## Facts

- Gail A. Waters purchased an annuity with proceeds from a personal-injury settlement.
- At the time of the disputed transaction, the annuity had a cash value of about $189,000 and guaranteed payments totaling about $694,000 over twenty-five years.
- Waters, in her early twenties, was found to be inexperienced in contract matters and subject to undue influence by her boyfriend, Thomas Beauchemin.
- Beauchemin introduced Waters to Min Ltd. and related defendants and acted in arranging the transaction while also serving as an agent aligned with the defendants.
- Waters agreed to assign the annuity in exchange for $50,000; the defendants expected to receive the annuity’s substantially larger value.
- The defendants used legal counsel to prepare the agreement; Waters had no attorney.
- The agreement was executed in informal settings, including signing parts on the hood of a car in a parking lot and in a restaurant.
- Beauchemin received personal financial benefits connected to the deal, including forgiveness of a debt and deductions from payments otherwise due to Waters.
- After trial, the court ordered rescission conditioned on Waters repaying $18,000 plus interest, representing funds she actually received.

## Issues

1. Whether the annuity-assignment contract was unconscionable and therefore subject to rescission.
2. Whether Min Ltd. was entitled to specific performance or other enforcement relief on its counterclaim.
3. Whether the trial judge erred in finding the transaction oppressive, including by concluding the defendants assumed no significant risk.

## Decision

- The Supreme Judicial Court of Massachusetts affirmed the judgment for Waters.
- The court upheld the finding that the transaction was unconscionable in light of the extreme disparity in exchange and the circumstances of formation.
- The court approved rescission restoring the annuity to Waters, conditioned on repayment of $18,000 plus interest.
- The court affirmed dismissal of Min Ltd.’s counterclaim and refusal to order specific performance.

## Legal Principles

- A court sitting in equity may refuse to enforce, and may rescind, an agreement that is unconscionable when the overall circumstances show oppression or unfair surprise, not merely unequal bargaining power.
- Unconscionability may be shown through a combination of substantive unfairness (grossly one-sided terms) and procedural unfairness (lack of meaningful choice, vulnerability, undue influence, or absence of ordinary safeguards).
- A gross disparity between the value surrendered and the consideration received may support an inference that the bargain was improperly obtained and unconscionable.
- Specific performance is an equitable remedy and will be denied when it would compel enforcement of an unconscionable agreement.
- Rescission may be conditioned on restitutionary repayment so the parties are returned as closely as possible to their pre-contract positions, accounting for amounts actually received.

## Conclusion

The court held the annuity assignment unconscionable because the consideration was drastically inadequate and the agreement was formed under conditions showing procedural unfairness, including undue influence and lack of counsel; equity therefore warranted rescission with repayment of the net funds received and justified denial of specific performance.


Waters v. Min Ltd., 412 Mass. 64, 587 N.E.2d 231 (1992)