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
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,
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
Allocation of risk to the
disadvantaged party due to superior bargaining power on the part of the
Gross disparity in
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.