Waters v. Min Ltd.
412 Mass. 64, 587 N.E.2d 231 (Mass. 1992)

  • The good news for Waters was that she owned an annuity that was worth $189k at the time (and would be worth$694k in the future). The bad news was that she was on drugs and out of money.
  • She was persuaded by her boyfriend to sell her annuity to Min for $50k. Waters didn't have a lawyer, but Min did.
    • The contract was executed under unusual circumstances. For example, it was signed on the hood of a car. Also Min forgave part of a debt that the boyfriend owed to them for helping in this transaction.
    • Waters' boyfriend suggested the deal after he had maxed out all her credit cards. The guy's a peach, ain't he?
  • Waters changed her mind and refused to hand over the annuity. She sued to rescind the contract on the basis on unconscionablity.
    • Waters argued that it was ridiculous to sell an item worth $189k for just $50k.
      • In the British case of Chesterfield v. Janssen, the term unconscionable was defined as a contract, "such that no man in his senses and not under delusion would make on one hand and as no honest or fair man would accept on the other."
      • In Campbell Soup Co. v. Wentz the court found a contract to be unconscionable when, "the sum total of its provisions drives too hard a bargain for a court of conscience to assist."
    • Min argued that 'a deal's a deal' and counterclaimed for specific performance of the contract.
  • The Trial Court found for Waters. Min appealed.
    • The Trial Court gave her back the annuity plus $18k interest.
  • The Appellate Court affirmed.
    • The Appellate Court found that Min was taking advantage of Waters' circumstances and should not be rewarded for their bad behavior.
      • Min assumed no risk and Waters received no advantage.
    • The Court proposed a six part test to determine unconscionablity:
      • The oppressiveness of the contract upon the disadvantaged party
      • Unfair surprise to the disadvantaged party
      • Allocation of risk to the disadvantaged party due to superior bargaining power on the part of the stronger party
      • Gross disparity in consideration
      • Evidence that the stronger party knowingly took advantage of the weaker party
      • The presence of high pressure sales tactics or misrepresentation
  • UCC 2-302 talks about unconscionablity with regards to the sale of goods.
    • Although this case wasn't a sale of goods and therefore not bound by the UCC, in this case, the Court used the UCC as part of their decision-making process.