Burch v. Second Judicial District of Nevada
i. DD Homes & Burch family entered into a contract for a house. House had a wet basement & DD didn’t fix it. After getting the house, the Burches signed a 1-page document that they were told was giving them extra coverage. DD then sent them a 31-page contract with an arbitration clause on page 6.
a. Burches file writ of mandamus
b. DD brings up the “you said (signed) it, you eat it” argument
c. Court here didn’t enforce the arbitration clause b/c was an Unconscionable Adhesion Contract
(1) Adhesion Contract-
(i) a standardized contract form
(ii) offered to consumers on a ‘take it or leave it’ basis
(iii) without affording the consumer a realistic opportunity to bargain
(2) 2 times Adhesion Contracts are enforceable:
(i) plain & clear notification of terms & understanding of consent
(a)basically, can you read it & understand it?
(ii) falls within reasonable expectations of the parties
(a)if you didn’t read it, could you have expected it to be in there?
(3) 2 components of Unconscionability
(i) Procedural- sharp practices by the party proposing the terms that undercuts the idea that the other party actually consented
(a)imperfections in the bargaining process; this undercuts the agreement/ promise aspect
· didn’t give her an opportunity to read it before signing
· terms were hidden on page 6
· guy giving the contract said it was automatic & acted like they were giving her something extra (extending her warranty)
(ii) Substantive- the contract is so 1-sided & overreaching that the court won’t enforce it; ridiculously unfair & entered into with open eyes
(a)like a public policy objection
· DD gave themselves the power to pick where arbitration would be, who would be the arbitrator, etc
· Court says that a lesser showing of Substantive Unconscionability is needed when there is a strong showing of Procedural