Contracts, Fall 2008

1. Contracts, Fall 2008 Class 24

2. Equitable Grounds not to Enforce a Contract • Problems with the parties • Problems with the process • Duress and undue influence • Misrepresentation • Problems with the substance • Unconscionability • Public policy • Covenants not to compete • Other • Illegality • Sensitive subjects (surrogacy)

3. Unconscionability • Need • Substantive Unconscionability • Procedural Unconscionability • A few courts; ‘substance is enough’- BUT still look for evidence of unequal bargaining power, lack of understanding, contract of adhesion, etc. • Could procedure ever be enough? Another doctrine would probably better cover… • BUT: waiver of jury trial might not be “knowing, voluntary and intelligent” – effect might be same as though procedure was enough

4. Public Policy: covenants not to compete • Conflicting policy concerns • reluctance to limit how/where/when people work • reluctance to limit competition • special factors with doctors and lawyers • Interests of people to choose their doctors and lawyers • With lawyers, per se unreasonable to prohibit lawyer from representing client • desire to let employer get benefit of proprietary investment, etc. • Approach: balance respective interests

5. Public Policy: Covenants Not to Compete • Restrict • A’s Activities • For x period of time • Over particular geographical range • Distinguish • Sale of business context • More apt to find covenant enforceable • Employer-employee context • Less apt to find covenant enforceable

6. Covenants not to compete • Three approaches • Enforce in whole • Don’t enforce • Blue pencil • Strike objectionable provision • Modify objectionable provision • Cross out objectionable words (‘light blue pencil’) OR • If necessary change words