Chapter 12 Guidance on questions in the book

Question

Sly called at the home of Ted, a wealthy elderly man in the early stages of senile dementia, asking whether Ted needed any jobs to be done around the house. Ted was impressed with Sly’s polite, deferential manner and immediately told Sly he wanted him to decorate the exterior of the house. Sly suggested a grossly extravagant figure for the work, imagining that Ted would negotiate a much lower price, but to Sly’s delight Ted agreed at once. When Sly had completed half of the decorating, Ted’s daughter Ursula arrived to visit her father and was appalled to discover the exorbitant price Ted had agreed to pay. She told Sly to leave at once and that he would not be paid a penny. Discuss.

Answer guidance

You are asked to ‘discuss’ the problem, which in effect means advise the parties whether the partially-executed contract between Ted and Sly is enforceable or voidable on the basis of unconscionability. In practice, if Sly wishes to enforce the contract he will need to go on the offensive and sue Ted, to be met with a defence of unconscionability pleaded by Ted. To establish unconscionability, you will need to demonstrate that Ted’s age and senility qualifies as a significant weakness and that Sly acted badly in knowingly exploiting Ted’s weakness. Does it make any difference that Ted initiated the transaction or that Sly expected Ted to negotiate a lower price? Remember also that, eventually, Ted’s senile dementia will progress to a point where the contract may be invalid due to his incapacity, on which see ORC W1 chapter.