Illegality Presentation

8/7/2019 Illegality Presentation

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Unconscionability and Illegality Defense

Case Analysis: Sosa v. Paulos M.D.Supreme Court of UtahPaul Bullen

Peter SongPatrick Johnson


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Introduction and Terms

Illegal = Unenforceable

3 Types of Illegal Contracts1. Agreements that violate statutes2. Agreements that violate public policy

3. Unconscionable agreements and contracts ofadhesion


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Unconscionability: Refers to contracts that areformed with the absence of meaningful choice for oneparty and/or contract terms that are unreasonablyadvantageous for one party

Elements of Unconscionability

Procedural Unconscionability: Unfairness in bargainingprocess

Substantive Unconscionability: Unfairness in terms


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Contracts of Adhesion:Take it or leave it offer given by a party in asuperior bargaining position

Common Law:Restatement (second) of Contracts closelyresembles UCC doctrine


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Case Facts

Plaintiff: Doncene Sosa

Defendant: Lonnie Paulos, M.D.

Event leading to lawsuit Physician-patient arbitration agreement

Botched surgery


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Case Facts

Specific contract terms in question

Article 3 Arbitration board must consist of only board-certified

orthopedic surgeons.

If patient fails to win 50% of desired retribution, patientmust pay legal fees as well as $150 per hour for timespent by physician defending himself

Article 5

Revocation allows agreement to be revoked within 14days


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Case History

Plaintiff files suit in district court(motion to dismiss arbitration contract)

Defendant moves to compel

arbitration in accordance withcontract

Trial court denies motionto compel arbitration

(unconscionable)


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Legal Issues (UT Supreme Court)

Substantively unconscionable

Procedurally unconscionable

Other Considerations: Does revocation clause matter?


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Decision and Reasoning

Was article 3 relating to arbitration boardselection unconscionable?

Answer: No

Reasoning:

1) No precedent

2) Cannot prove neutrally selected surgeons would be soone-sided or unreasonable as to unfairly surprise an

innocent party.


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Was article 3 relating to loser paymentsunconscionable?

Answer: Yes Reasoning:

1) No precedent

2) Contract was non-negotiated = both unconscionableand against public policy


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Was contract procedurally unconscionable?

Answer: Yes Reasoning: Arbitration agreement amounts to a contract of

adhesion

1) Presented with arbitration agreement minutes beforesurgery

2) Agreement not discussed with patient

3) Extraordinary assertiveness by Ms. Sosa not required


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Does the revocation clause save Dr.

Pauloss case?

Answer: Yes (split decision)

Reasoning:

1) 14 days was sufficient time to read contract


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Result

Reversed and remanded back totrial court to determine more

facts


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Implications

Unconscionable contract doctrine drawsfine line

Public policy implications can be

ambiguous

Law is extremely discretionary

Law changes with societys values, morals,

etc.


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Questions!?!?

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Illegality Presentation