ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 14
CAPACITY AND LEGALITY
14-1A. Mental incompetence
The court held that the deeds were valid. A state intermediate appellate court held that Feiden
might have been competent at the time of signing and deferred to the trial court’s judgment on
the issue. The deeds were held valid. The appellate court explained, “A party’s competence is
presumed and the party asserting incapacity bears the burden of proving incompetence.
14-2A. Covenants not to compete
The court granted a summary judgment in Brass’s favor, finding that the contract was overbroad
in its time and geographic limitations. On MSI’s appeal, a state intermediate appellate court
affirmed this judgment. The court quoted from a state statute, which said that a covenant not to
B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 14
14-3A. Contracts by minors
On this issue, the court ruled in favor of the defendants. The court reasoned that because
Samsonov signed the CSKA contract “before he turned eighteen years old, the agreement is
voidable. * * * [T]here is no liability for interference with such an agreement absent employment
14-4A. Exculpatory clause
The court granted the defendants’ summary judgment motion, noting the “extensive nature of
the waiver.” Eelbode appealed to a state intermediate appellate court, which reversed the lower
court’s judgment and remanded the case. The appellate court held that the document Eelbode
signed did not bar his claim. The court acknowledged that an exculpatory clause may be
enforced unless it violates public policy. In this case, the court found it significant that “[p]hysical
therapy services and health care services are regulated by the state. Physical therapists must
be licensed with the secretary of health and must conform to standards regarding the
14-5A. Unconscionability
IFF won in court. In its decision, the court distinguished between procedural and substantive
unconscionability. Procedural unconscionability may arise in the bargaining process and “is
characterized by great disparity in the bargaining positions of the parties,” producing a result
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 14 B-3
14-6A. Gambling debts
The court held that Aubin had defrauded Carnival and owed Carnival $25,000 (plus attorneys’
fees and costs). The court was bound by a higher court’s earlier decision in this case that debts
associated with gambling are unenforceable for reasons of public policy. But this court
concluded that the state’s public policy against fraud outweighed the policy against the
enforcement of gambling debts. The court reasoned that when Aubin signed the drafts, he
promised to pay them, but that he had no intent of doing so. “When there is a promise to do an
act in the future, like pay on a draft, and there exists at the time of the promise an intention not
14-7A. Adhesion contracts
B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 14
to Thomas’ reasonable expectation,” considering the stressful circumstances under which the
agreement was signed. As to the form’s unconscionability, the court stated that, given the
circumstances—Thomas’s hurry, the failure of the hospital to explain the agreement, and the
small print of the form—Thomas either may not have understood “the implications of the
agreement,” or may have “felt he had no choice but to immediately sign the preprinted form.”
14-8A. Gambling contracts
The Georgia Supreme Court held in part that an agreement to purchase a ticket in a lottery
sponsored by another state and to share the proceeds if it won was not a gambling contract.
The court explained that “[i]n a gambling contract one of [the parties] is certain to lose. By the
14–9A. Unconscionable contracts or clauses
The arbitration agreement in this case was both procedurally and substantively unconscionable.
Procedural unconscionability concerns the manner in which a contract is entered into. Here, the
buyers did not speak or read English, and the sale was conducted in Spanish. The written
14-10A. A QUESTION OF ETHICS
1. Rather than just enforce covenants not to compete, courts generally must consider and
weigh the protection of legitimate business interests of the employer, the potentially unduly
oppressive effect on the former employee, and the public interest involved. These factors may
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 14 B-5
2. Holding a covenant not to compete void frustrates the intent of the contracting parties.
Although a reasonable time period or geographical area is not capable of precise calculation,
3. The court granted the request. Glenn appealed to a state intermediate appellate court,
which reversed the order of the lower court. The appellate court recognized that “[a]n employer
may not simply forbid his employee from subsequently operating a similar business. The
employer must have an interest which he is trying to legitimately protect. There must be some
reason why it would be unfair to allow the employee to compete with the former employer.” The
court also identified as factors to weigh in the balance the breadth of a covenant’s restrictions
and the public policy at issue.