Estate of Nelson v. Rice

198 Ariz. 563, 12 P.3d 238 (Ct. App. 2000)



Unconscionability includes both procedural unconscionability, i.e., something wrong in the bargaining process, and substantive unconscionability, i.e., the contract terms per se. 


Personal representatives hired an appraiser to appraise personal property in preparation for an estate sale. The appraiser told the personal representatives that she did not appraise fine art and that, if she saw any, they would need to hire an additional appraiser. The appraiser did not report finding any fine art, and relying on her silence and her appraisal, personal representatives priced and sold plaintiff estate's personal property. Responding to a newspaper ad, a buyer attended the estate sale and paid the asking price of $ 60 for two oil paintings. An auction house authenticated the paintings as the work of Martin Johnson Heade, and it sold the paintings for $1,072,000. The buyer realized $ 911,780 from the sale. In an action seeking rescission or reformation of the sale of two paintings to the buyer, the estate alleged that the sale contract should be rescinded or reformed on grounds of mutual mistake and unconscionability.


Should the estate be entitled to a rescission of contract?




The court held that the estate was a victim of its own folly, and it was reasonable for trial court to allocate to it the burden of its mistake. The terms of the contract for the sale of the two paintings were not unconscionable, as the transaction involved no negotiation, plaintiff dictated the terms of the contract by naming a price for each painting, and defendant paid the asking prices. While the results of the transaction may have seemed unconscionable to plaintiff in hindsight, the terms of the contract were not. 

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