902

9. Remedia1 Defenses

NOTES ON UNCONSCIONABILITY AND

RELATED DEFENSES
1. Unconscionabilitv was an equitable defense, a defenge developed
by the chancellors before the merger. It is rooted in the notion that a
suit in equity was an appeal to the king's conscience; recall too, that the
early chancellors were usually bishops.
2. The chancellors enforced some equitable defenses at law as well
as in equity. For exam~le,fraud was an equitable defense not reognized
at law in suits on bonds or other promises under seal. B-debtor
cou!d file his own suit in equity and prove the fraud there, and the equity
court would enioin the creditor from suing on the instrument at law, or
from enforcing his judgment if h e already had one. It was a fraud case
that led to the historic clash between law and equity in 1616. Lord Coke,
Chief Justice of the King's Bench, attempted to have the debtor's lawyers
and the officials of the equity court indicted under a statute originally
intended to prevent Roman Catholic ecclesiastical courts from reviewing
common law judgments. King James 1 decided the case himself, relying
on a lengthy opinion from his attorney general, Sir Francis Bacon, and
permanently established the power of equity to enjoin proceedings at law.
3. The chancellors did not take al1 equitable defenses as seriously as
they took fraud. Unconscionability was a defense in equity, a g r p n d for
denyinn specific performance, but it was not a ground for enjoining a
suit at law. That tradition is reflected in Campbell's distinctionietween
unconscionable and illegal contracts: The contract is too one-sida to be
specifically enforced, but Campbell might be entitled to damages. That
rule might have been a reasonable accommodation when law and equity
were separate courts fighting for turf. It might even have made sense in
Campbell as a compromise, leaving Campbell to the undercompensatory
liquidated damage clause without denying it relief altogether.
Does it make any sense in the run of cases? Consider Campbell without
the liquidated damage clause. Does it make any sense to say the court
won't order the Wentzes to se11 $90 carrots for $30, but it will levy a $60
damage judgment against them if they refuse? 1s one order any harsher
than the other? How often do you suppose a court that considered a
contract too unconscionable to specificallv enforce actuallv entered a
damage judgment? The UCC codified unconscionability a*d made it
- noc
goods.
a defense at law as well as in equityf in
$2-302.
4. It is often said that there are other defenses to specific performance
that are not defenses to damage actions. Common examples are inadequate consideration, unilateral mistake, and ambiguous terms. Some
cases go beyond creating defenses. They put the burden of proof on
plaintiff, and emphasize that specific performance is a discretionary rem-

- -

B. Unconscionability and the Equitable Contract Defenses

903

edy. One finds statements such as the following: 'Specific performance

will be decreed only if it is clearlv established that the contract i s just,
reasonable, and free from misapprehension or misrepresqntation." Lannon v. Lamps, 399 N.E.2d 712, 716 (111. App. 1980).
There are plenty of cases on both sides of these propositions. In Lannon, the court refused to specifically enforce an option to lease land at
an interstate highway interchange for ninety-nine years. The rent was
fixed at $200 per acre per year; plaintiffs testified that that was a reasonable
rent at the beginning of the five-year option period. Plaintiffs had purchased the option for $10 from two feeble octogenarians. Contrast Lannon
with Bliss v. Rhodes, 384 N.E.2d 512 (111. App. 1978), specifically enforcing
a contract to se11 a farm for less than half its fair market value. T h e seller
was severely depressed and alcoholic when he agreed to the sale. The
legal description was inadequate and, to the extent it described anything,
erroneous. Both Lannon and Bliss cited Illinois Supreme Court cases in
support of their holdings.
5. Should al1 these defenses go to the substance of the contract and
not the remedy? That is, does it make any sense to say they preclude
specific performance but not damages? Might it make sense to say some
of these things preclude any expectancy remedy, whether specific performance or damages, but that they may not preclude some lesser remedy,
such as reliance damages, or cancellation of the contract and refund of
the purchase price?
6. Two recent articles defend the equitable defenses, principally on
the ground that courts can easily compromise the award of damages, but
cannot easily compromise on specific performance. Edward Yorio, A
Defense of Equitable Defenses, 51 Ohio St. L.J. 1201 (1990); Emily L.
Sherwin, Law and Equity in Contract Enforcement, 50 Md. L. Rev. 253
(1991). Courts can compromise on damages by awarding reliance instead
of expectancy, by finding consequential damages too remote or uncertain,
by accepting defendant's estirnate on valuation questions, or by letting
the jury nullify the rights of overreaching plaintiffs. A court can shave
the damages without having to acknowledge that it is doing so because
it disapproves of plaintiff's conduct. 1s this capacity for concealment a
good thing or a bad thing?
These techniques of compromise are relatively unavailable with a specific performance decree. Specific performance could be conditioned on
a price adjustment, but that is rare, and the reason for a price adjustment
would still have to be something like unconscionability. The result is that
specific performance cases are full of talk about conscience and discretion,
overtly introducing discretion to match the discretion that is inherent in
the more flexible process of measuring damages. The notion that damages
are more flexible than specific performance flouts the conventional wisdom. But isn't it right?