting Luke thought was genuine. If Ben did not know that Luke thought he was buying the genuine painting, then Luke’s unilateral mistake would not prevent the contract from being enforceable.

A bilateral mistake would result in a contract that could be voided by both individuals in the event that Luke and Ben both believed the forgery was a genuine work by Dali. If Ben believed Luke intended to buy an artificial Dali painting, and Luke believed Ben was selling a genuine work by Dali, a mutual mistake has again been made because there was no intention to defraud and both parties made a mistake of fact.

Mistakes of fact should not be confused with mistakes of value. A mistake of value would occur if Jim sold Jack a random painting that he believed had only a slight value for $50. If Jim later learns that the painting was in fact done by a famous artist and worth $500, he cannot sue Jack to make up the $450. This sort of mistake is not permitted because the value of an object is not a fact. It can change. In order for a mistake to provide the basis to overturn a contract, the mistake must be of a fixed and provable nature.

Discover Contracts Contrary to Statute

There are several reasons the legality of a contract may be in question. The first is if the contract violates a statute. Contracts that are contrary to statute are considered void.

Usury contracts contrary to statute are formed when a contract exists that charges interest rates above the rate that State or local laws permit. Nearly every State has distinct usury laws. In some states a usurious loan is automatically void. In states that declare usury contracts void ab initio, the lender forfeits the principle as well as the interest if the courts become involved.

Other states allow a usurer to recover both the principle loaned, as well as the interest up until the amount that would have been permitted under the law. In still other states, an usury contract only permits an individual to recoup the initial principle. Usurious rates depend upon the particular type of loan. If an usurious loan is not challenged, the person who has taken out the loan is usually obliged to repay the full amount.

Gambling contracts are void when they occur outside of the legally-approved methods of gambling. As with what level of interest constitutes usury in a particular State, each State has different ga

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The Truth Behind Fraudulent Misrepresentation