Even in the absence of a more specific reason courts will occasionally void

Even in the absence of a more specific reason courts

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Even in the absence of a more specific reason, courts will occasionally void contracts that are unconscionable, or that shock the conscience of the court. Especially when a party had no choice but to sign some kind of oppressive agreement, courts tend to find unconscionability. But often, courts are unimpressed by plaintiff's claims, as Doughty v. Idaho Frozen Foods shows. Courts often require that the party seeking to avoid a contractual provision must show both of two types of unconscionability. They must show procedural unconscionability in that the clause was not adequately communicated (e.g., hidden in the fine print), or that there was a disparity of bargaining power between the parties. They must also show substantive unconscionability or that the terms of the provision are so unfair as to shock the conscience. All states have statutes related to wagering agreements , or gambling contracts. These make making bets and operating games of chance are prohibited. Any obligations arising from these activities are void in the eyes of the law and thus, unenforceable by the winner. Laws are beginning to loosen up in this area, including “friendly bets.” Insurance contracts : Contracts where performance is dependent upon an element of chance are not wagers and thus are legal. An insurance policy is simply a contract by which existing risk is shifted to an insurance company for a consideration paid by the owner. Licensing Statutes require that persons who engage in certain professions or businesses be licensed (lawyers, physicians, contractors, electricians, vendors of liquor, etc.) Usury : maximum rate of interest that may be charged on ordinary loans. Charging interest in excess of those permitted rate constitutes usury. Contracts that unreasonably retrain trade or competition in interstate commerce are in violation of federal antitrust statutes. An ancillary covenant is one that is a subsidiary or auxiliary part of a larger agreement. This is commonly a sale of a business, where the contract contains a promise by the seller not to engage in the same type of business within a prescribed geographical distance for a certain length of time after the sale. These covenants, such as a promise by a father to pay $10,000 for a son’s promise not to engage in the medical practice- are generally considered to be an unreasonable restraint of trade and thus are unenforceable on public policy grounds . à In the majority of states, courts that find that a contract’s restrictions on competition serve an employers legitimate interest but are unreasonably broad (either in terms of geography or time) will simply rewrite the covenant so that the restrictions are reasonable in scope and then enforce them to that extent.
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Businesses and others try to avoid potential liability from the tort of negligence through the use of exculpatory clauses that purport to excuse them from liability resulting from their own negligence. These are generally, though not always, held to be contrary to public policy and thus unenforceable.
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  • Spring '08
  • Law, Common Law, Supreme Court of the United States

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