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A contract is considered unconscionable if it is such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other. A contract is unenforceable because it is unconscionable when the sum total of its provisions drives too hard a bargain for a court of conscience to assist.
Plaintiff Gail Waters owned an annuity with a cash value of $ 189,000 and long-term value of $ 694,000. Her boyfriend introduced her to drugs, exhausted her credit card resources, and used his influence with her to convince her to sell the annuity to defendants, to whom he owed money, for $ 50,000. Plaintiff filed an action to rescind the contract. Defendants counterclaimed for a declaratory judgment and specific performance. The superior court rescinded the contract on grounds of unconscionability.
Was the contract unconscionable, thereby warranting its rescission?
On appeal, the court affirmed the superior court’s order. Applying both the principles of common law and their incorporation into the Uniform Commercial Code, the court agreed that the contract was unconscionable. The court remarked that the gross disparity between the value given in exchange for the $ 50,000 payment was reason alone to rescind the contract for unconscionability. The agreement was not one that any person in her right mind would have made on the one hand and that no honest and fair person would have accepted on the other hand. Combining these features with the undue influence of defendants' agent, the boyfriend, and other irregularities of the contract rendered it unenforceable.