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Contracts

Exam 21
30 minutes

Fact Pattern

Storage Owner runs a warehouse full of one hundred small storage units, rented monthly by customers. The contract between Storage Owner and her customers specifies that if any customer falls behind in rental fees for six months, that unit’s contents will be sold at auction. In advance of her most recent auction, Storage Owner ran the following advertisement in the local newspaper:

EXCITING OPPORTUNITY! Storage units rented by New City’s wealthiest residents up for auction! No peeking before bidding – could be treasure, could be trash! Sixteen units to be auctioned, 9 a.m. sharp on January 18. 

Buyer read the ad and called Storage Owner to ask about the auction. Buyer was particularly curious about the description “rented by New City’s wealthiest residents,” and asked if Storage Owner would share the identities or any other details about the renters whose units were to be auctioned off. Storage Owner replied, “Well, I can’t tell you anything specific, since we don’t give out information about the individual units. I can say that a survey that we ran last year of our customers showed that the average income for the people renting our units was well into the six figures! Who knows what they store with us, but there’s a chance that the units contain some valuable items.”

Upon arrival at the auction, Buyer signed a contract with Storage Owner agreeing that his bids constituted binding offers that could be accepted by Storage Owner closing the auction. The contract also stated that any successful bids created an enforceable agreement. As the auction began, Storage Owner opened the door to each unit and allowed attendees to stand three feet from the door and look inside, but not to enter the unit or touch anything inside. Buyer was interested in Unit Four, which was almost completely full of cardboard boxes stacked in neat towers. Only one other attendee bid against Buyer for the unit, and Buyer was successful with a winning bid of $750. 

After the auction finished, Buyer signed an agreement acknowledging his high bid of $750 for the contents of Unit Four. Buyer then excitedly entered Unit Four and opened up the first box. He was disappointed to discover that the box was full of old newspapers. Even worse, he discovered that every single box was full of carefully preserved but worthless newspapers.

After opening the last box, Buyer stormed into the front office and accused Storage Owner of lying to him regarding the supposedly valuable contents of storage units. Storage Owner responded “Hey, sorry, I hope that they’re full of valuable things too! It doesn’t help me to have worthless items inside. I really thought there might be some cool stuff in there! But that doesn’t mean I’m refunding your money, a deal’s a deal.”

Buyer sued Storage Owner, demanding his $750 back. Buyer argued that the contract should not be enforced for three reasons: (1) Storage Owner misrepresented the contents of the storage units, (2) at least one of them was mistaken about the contents, and (3) given the worthless contents of the unit, the contract was unconscionable.


Questions

  1. Is Buyer likely to prove Storage Owner misrepresented something about the storage units in their communications regarding the auction? Explain.
  2. What will Buyer argue regarding potential mistakes in his contract with Storage Owner? Is Buyer likely to succeed? Explain.
  3. Is Buyer likely to successfully argue that his contract with Storage Owner is unconscionable? Explain.

Question 1

Is Buyer likely to prove Storage Owner misrepresented something about the storage units in their communications regarding the auction? Explain.

Question 2

What will Buyer argue regarding potential mistakes in his contract with Storage Owner? Is Buyer likely to succeed? Explain.

Question 3

Is Buyer likely to successfully argue that his contract with Storage Owner is unconscionable? Explain.

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