It’s the Law: The Rules of Contract

A couple of years back, I ran into a friend at the auto parts store.
I can’t remember what I was picking up, but I mentioned that I was rebuilding a 1966 Mustang. He was clearly surprised, and when I inquired as to why he said, “I don’t know, you just don’t seem the kind of guy who can do that.”
I wasn’t going to pursue that to find out the kind of guy he envisioned me to be, but recent events make me wonder whether I have “rube” or “sucker” plastered on my forehead.
A few weeks ago, I took my car into the dealership on a recall notice and, of course, they did the usual upsell informing me that my jalopy was one bolt from disintegrating. In particular, they wanted $577 to replace the rear shocks. Mind you, despite “rube” emanating from my persona, I actually know something about cars and I knew the price given was just a tad high.
I found some highly recommended shocks online for $76 (for both) and timed how long it took me to swap out the new shocks for the old — 34 minutes, not including jacking up the car. This means that the dealership wanted to charge me about $1000 per hour for labor. (I know what all of you are thinking — who are you lawyers to talk?)
The question for this column is, was asking $1000 per hour for labor legal? Many of you may be shocked (bad pun) at the price, but it is legal. It is a matter of contract.
If I had agreed, and there was no outside pressure acting on me to force my decision, I wouldn’t have any basis to complain. I was free to agree or go to another place and get another price. For the most part, people can contract freely for services and goods.
As with all things in the law, there are exceptions. There is no contract if there is some form of coercion forcing one party to enter into the contract. Duress can take different forms: economic duress, threats of violence, elder financial abuse, etc. There is also the question of whether an individual has the “capacity” to contract.
The most obvious example of one who does not have the capacity to contract is someone with dementia. Minors are considered to not have capacity to contract with a few notable exceptions — sports and entertainment contracts, for example.
Most people are aware of the anti-gouging laws. Some of our capitalist brethren flock to disaster sites offering their services for 10 times the going rate, relying upon the victims’ desperate circumstances to fleece them. This, of course, is a form of duress.
Then there is that all-American favorite: fraud. We laugh at the stereotypical car salesman telling you that “this baby sat in Grandma’s garage and never went over 20 miles an hour,” when it has been in a wreck. This is more than harmless puffing. It constitutes a special species of fraud — fraud in the inducement — where one is induced to enter into a contract because of misrepresentations.
There are also restrictions on “how” one can contract. This raises its head largely in the consumer context. In order to protect consumers from, for example, contractors, the law requires that any contract for home improvement have a host of provisions that help to educate and protect the consumer.
Home improvement contracts require — amongst many other things — that a contractor never take a down payment of more than 10 percent of the contract price or $1000, whichever is less. It also requires a number of warnings and a notice of the right to cancel the contract within three days of signing it — with a minor exception or two.
The saying: “Let the buyer beware,” was once a fairly good one-line summary of contract law. The law has, however, evolved to protect those in a weaker position from falling victim to the most strident adherents of our make-a-buck society. Mind you, this column covers just a tiny snapshot of the myriad laws surrounding contracts.
Has the law evolved enough to protect people like me who look like they can’t wait to pay $1000 per hour for labor? Not yet. 
– Gary Redenbacher of Scotts Valley is an attorney in private practice. E-mail him at ga**@re*********.com