4/21. Wertheimer, “Unconscionability and Contracts.”

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14 thoughts on “4/21. Wertheimer, “Unconscionability and Contracts.””

  1. Wertheimer’s paper on unconscionability and contracts in my opinion focuses more on the ethics of exchange relationships. His paper gives insight that unconscionability in contract law should be subject to a standard of fairness beyond the prohibitions against fraud and force. However, towards the end of his paper Wertheimer he comes up with four types of unconscionable contracts which are (a) harmful/high profit, (b) harmful/low profit (c) beneficial/high profit and (d) beneficial/low profit. According to Wertheimer “contracts of types A and B occur when B does not understand the terms of the contract or the value of the goods or when B is placed under such stress that he cannot resist entering into a non-advantageous transaction” (Wertheimer, 1992 p. 491). This type of contract becomes unconscionable because it seeks to protect B from harming himself. If Wertheimer is making such a claim, essentially, he is saying that A is not to blame, and if that’s the case then how is A exploiting B?

    1. Interesting point, i think when we go out and buy something on credit, big companies go through background check and lend appliances. Now when we bring those appliances home and use them, later when we run out of luck to pay back, they are possessed back. The company seeks to have some vantage point to a complete loss of a product, that is how they are protecting themselves. Now when someone on purpose buys something on a credit, they intend to not return and let company pay their account through unrecoverable debt or loss accounts, the individual is taking advantage. This is where the role of credit plays. If you have bad credit you cannot take item on installments. If you have good credit you can. This is what we see as a balance. The both parties have something to loose when the contract is voided. One looses credit score and other looses the opportunity to make money.

    2. Great question! I didn’t think about it like that. Someone could argue that it is unconscionable to form a contract which you know that most people would sign only if they did not understand the likely result of the contract. If we did not enforce these contracts for that reason, then we would be truly refusing to enforce them because they are unconscionable. However, Wertheimer doesn’t say that; he says we shouldn’t enforce them because this prevents people from harming themselves. So I think you are right, “unconscionable” is probably a misnomer in these cases.

  2. Unconscionable contracts are those which often operates in the background of a contract itself. It is the term that is so unjust in the form of a contracts and benefits one party from its existence. It is also biased or unfavorable. These contracts show inadequate consideration in the favor or one party and opposite to the other. When the party is seeking to escape such contract, the court looks at unconscionability of a contract when it was made. Such as its bargaining power, age, and mental capacity. It is also a misrepresentation of something in a way that lures the party and sign it. If the unconscionability has to be applied the contract has to be unconscionable at the time it was made. Now question is, why people take advantage of this situation? There are many examples, I will share one. It is famous that a lot of people after or before getting married sign a contract, sometimes it is post-nuptial agreement, or pre-nuptial agreement. A 55-year-old rich man married a beautiful 22-year-old waitress. He had a pre-nuptial agreement with her that she will not inherit any state from him and will not interfere in his financial transactions, or business. She will not ask him about his earnings as well. After he died, his will was executed, and it was not in the favor of his young wife that he left behind. The court looked at the will and decided that it is unconscionable and proceeded to execute the will under the laws of intestacy. The waitress received first 50 grand and half of his state and remaining was distributed to his siblings. Now this is the power that system holds to protect one’s rights. The man in his complete conscious decided not to share his estate with the young wife but the court did not agree and proceeded the action under its own just decisions. The unconscionability law is there to protect someone from taking advantage of another. If we look at our current situation, we will see that how business tried to make money in New York City through napkins, sanitizers and masks. It is also a situation of “Take it or leave it”. It is not fair to another person. The system over sees the benefit of majority. We can challenge any contracts. I remember listening to this radio advertisement of Celino and Barnes. My friend one day asked, did he pay the clients to speak on the radio for him “I got 9 times more than what insurance offered me, thanks to Celino and Barnes”, I said next time the advertisement plays, focus on the first line it said “Paid actors illustrating real clients”, we miss commercials with *star sign a lot of the times on television. It is all to lure layman into the trap and take advantage of him.

  3. My understanding of Wertheimer’s article is that he things that all contracts are not unconscionable although from the outward appearance it might appear that way. I understood his analysis of how some persons might appear to enter into contracts at free will, but what I wouldn’t say is that given their circumstances, though they can go other places, they didn’t didn’t have the bargaining power on their side. With a commodity or a service that is needed at the time, I do think that contracts entered into under unconscionable circumstances, or just anyone using a certain leverage and a better bargaining ability will force the person with the unfavorable bargaining potential to fold and make that an unfair deal which would lean most contracts into the harmful-high profit and harmful-low profit of the spectrum.

  4. In Wertheimers article he expresses unconscionability in contact law. He explains the different types of contracts which can be unjust or just Some contacts may only benefit one party and puts the other at harm without the party in harm even realizing and by that time they have already signatured. Some contracts can be unfair and hard to get out of. These kind of contracts lure people into signing such agreements that they are not fully aware of. Many people take advantage of others in order to profit and when one that is being taking advantage of wants to bring these issues forward to court; sometimes there is not much they can do because of the contract it’s self that they have signed. Unconscionability law is to protect parties from taking advantage from one another which I feel is just. We need a system for society to follow because if we do not, there would be a lot of fraud occurring. People should not have to go through this when investing in something but a system that protects us from this is something our society cannot do without.

  5. In the reading “unconscionability and contracts” Wertheimer talks about how there are different types of contracts, but he focuses on unconscionable contracts which, he explains, are unfair and unjust and should be unenforceable.
    Unconscionable contracts are those in which, even though there was an agreement between the parties involved, one of the parties seems to take advantage of the other party.
    In the eyes of the law, if there is a contract that is unfair or inconprehemsible (to either one of the parties) in any way, it is unenforceable.
    This is a really interesting reading since it made me think about how we do not even see the trap we fall in when entering a contract with unkonwn terms.

    1. While reading this, I remembered a case I read in one of my past classes, the case is: Florida Bar v. Belleville 
      The case was about a negotiation for the sale of an apartment building.
      Buyer and seller negotiated only for the sale of the apartment building, but buyer’s attorney drafted documents to sell seller’s apartment building and residence. The documents overwhelmingly favored the buyer.
      There were many issues with the financing documents of this case. First, the seller and had to pay an attorney, someone who was not even representing him, the amount of $625. There is no reason and no explanation for that payment. Secondly, Mr. Cowan (the seller) also received a promissory note instead of obtaining a mortgage which would make the transaction more secure. Third, there was property included in the documents which was not agreed upon.
      The seller was a 55 years old man and had no even finish high school let alone know anything about selling.
      Anyway he signed the papers but he did not know what he was getting into.
      This is a clear example of entering an unconscionable contract.

        1. I see your point professor but I also feel that you can argue that the lawyer involved should have advised the buyer of the unfairness of the contract, instead of being unethical and taking advantage of this man for a pay day. As I remember from this case the lawyer only represented the buyer and in the contract put lawyers fee that the seller had to pay him. Either way you look at this the man wasn’t in the wrong, he was just not aware of procedure and the fact that having a lawyer present would have been a good idea.

    2. I agree. An example of this is the fine print on credit cards for those who are trying to establish credit or trying to re-build credit. These people sign on the dotted line and agree to terms that are advantageous to the bank.

      People just don’t realize how much they stand to lose. Most contracts use uncommon language and the average consumer doesn’t pay attention because they are desperate. This doesn’t limit itself to credit cards. This is also true when purchasing a home or renting an apartment. Although there are laws to protect home owners and renters, there are still inequalities that leave renters and homeowners out in the cold, e.g. with the current pandemic, what’s going to happen to those who couldn’t pay their rent or mortgage because they lost their jobs or were furloughed from their job.

  6. Although unconscionable contracts are unfair and should not be enforceable, they remain alive and well in the current business market. Unconscionable contracts are being written and signed by consumers who do business with such companies such as Rent-A-Center, where one pays double or triple the value of a product because they are paying $15.00 a week on an item. Another example of unconscionable contracts are credit cards with interest levels that go through the roof.

    While unconscionable contracts are unfair, they have their place in today’s consumer market. This is how the poor man can afford to by his flat screen television set or replace his refrigerator or stove. Low income people know that they are being taken advantage of, however, they have no other choice but to enter into such contracts. This is also how one can establish credit. Otherwise, they won’t be able afford to purchase these items or build credit. his does not limit itself to the low income consumer. This includes those who are working class and enter into unconscionable contracts only to lose their jobs and have everything repossessed from them as well as have their credit backgrounds destroyed.

    The Other side of the coin is that businesses deliberately count on unconscionable contracts. Banks for example stand to gain financially through the consumer market. Most consumers will not go to court and sue on the grounds of inequitable contract terms or claim usury and unfair interest rates simply because they are ignorant of their rights.

    Are inequitable contracts unfair and should they continue to be unenforceable, yes. However, it is also true that for many consumers who do not have an overflow of finances or need to establish credit, it is a necessary evil.

  7. From my understanding Wertheimer, “Unconscionability and Contracts ” is about the unfairness of contracts and of course he goes in depth about the different type of unfairness in contracts such as harmful/high profit, harmful/low profit, beneficial/high profit and beneficial/low profit. I in part agree with his reasoning and school of thought, unconscionable contracts shouldn’t be enforced but sadly they are a part of our society.

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