P was in the business of leasing pinball machines and jukeboxes. D was a bar owner.
D approached P for a loan in the amount of $1500. D already owed P $5000 from previous dealings.
P agreed to loan D the money provided that the loan be secured by the liquor license and by way of a minimum guarantee from machines P was going to install in the bar. D signed the contract without reading it and without counsel present.
When P tried to collect the minimum guarantee money from D, they resisted and denied knowing about it. D asked P to remove his equipment from their bar.
P sued D alleging breach of the agreement. (sought an injunction restraining D from having any other coin-operated stuff and monetary damages)
Procedural History:
Lower court denied P's claim, found that the minimum guarantee clause was unconscionable, contract not valid.
MD COA reversed, granted P's claim, contract valid.
Issues:
Does the court have a duty to bail out parties who have the resources and intelligence to read and understand contracts but choose not to do so?
Holding/Rule:
The court does not have a duty to bail out parties who have the resources and intelligence to read and understand contracts but choose not to do so, absent fraud, mutual mistake, etc.
Reasoning:
Though D said they would not have signed the contract if they had known about the harsh terms, they did sign it and left themselves in the position of not being able to say what was in it at the time of signing.
Thus, they cannot prove that the guarantee provisions were written in after they signed it.
There is no evidence of fraud.
If the material provisions were indeed inserted in the blank spaces before the execution of the contract, it was a valid contract for the law presumes that a person knows the contents of a document that he executes.
It is getting to be too common to have parties ask courts to do what they could have done themselves if they had exercised ordinary prudence, or, to state it in another way, to ask courts to undo what they have done by reason of their own negligence or carelessness.
Discussing terms and executing the contract after D's attorney left wasn't good but was not enough to prevent the contract from being valid.
This was not a deliberate attempt to deceive D or gain a better bargaining position.
They had been to court before and were not friends; all the more compelling reasons why D should have read the contract.
Dissent:
None.
Notes:
The one case where prof cannot make up mind about who to believe.
