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IMPROPER BARGAINING STEP BY STEP

[8 Types] 1) Test FRAUD (5) Trigger = Misrepresentation


a) False Assertion of Fact: 3 ways to prove i) Affirmative Statement: Basically a deliberate lie ii) Concealment: Action taken to prevent other party from learning about a fact is equivalent to assertion that fact does not exist iii) Non-Disclosure: Not disclosing equivalent to assertion that fact does not exist (Ghost House Case) A) Relationship: When parties have some trust-based relationship B) Knowledge: When non-disclosing party knows that victim partys basis for K is a false fact C) Previous Wrong: When non-disclosing party does not correct a previously wrong assertion D) GFFD: When the Good Faith and Fair Dealing is breached iv) Notes: Fact (Sofa is made of leather) / Fact-based Opinion (Sofa is fashionable) can be basis. Opinion (I think sofa is great) / Future Prediction (Sofa will be envy of your friends) cannot be basis. b) Scienter: Knowledge that assertion is wrong or recklessness to the truth of assertion i) Actual Knowledge: Party knows/believes the assertion is not true ii) Confidence: Party lacks the confidence he states/implies in the truth of assertion iii) Basis: Party lacks the basis he states/implies for the assertion c) Intent to Induce: SUBJ desire to induce K via fraudulent assertion d) Justified Reliance: SUBJ victim party was induced and OBJ reasonable person would be induced e) Injury: Needs to be real

2) Test NEG/INNO MISREP (4) Trigger = Misrep


a) False Assertion of Fact: Just show one exists b) Reckless Scienter: No actual knowledge, but person lacks confidence/basis for assertion c) Fact is Material: 2 ways to prove

i) OBJ: Assertion would be likely to induce a reasonable person to manifest his assent; OR ii) SUBJ: Maker knows that it would be likely to induce the recipient to manifest his assent d) Injury: Needs to be real

3) Test DURESS (4) Trigger = Threat made


a) Threat: Show some threat was made, can be economic ( Austin Navy Case / Alaska Packers) b) Threat is Improper: Improper threats generally include any threatened behavior that goes beyond or abuses the legitimate rights of the threatening party ex. criminal prosecution, no-basis tort, breach of K c) Threat Induces K: Causation question did the threat actually induce the K? d) No Reasonable Alternative: Looks at all circumstances reasonable means no substantial injury, etc

4) Test UNDUE INFLUENCE (2) Trigger = Abuse of relationship


a) Relationship: Trust-relationship exists where victim party justifiably relies on other party b) Abuse of Trust: Party abuses trust to unduly influence victim party into assenting to an adverse K

5) Test UNCONSCIONABILITY (2) Trigger = No Fraud/Duress but unfair K


a) Absence of Choice (Procedural): Focus on oppressive bargaining power of dominant party. i) Oppressive Bargaining Indicia: (a) Some degree of deception or compulsion; (b) Awareness by a dominant party of infirmity; or (c) Ignorance/lack of understanding of non-dominant party ii) Adhesion K: Take it or leave it STD form K. Not unconscionable because its a STD form K, but because no real choice / unreasonable terms ex. Hospital requires signing liability K before administering treatment to gunshot-wound victim b) Unreasonable Terms (Substantive): Terms are grossly harsh, unfair, or unduly favorable to one party

6) Test ILLEGALITY/AGAINST PUBLIC POLICY (3) Trigger = Illegal basis for K


a) In Part Delicto: Leave the parties as they are starting point for courts ( Lawyer Referral Case)

b) Equities of Parties: Who was more at fault? Who gains more? ( Law Firm Partner Leaving Case) c) Public Interest: What should court do with the K in light of public interest?

7) Test INCAPACITY Trigger = Minor/mental illness/intoxication


a) General Rule: Ks entered into with an incapacitated party are voidable by the incapacitated party. i) Minor: Age of consent = 18. Result = voidable ii) Mental Capacity: Must show (A) incapacity existed (B) at the time of K iii) Intoxicated: No general avoidance unless parties knew of the drunk state