Unconscionability Self-Quiz
Ben and Jerry own an ice
cream manufacturing plant in Vermont, where there are only two dairy farms
that produce enough milk to fill Ben and Jerry’s needs. For years,
Ben and Jerry have been buying their milk and cream from Slumberland Farms.
However, an epidemic has recently killed 90% of Slumberland’s cows
and they have gone out of business. Desperate to stay in business, Ben
and Jerry turn to Moo Juice, the other dairy farm in the area, for their
milk and cream. Seeing that Ben and Jerry are desperate, Moo Juice agrees
to sell cream to Ben and Jerry for 50 cents a gallon and milk for $7 per
gallon. The market price for cream is 45 cents per gallon and the market
price for milk is $1 per gallon. Having no choice, Ben and Jerry agree.
However, when Moo Juice makes the first delivery, Ben and Jerry refuse
to accept the milk. Moo Juice immediately sues for breach of contract.
Ben and Jerry argue that the contract is unconscionable. The court finds
that the contract is unconscionable and Ben and Jerry request that the
court either 1) void the whole contract, 2) void the contract but only
as far as the sale of the milk, or 3) uphold the entire contract but modify
the unconscionable element of it so that they can pay a more reasonable
price for the milk. The court will be able to enact:
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College Painters, Inc. is
a house painting company staffed and run by college students from Boston
College. The company has just signed a contract with Howard, a private
homeowner, to paint his house. The contract states that the company will
paint the house white with blue trim and Howard will pay the company $10,000
for the job. Howard takes the contract to read it over and slips in a
clause stating that he will not have to pay the company until one year
after the job has been finished. The company does not notice the clause
until after they have signed the contract but before they have begun painting.
After they notice the clause, the company calls Howard and tells him that
they will not be painting his house. Howard immediately sues the company.
The company will probably:
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Moo Juice is a dairy farm
that has been the exclusive supplier of milk and cream to Eddie’s
Ice Cream for several years. Moo Juice’s sales to Eddie have accounted
for 95% of Moo Juice’s business. Recently, Eddie’s has gone
out of business and Moo Juice is desperate to find a new company to buy
their milk and cream. Ben and Jerry own an ice cream manufacturing plant
in Vermont and Moo Juice approaches Ben and Jerry about becoming their
new milk supplier. Ben and Jerry tell Moo Juice that they will buy all
the cream they need from Moo Juice at 50 cents per gallon and all the
milk they need from Moo Juice at $1 per gallon. The market prices for
cream and milk are 60 cents per gallon and $1.10 per gallon respectively.
Ben and Jerry tell Moo Juice that they will not negotiate on the price
and that Moo Juice can either take the offer or leave it. Moo Juice immediately
signs the agreement. Later, Moo Juice finds out that Ben and Jerry inserted
a provision into the contract that defers their duty to pay Moo Juice
for one year. Moo Juice refuses to deliver to Ben and Jerry and Ben and
Jerry sue Moo Juice for breach of contract. Ben and Jerry will probably:
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Ben and Jerry sign a contract
under which Moo Juice will ship them 10,000 gallons of milk per month
for two years and Ben and Jerry will pay $1 per month for the milk. Ben
and Jerry insist on putting a clause in the contract insulating themselves
from liability if they intentionally breach the contract. The day before
the first delivery is due, Ben and Jerry inform Moo Juice that they will
not be buying milk from them. Moo Juice immediately sues Ben and Jerry.
Ben and Jerry will probably:
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