*25The opinion of the court was delivered by

Heher, J.

By an indenture dated April 16th, 1931, plaintiff leased to defendants, for the retail merchandising of women’s wearing apparel, store premises situate in the principal business district of the city of Paterson. The term was two years, to commence on May 1st next ensuing, with an option of renewal for the further period of three years; and the rent reserved was $2,100 for the first year, and $2,400 for the second year, payable in equal monthly installments in advance.

The state of the case settled by the District Court judge sets forth that defendants adduced evidence tending to show that, in the month of April, 1932, before the expiration of the first year of the term, they advised plaintiff that “it was absolutely impossible for them to pay any increase in rent; that their business had so fallen down that they had great difficulty in meeting the present rent of $175 per month; that if the plaintiff insisted upon the increase called for in the lease, they would be forced to remove from the premises or perhaps go out of business altogether;” and that plaintiff “agreed to allow them to remain under the same rental ‘until business improved.’ ” While conceding that defendants informed him that “they could not pay the increase called for in the lease because of adverse business conditions,” plaintiff, on the other hand, testified that he “agreed to accept the payment of $175 each month, on account.” For eleven months of the second year of the term rent was paid by defendants, and accepted by plaintiff, at the rate of $175 per month. The option of renewal was not exercised; and defendants surrendered the premises at the expiration of the term, leaving the last month’s rent unpaid. This action was brought to recover the unpaid balance of the rent reserved by the lease for the second year — $25 per month for eleven months, and $200 for the last month.

The District Court judge found, as a fact, that “a subsequent oral agreement had been made to change and alter the terms of the written lease, with respect to the rent paid,” but that it was not supported by “a lawful consideration,” and therefore was wholly ineffective.

*26The insistence is that the current trade depression had disabled the lessees in respect of the payment of the full rent reserved, and a consideration sufficient to support the secondary agreement arose out of these special circumstances; and that, in any event, the execution of the substituted performance therein provided is a defense at law, notwithstanding the want of consideration. The principle invoked is applied in Long v. Hartwell, 34 N. J. L. 116; Halpern v. Shurken, 98 N. J. Eq. 28; Frank Wirth, Inc., v. Essex Amusement Corp., 115 N. J. L. 228. It is said also that, “in so far as the oral agreement has become executed as to the payments which had fallen due and had been paid and accepted in full as per the oral agreement,” the remission of the balance of the rent is sustainable on the theory of gift, if not of accord and satisfaction — citing McKenzie v. Harrison, 120 N. Y. 260; 24 N. E. Rep. 458; Evans v. Lincoln Co., 204 Pa. 448; 54 Atl. Rep. 321; Malis v. Campo, 25 Pa. Dist. 32; 43 A. L. R. 1458.

It is not suggested that the primary contract under consideration was of a class which may not lawfully be modified by parol, except to the extent that the substituted performance has been actually and fully executed and accepted; and we are not therefore called upon to consider that question. See Kerzner v. Chanin, 98 N. J. L. 38; Long v. Hartwell, supra; Troth v. Millville Bottle Works, 89 Id. 219; Headley v. Cavileer, 82 Id. 635; Wilkinson v. Plaket, 5 N. J. Mis. R. 853; affirmed, 104 N. J. L. 451; Halpern v. Shurkin, supra. The point made by respondent is that the subsequent oral agreement to reduce the rent is nudum pactum, and therefore created no binding obligation.

It is elementary that the subsequent agreement; to impose the obligation of a contract, must rest upon a new and independent consideration. The rule was laid down in very early times that even though a part of a matured liquidated debt or demand has been given and received in full satisfaction thereof, the creditor may yet recover the remainder. The payment of a part was not regarded in law as a satisfaction of the whole, unless it was in virtue of an agreement *27supported by a consideration. Pinnel’s Case, 5 Coke 117, a; 77 Eng. Reprint 237; Fitch v. Sutton, 5 East. 230; Foakes v. Beer, 9 App. Cas. 605; Cumber v. Wane, 1 Str. 426; Chicago, Milwaukee and St. Paul Railway Co. v. Clark, 178 U. S. 353; 20 S. Ct. 924; 44 L. Ed. 1099; Williston on Contracts (Rev. Ed.) §§ 120 et seq.; Anson on Contracts (Turck Ed.) 229, 234 et seq. The principle is firmly imbedded in our jurisprudence that a promise to do what the promisor is already legally bound to do is an unreal consideration. Schaefer v. Brunswick Laundry Co., 116 N. J. L. 268; Haynes Auto Repair Co. v. Wheels, Inc., 115 Id. 447; 180 Atl. Rep. 836; Durant v. Block, 113 N. J. L. 509 ; Decker v. Smith & Co., 88 Id. 630 ; Watts v. Frenche, 19 N. J. Eq. 407; Clyne v. Helmes, 61 N. J. L. 358; Chambers v. Niagara Fire Insurance Co., 58 Id. 216. It has been criticised, at least in some of its special applications, as “mediaeval” and wholly artificial — one that operates to defeat the “reasonable bargains of business men.” See Professor Ames’ Treatise, tit. “Two Theories of Consideration,” in 12 Harvard Law Review 515, 521; Chicago, Milwaukee and St. Paul Railway Co. v. Clark, supra; Sigler v. Sigler, 98 Kan. 524; 158 Pac. Rep. 864; Brooks v. White, 43 Mass. 283; Bolt v. Dawkins, 16 S. C. 198, 214; Wm. Lindeke Land Co. v. Kalman, 190 Minn. 601; 252 N. W. Rep. 650. But these strictures are not well grounded. They reject the basic principle that a consideration, to support a contract, consists either of a benefit to the promisor or a detriment to the promisee — a doctrine that has always been fundamental in our conception of consideration. It is a principle, almost universally accepted, that an act or forebearance required by a legal duty owing to the promisor that is neither doubtful nor the subject of honest and reasonable dispute is not a sufficient consideration. Williston on Contracts (Rev. Ed.), §§ 103b, 120, 130; Contracts A. L. I., § 76; Anson on Contracts {Turck Ed.) 229, 234, et seq.

Yet any consideration for the new undertaking, however insignificant, satisfies this rule. Coast National Bank v. Bloom, 113 N. J. L. 597. For instance, an undertaking to *28pay part of the debt before maturity, or at a place other than where the obligor was legally bound to pay, or to pay in property, regardless of its value, or to effect a composition with creditors by the payment of less than the sum due, has been held to constitute a consideration sufficient in law. The test is whether there is an additional consideration adequate to support an ordinary contract, and consists of something which the debtor was not legally bound to do or give. Haynes Auto Repair Co. v. Wheels, Inc., supra; Sigler v. Sigler, supra; Bryant v. Proctor (14 B. Mon.), 53 Ky. 451; Hastings v. Lovejoy, 140 Mass. 261; 2 N. E. Rep. 776; White v. Walker, 31 Ill. 422; Lamb v. Rathburn, 118 Mich. 666; 77 N. W. Rep. 268; Evans v. Lincoln Co., supra; Jaffray v. Davis, 124 N. Y. 164; 26 N. E. Rep. 351; Bice v. Silver, 170 Ia. 255; 152 N. W. Rep. 498; Singer Sewing Machine Co. v. Lee, 105 Md. 663; 66 Atl. Rep. 628; Perkins v. Lockwood, 100 Mass. 249; Good v. Cheesman, 2 B. & Ad. 328; Williston on Contracts (Rev. Ed.), §§ 103b, 131; Anson on Contracts (Turck Ed.) 236, 250; 1 C. J. 541, 544, 545.

And there is authority for the view that, where there is no illegal preference, a payment of part of a debt, “accompanied by an agreement of the debtor to refrain from voluntary bankruptcy,” is a sufficient consideration for the creditor’s promise to remit the balance of the debt. But the mere fact that the creditor “fears that the debtor will go into bankruptcy, and that the debtor contemplates bankruptcy proceedings,” is not enough; that alone does not prove that the creditor requested the debtor to refrain from such proceedings. Melroy v. Kemmerer, 218 Pa. 381; 67 Atl. Rep. 699. See Williston on Contracts (Rev. Ed.), § 120, and cases cited in footnote.

The eases to the contrary either create arbitrary exceptions to the rule, or profess to find a consideration in the form of a new undertaking which in essence was not a tangible new obligation or a duty not imposed by the lease, or, in any event, was not the price “bargained for as the exchange for the promise” (see Coast National Bank v. Bloom, supra), and therefore do violence to the fundamental principle. They *29exhibit the modera tendency, especially in the matter of rent reductions, to depart from the strictness of the basic common law rule and give effect to what has been termed a “reasonable” modification of the primary contract. See Bowman v. Wright, 65 Neb. 661: 91 N. W. Rep. 580; 92 Id. 580: Ten Eyck v. Sleeper, 65 Minn. 413; 67 N. W. Rep. 1026; Ossowski v. Wiesner, 101 Wis. 238; 77 N. W. Rep. 184; Hastings v. Lovejoy, supra; Evans v. Lincoln Co., supra; Nonamaker v. Amos, 73 Ohio St. 163; 76 N. E. Rep. 949; Lamb v. Rathburn, supra; Wm. Lindeke Land Co. v. Kalman, supra; Sigler v. Sigler, supra; While v. Walker, supra; Donellan v. Read, 3 B. & Ad. 899; 23 E. D. L. 215; 6 Eng. Rul. Cas. 298; Jaffray v. Greenbaum, 64 Iowa 492; 20 N. W. Rep. 775; Sargent v. Robertson, 17 Ind. App. 411; 46 N. E. Rep. 925; United Steel Co. v. Casey, 262 Fed. Rep. 889; Commercial Car Line v. Anderson, 224 Ill. App. 187; 43 A. L. R. 1456, 1458, 1478.

So tested, the secondary agreement at issue is not supported by a valid consideration; and it therefore created no legal obligation. General economic adversity, however disastrous it may be in its individual consequences, is never a warrant for judicial abrogation of this primary principle of the law of contracts.

It remains to consider the second contention that, in so far as the agreement has been executed by the payment and acceptance of rent at the reduced rate, the substituted performance stands, regardless of the want of consideration. This is likewise untenable. Ordinarily, the actual performance of that which one is legally bound to do stands on the same footing as his promise to do that which he is legally compellable to do. Anson on Contracts (Turck Ed.) 234; Willis ton on Contracts {Rev. Ed.), §§ 130, 130a. This is a corollary of the basic principle. Of course, a different rule prevails where bona fide disputes have arisen respecting the relative rights and duties of the parties to a contract, or the debt or demand is unliquidated, or the contract is wholly executory on both sides. Anson on Contracts (Turck Ed.) 240, 241.

*30It is settled in this jurisdiction that, as in the case of other contracts, a consideration is essential to the validity of an accord and satisfaction. Haynes Auto Repair Co. v. Wheels, Inc., supra; Decker v. Smith & Co., supra; Union Cleaners and Dyers, Inc., v. Zeidman, 113 N. J. L. 86. On reason and principle, it could not be otherwise. This is the general rule. 1 Am. Jur. 235. The cases cited by appellant, Long v. Hartwell, supra; Halpern v. Shurken, supra, and Frank Wirth, Inc., v. Essex Amusement Corp., supra, are not in point. It results that the issue was correctly determined.

Judgment affirmed, with costs.

Opinion by

Me. Justice Eagen,

This appeal is from a final decree of the Court of Common Pleas of Allegheny County sitting in equity. Plaintiff asked the court to set aside a real estate conveyance as a violation of the Uniform Fraudulent Conveyance Act, Act of May 21, 1921, P. L. 1045, 39 P.S. §§351-363, to declare void a supplemental agreement allegedly induced by fraud, and to grant plaintiff a money decree for work done under both the supplemental agreement and the basic contract as well as for loss of profits and punitive damages. Defendant denied that there was fraud involved in either the real estate conveyance or the supplemental agreement, denied that it owed plaintiff any sum under the basic contract and supplemental agreement, claimed a set-off for uncompleted work and counterclaimed for delay damages. The court below refused the request for a reconveyance under the Fraudulent Conveyance Act, supra, refused to declare the supplemental agreement void, dismissed plaintiff’s claims for lost profits and punitive damages, denied defendant a set-off for uncompleted work, dismissed the counterclaim for delay damages and decreed that defendant should pay plaintiff $127,759.54 (the balance due on the basic contract price together with extras) plus interest. Defendant appeals.

Briefly, the background facts of this case are as follows. On August 16, 1961, the plaintiff, Universal *553Builders, Inc. (hereinafter Universal), entered into a written contract with the defendant, Moon Motor Lodge, Inc. (hereinafter Moon), for the construction of a motel and restaurant in Allegheny County. The contract provides, inter alia, that all change orders must be in writing and signed by Moon and/or the Architect and that all requests for extension of time must be made in writing to the Architect. The contract specifications also required that a certain proportion of a re-inforcing substance be used in the building walls. The masonry sub-contractor failed to use the specified proportion. When this defect was discovered, Moon magnified its importance, withheld from Universal a progress payment to which Universal was entitled, threatened to expel Universal from the job and thereby induced Universal to enter into the supplemental agreement. The supplemental agreement, dated March 27, 1962, provides, inter alia, that Universal will pay Moon |5000 as damages for the absence of the reinforcing material, that Universal will perform certain additional work at no additional cost to Moon, that the date for completion of the project is extended from April 1, 1962, to July 1, 1962, and that liquidated damages at a specified rate per day will be assessed for delay.

Universal substantially completed performance on September 1, 1962, and left the construction site on October 1, 1962. After filing this suit, Universal went into bankruptcy. The trustee prosecuted this action and won a final decree in the lower court.

Before reaching the contract questions, it is necessary to consider several preliminary matters.

Moon contends that Universal has unclean hands because Joseph V. Pizzuti, an officer and executive of Universal during the performance of the contract, allegedly manufactured evidence to support Universal’s *554case. This is not a sufficient ground to deny Universal relief for three reasons.

First, although the manufacturing of evidence by a plaintiff certainly might bar recovery under the clean hands doctrine, see Gaudiosi v. Mellon, 269 F. 2d 873 (3d Cir. 1959) and Mas v. Coca-Cola Co., 163 F. 2d 505 (4th Cir. 1947), in the instant case the evidence was manufactured not by the plaintiff but by an officer of the plaintiff corporation, now in bankruptcy. The attribution of one party’s unclean hands to another party is not based on simple agency principles. The applicable law has been outlined by the late Judge Learned Hand: “Whenever the question has come up, it has been held that immoral conduct to be relevant, must touch and taint the plaintiff personally; that the acts of his agents, though imputed to him legally, do not impugn his conscience vicariously. Vulcan Detinning Company v. American Can Company, 72 N.J. Eq. 387, 391, 392, 67 A. 339 . . . [other citations omitted]. On principle, so far as there is any principle about the whole matter, it seems to me that a plaintiff should not be so charged. The doctrine is confessedly derived from the unwillingness of a court, originally and still nominally one of conscience, to give its peculiar relief to a suitor who in the very controversy had so conducted himself as to shock the moral sensibilities of the judge. . . . The reasons which justify imputing liability to a principal for his agent’s acts, whatever they are, have nothing in common with such a notion. It would be monstrous that a man’s conscience should bear the sins of those he employs, however liable he may be for their acts, and a doctrine which stands upon moral wrongdoing must clear itself of that confusion, or adopt another form. While it stands upon the court’s repugnance to the suitor personally, it must confine itself to his personal delinquencies.” Art Metal *555 Works, Inc. v. Abraham & Straus, 70 F. 2d 641, 646 (2d Cir.) (dissenting opinion), cert. denied 293 U.S. 596, 55 S. Ct. 110 (1934), adopted as opinion of the court 107 F. 2d 944 (2d Cir.) (per curiam), cert. denied 308 U.S. 621, 60 S. Ct. 293 (1939). In this case, appellant offers no persuasive reasons for imputing Pizzuti’s conduct to the bankrupt corporation, nor do we see any such reasons ourselves.

Second, assuming for the sake of argument that Pizzuti’s conduct should be imputed to Universal, the application of the clean hands doctrine to deny relief is within the discretion of the chancellor. Shapiro v. Shapiro, 415 Pa. 503, 204 A. 2d 266 (1964). Where the rights of innocent parties are involved, the doctrine should be applied cautiously. See Zweifach v. Scranton Lace Co., 156 F. Supp. 384 (M.D. Pa. 1957), and the doctrine should not be invoked if its application will produce an inequitable result. Hartman v. Cohn, 350 Pa. 41, 38 A. 2d 22 (1944). To deny plaintiff recovery in this case would result in the enrichment of Moon at the expense of innocent creditors of the bankrupt Universal. This is an inequitable result and thus we are not persuaded that the clean hands doctrine should be applied.

Third, although it has been said that the clean hands doctrine applies in courts of law as well as in courts of equity, Olmstead v. United States, 277 U.S. 438, 484, 48 S. Ct. 564, 574 (dissenting opinion) (Brandeis, J.) and Z. Chaffee, Some Problems of Equity (1950), it generally has been held that the doctrine operates only to deny equitable, and not legal, remedies. Merchants Indemnity Corp. v. Eggleston, 37 N.J. 114, 179 A. 2d 505 (1962); Manufacturers’ Finance Co. v. McKey, 294 U.S. 442, 55 S. Ct. 444 (1935); 30 C.J.S., Equity, §98 at pp. 1037-38 (1965). The plaintiff in this case was granted, not a special equi*556table remedy, but only a money decree. In effect, Universal received what it would have if the action had been at law in assumpsit.* We are not persuaded that the clean hands doctrine should be applied to deny plaintiff this legal right.

Next Moon contends that Pizzuti’s conduct in manufacturing evidence should disqualify him as a witness, just as if he had been convicted of perjury. If Pizzuti’s testimony is completely disregarded, Universal’s case against Moon collapses. Moon’s argument that Pizzuti should be disqualified as a witness completely ignores the Act of May 23, 1887, P. L. 158, §4, 28 P.S. §314, which provides: “In any civil proceeding before any tribunal of this Commonwealth, or conducted by virtue of its order or direction, no liability merely for costs nor the right to compensation possessed by an executor, administrator or other trustee, nor any interest merely in the question on trial, nor any other interest, *557 or policy of law, except as is provided in section five of this act, shall make any person incompetent as a witness.” (Emphasis added.) None of the exceptions apply. See Act of May 23, 1887, P. L. §5, 28 P.S. §§315, 317, 321, 322, 323.

Finally, recognizing that it is discretionary with a court to accept or reject the testimony of a witness who is found to he lying in part, e.g., Luckenbach v. Egan, 418 Pa. 221, 224, 210 A. 2d 264, 265-66 (1965) and Commonwealth v. Ieradi, 216 Pa. 87, 64 A. 889 (1906), Moon contends that the lower court abused its discretion in not rejecting all of Pizzuti’s testimony. There is no merit in this argument. The lower court certainly had sufficient grounds to exercise its discretion. It noted that Pizzuti’s financial interest in the outcome of the litigation is remote. The lower court also had the opportunity to observe the witness and to compare his testimony with other evidence for purposes of corroboration. We find no abuse of discretion in the lower court’s consideration of Pizzuti’s testimony.

With reference to the merits, Moon urges that the lower court erred in several respects.

First Moon submits that the chancellor erred in not enforcing the contract provision that extras would not be paid for unless done pursuant to a written, signed change order.

Unless a contract is for the sale of goods, see the Uniform Commercial Code—Sales, the Act of April 6, 1953, P. L. 3, §2-209(2), as amended, 12A P.S. §2-209 (2), it appears undisputed that the contract can be modified orally although it provides that it can be modified only in writing. E.g., Wagner v. Graziano Construction Co., 390 Pa. 445, 136 A. 2d 82 (1957); 4 Williston on Contracts, §591 (3d ed. 1961); 6 Corbin on Contracts, §1295 (1962); Restatement, Contracts, §407 (1932). Construction contracts typically provide *558that the builder will not be paid for extra work unless it is done pursuant to a written change order, yet courts frequently hold that owners must pay for extra work done at their oral direction. See generally Annot., 2 A.L.R. 3d 620, 648-82 (1965). This liability can be based on several theories. For example, the extra work may be said to have been done under an oral agreement separate from the written contract and not containing the requirement of a written authorization. 3A Corbin on Contracts, §756 at p. 505 (1960). The requirement of a written authorization may also be considered a condition which has been waived. 5 Williston on Contracts, §689 (3d ed. 1961).

On either of the above theories, the chancellor correctly held Moon liable to pay for the extras in spite of the lack of written change orders. The evidence indicates that William Berger, the agent of Moon, requested many changes, was informed that they would involve extra cost, and promised to pay for them. In addition, Berger frequently was on the construction site and saw at least some of the extra work in progress. The record demonstrates that he was a keen observer with an extraordinary knowledge of the project in general and the contract requirements in particular. Thus it is not unreasonable to infer that he was aware that extra work was being done without proper authorization, yet he stood by without protesting while the extras were incorporated into the project. Under these circumstances there also was an implied promise to pay for the extras.

C. I. T. Corp. v. Jonnet, 419 Pa. 435, 214 A. 2d 620 (1965), does suggest that such non-written modifications are ineffective unless the contract provision requiring modifications to be in writing was first waived. That case, however, is misleading. Although it involved a contract for the sale of movable bar and *559restaurant equipment, which is a contract for the sale of “goods” controlled by the Uniform Commercial Code —Sales, supra, §2-101 et seq., as amended, 12A P.S. §2-101 et seq., it overlooks that legislation, in particular §2-209, which provides: “(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party. (3) The requirements of the Statute of Frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions. (4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver. (5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.”

From subsection (5) it can be inferred that a provision in a contract for the sale of goods that the contract can be modified only in writing is waived, just as such a provision in a .construction contract is waived, under the circumstances described by Restatement, Contracts, §224 (1932), which provides: “The performance of a condition qualifying a promise in a contract within the Statute [of Frauds or in a contract containing a provision requiring modifications to be in writing (§407)] may be excused by an oral agreement or permission of the promisor that the condition need not be performed, if the agreement or permission is given while the performance of the condition is possible, and in reliance on the agreement or permission, while it is *560unrevoked, the promisee materially changes his position.” Obviously a condition is considered waived when its enforcement would result in something approaching fraud. 5 Williston on Contracts, §689 at pp. 306-07 (3d ed. 1961). Thus the effectiveness of a non-written modification in spite of a contract condition that modifications must be written depends upon whether enforcement of the condition is or is not barred by equitable considerations, not upon the technicality of whether the condition was or was not expressly and separately waived before the non-written modification.

In view of these equitable considerations underlying waiver, it should be obvious that when an owner requests a builder to do extra work, promises to pay for it and watches it performed knowing that it is not authorized in writing, he cannot refuse to pay on the ground that there was no written change order. Focht v. Rosenbaum, 176 Pa. 14, 34 A. 1001 (1896). When Moon directed Universal to “go ahead” and promised to pay for the extras, performance of the condition requiring change orders to be in writing was excused by implication. It would be manifestly unjust to allow Moon, which mislead Universal into doing extra work without a written authorization, to benefit from nonperformance of that condition.

Next Moon submits that the lower court erroneously dismissed its counterclaim for delay damages. The lower court denied Moon any recovery for the delay because it resulted from Moon’s own acts in ordering many changes. There is authority for this position. E.g., Hood v. Meininger, 377 Pa. 342, 350, 105 A. 2d 126, 130 (1954) (cited by lower court); Pittsburgh Iron and Steel Engineering Co. v. National Tube Works Co., 184 Pa. 251, 39 A. 76 (1898); Lilly v. Person, 168 Pa. 219, 32 A. 23 (1895). In this case, however, the contract expressly conditions the allowance *561of any time extension on the submission of a written request to the Architect. This condition specifically applies to delays caused by the owner’s, i.e., Moon’s, own acts. Article 18 of the General Conditions provides: “If the contractor be delayed at any time in the progress of the work by any act or neglect of the Owner or the Architect, or of any employee of either, or by any separate contractor employed by the Owner, or by changes ordered in the work . . . then the time of completion shall be extended for such reasonable time as the Architect may decide. No such extension shall be made for delay occurring more than seven days before claim therefor is made in writing to the Architect. . . .”

Consequently the case authority on which the lower court based its decision is not controlling.

The evidence that Universal conformed with the procedure required by Article 18 is slight; what evidence there is has been largely discredited. However a condition precedent such as the one contained in Article 18 can of course be waived, 3A Corbin on Contracts, §756 at 507-08 (1960), and there is evidence to support at least a partial waiver.

By executing the Supplemental Agreement (which extends the time of substantial completion from April 1, 1962, to July 1, 1962) without reference to the procedure established by Article 18, Moon certainly waived Article 18 with reference to that extension. It is not apparent, however, that this waiver applies to subsequent delays. Apart from the execution of the supplemental agreement, there is no evidence that Moon expressly or impliedly promised that the condition precedent contained in Article 18 would not apply to subsequent delays. We think it does so apply.

With reference to the assessment of delay damages, we agree with the lower court that the liquidated damage provision in the supplemental agreement is void. *562Consequently, Moon is entitled only to the actual damages caused by the delay from July 1, 1962 (the date set for completion in the Supplemental Agreement) to September 1, 1962 (the date when the contract was substantially completed). This is computed as follows:

$69,869. (The loss of earnings attributable to the delay of five months from April 1,1962 to August 31, 1962, according to Moon’s Exhibit L, prepared by Arnold I. Levine, C.P.A. of J. K. Lasser & Co., Pittsburgh, Pa.)

X 2/5ths (Eepresenting the two month delay)

$27,946.60 -• 5,000.00 (check of July 5, 1962, given by Universal to Moon as delay damages)

$22,946.60

Finally, we have carefully considered the record and we agree with the lower court that there was sufficient evidence to establish the amount of Universal’s claim for extras and that there was not sufficient evidence to establish Moon’s set-off claim for uncompleted work.

The decree of the lower court therefore was correct, except insofar as it failed to allow Moon’s counterclaim for delay damages, as before indicated, for the period from July 1, 1962, to September 1, 1962.

Decree vacated and record remanded for entry of a decree consonant with this opinion. Each party to bear own costs.

Dissenting Opinion by

Me. Justice Musmanno:

I believe an injustice is being done the defendant in this case. The lower court awarded the plaintiff *563$42,283.29, for extras, but the record shows that only $900 of such extras was earned on two signed change orders agreed to in writing. Yet the agreement specifically provides that, except in an emergency endangering life or property, no claim for an addition to the contract price was to be valid unless the work was done pursuant to the owner’s written, signed order, and after written notice given by the contractor before proceeding with the work. I am disturbed that the Majority could have reached its conclusion when the record shows that there toas no such writing.

Even the plaintiff did not contend that the requirement in writing was waived by agreement of the parties, as in Wagner v. Graciano Construction, 390 Pa. 445, relied upon by the Majority. The most that the plaintiff has shown are oral modifications of the work called for under the contract, which is exactly what is prohibited by the solemn agreement entered into between the parties. The oral modification certainly cannot be used as evidence of a waiver, for otherwise, a requirement of writing would become meaningless. This Court clearly pointed out this fundamental proposition of law in C.I.T. Corp. v. Jonnet, 419 Pa. 435, 438, where this writer, speaking for the Court, said: “Nowhere, however, do the defendants allege cancellation by the plaintiff of the express term of the original conditional sale contract that £no waiver or change in this contract or related note, shall bind such assignee (in this ease, the plaintiff) unless in writing signed by one of its officers.’

“This specific condition stands as a stone wall in the path of the defendants’ contention. However, they believe they have found a way around this formidable barrier by citing the case of Kirk v. Brentwood M. H., Inc., 191 Pa. Superior Ct. 488, 492 where the Superior Court said that ‘Even where the written contract pro*564Mbits a non-written modification, it may be modified by subsequent oral agreement.’ TMs is true but there must first be a waiver of the requirement which has been spelled out in the contract. Otherwise, written documents would have no more permanence than writings penned in disappearing ink. If this, the defendants’ argument, were to prevail, contractual obligations would become phantoms, solemn obligations would run like pressed quicksilver, and the whole edifice of business would rest on sand dunes supporting pillars of rubber and floors of turf. Chaos would envelop the commercial world.”

The lower court, in reaching its conclusions, relied in part on a certain letter, but this letter, by its reference to one of the signed change orders, clearly refutes rather than supports any agreement to cancel out the requirement of writing. Nor was there sufficient evidence to support the award for the extras. Pizzuti, plaintiff’s secretary-treasurer and only full-time officer, testified that the extra costs were incurred in the amounts shown on change order forms which were not signed by the defendant and which were prepared by the plaintiff away from the job site and presented for the first time during court conciliation attempts. The evidence failed to show that the work charged for was actually performed and that an extra cost was incurred thereby, nor was there a showing of the exact amount involved. Further, there was no evidence as to what labor and material were used in excess of what was required under the original plans. There was no breakdown whatever with accompanying proof to support the plaintiff’s claim for extras or that its figure had awarded the defendant proper credit for the items charged in the original contract and later changed and charged as extras.

*565It was the plaintiff’s duty to support its claim for extras with competent evidence which in my opinion it wholly failed to produce. I cannot, therefore, go along with the Majority’s conclusions as to recoveries to be permitted. And I am perplexed as to why the Majority denies the defendant credit for the cost of completing the work left unfinished by the plaintiff. The court below held that the figure of $15,564, testified to by defendant’s expert, did not take into account the 1962 rates of labor and material which were 15% lower; but even if the $15,564 was reduced by 15%, the defendant would still be entitled to a $13,229 credit.

As to damages due the defendant for the plaintiff’s five months’ delay in the completion of the motel, Arnold I. Levine, CPA, resident partner of J. K. Lasser and Company, testified that the delay amounted to $456.67 a day or a loss of not less than $69,869. Pizzuti claimed excusable delays of 59 days and the architect, Roberts, testified to a delay of 76 days. Therefore, even if the 76 days are deducted from the $68,869 (which figure was not contradicted by any testimony to the contrary) defendant would still be entitled to $35,620.-26 less the $5,000 agreed to as delay damages in the supplemental agreement, or a net of $30,620.26.

Though the credibility of witnesses is ordinarily a matter left within the chancellor’s determination, I cannot escape concluding that the chancellor in this case abused the discretion vested in him when he chose to grant such a large award to the plaintiff corporation on the testimony of its principal officer who had given to the court admittedly forged documents and testified falsely with regard to those documents. However, as before stated, even if his testimony were entitled to some probative value, it was insufficient to support the plaintiff’s claims for extras and to defeat *566the defendant’s credit for unfinished work and delay damages.

Accordingly, I would only allow the plaintiff corporation to recover the balance due on the original contract of $91,590 less undisputed credits of $6,113.75 and less $13,229 credit for unfinished work and less $30,620.26 as damages for the delay in making the motel available to defendant for use, or a total of $41,626.99. It is my opinion • that the plaintiff wholly failed to support its claim for extra work by credible, competent and sufficient evidence and the burden of disproving extras should not have been placed upon the defendant as in effect it was. The defendant’s evidence, to the contrary, in support of its claim for credit for unfinished work and for damages for the delay in having the motel available for occupancy, was credible, competent and sufficient in support thereof. Thus I believe it was a gross abuse of discretion on the part of the court below to deny the defendant such credits. Where the court was too lenient with the plaintiff, it was too strict with the defendant.

Thus I would modify the decree of the court below in accordance with what I have here written.

Mr. Chief Justice Bell joins in this dissenting opinion.

LANGTRY, J.

(Pro Tempore).

The plaintiff’s complaint alleged that plaintiff and defendant agreed that the plaintiff would attempt to *250find a lessee for industrial property owned by the defendant, that plaintiff did find a lessee with whom defendant made a 20-year lease of the property at a total rental of $3,040,000, that the defendant therefore owed plaintiff a commission of five per cent plus one half of the first month’s rent, or $157,000, and that the defendant paid $5,000 to plaintiff and owed the remaining $152,000, for which judgment was demanded.

The defendant’s answer consisted of a general denial and an affirmative defense based on an attached release. The instrument recites that for $5,000, acknowledged to be a full commission for all services rendered, a complete release was granted by the plaintiff.

Plaintiff’s reply alleged two defenses to the release: no consideration and duress. Defendant demurred separately to each of these affirmative replies, both demurrers were sustained, and judgment for the defendant was entered on the pleadings. The demurrers should have been overruled. A demurrer to an answer or a reply opens, or searches, the record so that the sufficiency of the preceding pleadings of both parties relating to the same subject are tested. 71 CJS 536-39, Pleadings §262; Clark, Code Pleading 524-26, §83 (2d ed 1947). A party demurring to his opponent’s pleading stakes any of his own pleadings on the same matter on the demurrer and he cannot prevail if his own pleading is defective. 71 CJS, Pleadings at page 536. See Scott v. Hall, 177 Or 403, 163 P2d 517 (1945). Defendant’s answer was deficient in that it failed to allege that the $5,000 was paid in settlement of a claim that was either unliquidated or otherwise in dispute.

“it is necessary * * * to allege the various *251particular elements of an accord and satisfaction * ** * and that the prior demand was unliquidated or honestly disputed * * *.”① 1 CJS 553, Accord and Satisfaction § 47.

The fact that defendant’s answer generally denies the complaint is not sufficient to cure the lack of an allegation that the claim was in dispute or unliquidated at the time the alleged release was executed. The affirmative answer must be complete in itself.②

*252This ease must he remanded to the circuit court, where the pleadings may be amended. In order to save another appeal on matters which have been fully briefed and argued in this one, we think a discussion of the sufficiency of the affirmative reply relating to duress is in order. The reply in question was as follows:

“I

“The Plaintiff, in requesting' payment of the obligation due him from Defendant, which obligation is set forth in the Complaint on file herein, informed Defendant that due to Plaintiff’s adverse financial condition, he was in danger of immediately losing his home by foreclosure of the existing mortgage and was in danger of immediately losing other personal property through repossession and foreclosure unless funds from Defendant were immediately made available for the purpose of paying these creditors. As a result thereof, Defendant at the time of the execution of the pretended release set forth in Defendant’s Answer well knew Plaintiff’s precarious financial condition and knew of the impending immediate loss of Plaintiff’s property unless funds were forthcoming. At that time Defendant was informed by Plaintiff and well knew that the money due Plaintiff from Defendant was the only source of funds then and there available to Plaintiff. Under these circumstances Defendant, through its agent, Harlow Call, advised Plaintiff that though he was entitled to the sums demanded in Plaintiff’s Complaint, unless he signed the purported release set forth in Defendant’s Answer, Plaintiff would receive no part thereof, inasmuch as Defendant had extensive resources and powerful and brilliant attorneys who would and could prevent Plaintiff in any subsequent legal proceeding from obtaining payment of all or any portion of said sums.

“II

“Defendant, through its agents, acted without good faith, without reasonable belief that the de*253mand it was making upon Plaintiff was based upon a good defense or good cause of action, and with knowledge that Defendant had no right to the money it gained by the alleged release.

“HI

“As .a result of the duress imposed upon the plaintiff by Defendant and by third parties, of which Defendant had knowledge Plaintiff was deprived of the free exercise of his will; faced with the choice between the comparative evils of loss of property altogether or compliance with an unconscionable demand, and as a result, was thereby forced to release a valid claim worth $157,000.00 for the grossly inadequate sum of $5,000.00.”

The Restatement, 2 Contracts 938, §492 (1932), defines duress in the following terms:

“Duress in the Restatement of this Subject means

“(a) any wrongful act of one person that compels a manifestation of apparent assent by another to a transaction without his volition, or

“(b) any wrongful threat of one person by words or other conduct that induces another to enter into a transaction under the influence of such fear as precludes him from exercising free will and judgment, if the threat was intended or should reasonably have been expected to operate as an inducement.”

This statement of the rule reflects what the text writer calls the modern or equitable rule in 17 CJS, Contracts § 177 at page 965. The text states that a contract may be unenforceable by reason of “* * * economic duress or business compulsion where undue or unjust advantage has been taken of a person’s economic neces*254sity or distress to coerce him into making the agreement * °

' In early decisions, duress was limited in its scope so that a ease stated like the one at bar did not, if proven, invalidate a contract. Thus, in Hackley v. Headley, 45 Mich 569, 8 NW 511 (1881), where the facts were almost in point with those in the instant ease, the court held that simply because the plaintiff was in dire financial circumstances, which defendant knew and took advantage of, there was no ground for a successful claim Of duress. The holding in Hacldey is typical of other opinions, some old and some recent, which have held that the economic necessity of the claimant, coupled with the debtor’s refusal to pay unless foreed by law to .do so, which together make it possible for the debtor to coerce an advantageous agreement from the claimant, are no basis for avoiding the agreement on a duress defense. See cases cited for the text in 17 CJS 966, 967, Contracts § 177. The decisions are often conflicting in similar fact situations, as Professor John P. Dawson pointed out in Economic Duress — An Essay in Perspective, 45 Mich L Rev 253 (1947). He said at page 289:

. a* * * The direct conflict in decisions, on facts substantially identical, makes it likewise impossible to formulate any general proposition that could now achieve anything like universal acceptanee. Nevertheless;,- it seems clear that many decisions have already shifted a considerable distance beyond the limits defined by conventional statements of doctrine and' that further shifts aré to be expected. The most that can be claimed is ■■that .change has been broadly toward acceptance of' a general conclusion — that in the absence of specific countervailing factors of policy or administrative 'feasibility, restitution is required of any excessive gain that results,-in1 á bargain transaction, from 'im*255paired bargaining power, whether the impairment consists of economic necessity, mental or physical disability, or a wide disparity in knowledge or experience.”

Among many cases decided since Professor Dawson’s article was published in 1947 are the following:

Ross Systems v. Linden Dari-Delite, Inc., 35 NJ 329, 335, 173 A2d 258 (1961):

“* i! * Payments are made under duress when they are induced by the wrongful pressure of the payee and the payor has no immediate and adequate remedy in the courts to resist them * * (Citing cases, Annotations in 75 ALR 658 (1931); 79 ALR 655 (1932), and Economic Duress — An Essay in Perspective, supra.)

“* ® * [T]he phrase ‘immediate and adequate remedy’ as it is used in the duress doctrine * * * is to be tested by a practical standard which takes into consideration the exigencies of the situation in which the alleged victim finds himself * * * [citing cases].” 35 NJ at 336.

Joyce v. Year Investments, Inc., 45 Ill App2d 310, 314, 196 NE2d 24 (1964):

“ ‘[T]he real and ultimate fact to be determined in every case is whether or not the party really had a choice — whether he had his freedom of exercising his will.’ 5 Williston, Contracts (Rev. Ed. 1937) §1603. The legal conception of economic or compulsory duress is in forcing a person to act against his own will. It does not exist when the person upon whom it has been so charged had an option or choice as to whether he will do the thing or perform the act said to have been done under duress * *

The court held that under the facts of that case, where the plaintiff had disputed and negotiated with defendant for 18 months before signing the questioned re*256lease tliat plaintiff had had adequate opportunity to protect himself in an equity court proceeding if he had wanted to do so as an alternative to executing the release.

Manno v. Mutual Ben. Health & Accident Assoc., 187 NYS2d 709, 713 (Sup Ct 1959):

“It may not be amiss to point out some of the elements, presently lacking, which would appear essential to invoke the modern doctrine of economic duress. This doctrine is constantly being extended and expanded and bears slight resemblance to common-law duress (see, generally, Dawson, Economic Duress — An Essay in Perspective, 45 Mich. L. Rev. 253; Dawson, Duress Through Civil Litigation, 45 Mich. L. Rev. 571; Id. 679; Dalzell, Duress by Economic Pressure, 20 N.C.L. Rev. 237; Id. 341; Hale, Bargaining, Duress and Economic Liberty, 43 Col. L. Rev. 603; Prewett, Threat of Litigation as Duress, 6 Ark. L. Rev. 472; 5 Williston, Contracts [Rev. Ed.], ch. XLVII; Restatement, Contracts, ch. 16, and New York Annotations thereon; 17A Am. Jur., Duress and Undue Influence, secs. 1-18; Annotation, 79 A.L.R. 655). As stated by Professor Dawson (45 Mich. L. Rev., at 289): 'The history of generalization in this field offers no great encouragement for those who seek to summarize results in any single formula.’ This is peculiarly a field where each case must stand on its own facts.

“Among the factors and circumstances which seem requisite to a cause of action for economic d,uress are the age and mental ability of the party seeking to avoid the transaction, his financial condition, the absence of good faith and reasonable belief by the other party making the demand that he has a good defense or a good cause of action, the adequacy of the consideration passing between the parties, and the adequacy of the legal remedy afforded by the courts [citing cases].” (Emphasis supplied.)

*257See also Parmentier v. Pater, 13 Or 121, 9 P 59 (1885); Schoellhamer v. Rometsch, 26 Or 394, 38 P 344 (1894); Mendelson v. Blatz Brewing Co., 9 Wis2d 487, 101 NW2d 805 (1960); and Tri-State Roofing Co. of U. v. Simon, 187 Pa Super 17, 142 A2d 333 (1958).

In Leeper v. Beltrami, 53 Cal2d 195, 1 Cal Rptr 12, 347 P2d 12, 77 ALR2d 803 (1959), the court held that if the plaintiff had a “reasonable alternative” to that of acceding to defendant’s demand that she pay a false claim, and plaintiff did not avail herself of the alternative, the defendant’s action which coerced her into payment is not duress. Deeper is not in point with the case at bar on its fact, but the court clearly held that in cases where economic duress is claimed, it is a question of fact whether the plaintiff acted as a reasonably prudent person in choosing the alternative which was chosen. See also Inman v. Clyde Hall Drilling Company, 369 P2d 498, 500, 4 ALR3d 430 (Alaska 1962).

We have reviewed recent writings and opinions at some length in this opinion. Prom this review, we conclude that the better rule is one which allows the statement of a duress cause or defense such as plaintiff has pleaded here to be tried on its facts. Thus, the quoted allegations from the plaintiff’s reply state a defense.

Reversed and remanded for further proceedings consistent with this opinion.

DENECKE, J.,

specially concurring.

I concur in the decision that the judgment for the defendant must be reversed; however, I cannot concur in the reasoning of the majority.

The first ground for reversal is that the defendant’s answer setting up a release is insufficient be*258cause it failed to allege that the claim was unliquidated or otherwise in dispute. The majority refers to this release as an accord and satisfaction, whereas the instrument is in terms of a release. There is a theoretical difference between a release and an accord-satisfaction ; however, both are forms-of contract, and probably it is immaterial whether the agreement is an accord and satisfaction or a release.

I can see nothing to be served by requiring the pleader setting up an accord and satisfaction or a release to further allege that the claim released or satisfied was an unliquidated or disputed claim. The only materiality of such an allegation is that a release or agreement of accord and satisfaction of a liquidated and undisputed claim for an amount less than the full amount of the claim is not binding. It is not binding because there is no consideration. This court has adopted the accepted rule of pleading that the defense of want of consideration is new matter which must be pleaded. Tuthill v. Stoehr, 163 Or 461, 469, 98 P2d 8 (1940). Observance of this rule requires the other party to allege that the claim was liquidated and not disputed and, therefore, there was a want of consideration, and the release is not binding.- This is what the plaintiff did in this case in his réply. I can see no reason to require the defendant to allege that the claim was unliquidated and disputed.

I concur that the demurrer to plaintiff’s affirmative reply of no consideration was improperly sustained, and the judgment on the pleadings was, therefore, in error. In my opinion the reply alleges a liquidated and undisputed claim of $.157,000 and the defense of want of consideration is adequately pleaded.

I disagree with that part of the majority holding *259that the plaintiff’s affirmative reply of duress states a cause for rescission:

I interpret the plaintiff’s reply as alleging as follows: Plaintiff was in such economic distress that he was in danger of losing his home and other personal property unless funds owed him by the defendant were immediately paid; plaintiff informed defendant of his condition; defendant acknowledged to plaintiff that it owed him $157,000 but advised plaintiff that unless he signed a complete release in consideration of receiving $5,000 the defendant would pay him nothing; and defendant further informed the plaintiff that defendant’s lawyers were so brilliant that they could prevent plaintiff from getting a judgment against defendant.

I view the basic ingredients of the allegations to be. that plaintiff is in serious economic distress, which is known to defendant, and because of this defendant offers .and plaintiff accepts less than the defendant legally owes plaintiff.

This seems to be as strong a case for the operation of the doctrine of economic duress as can be made. Nevertheless, I believe it would be judicially unwise to hold .that these allegations constitute economic duress and that proof of such allegations would enable the plaintiff to rescind the release.

I .am of this opinion because I believe that a substantial number of business transactions today have these same basic ingredients. I am also of the opinion that' a majority of businessmen, while not approving such conduct, do not believe that such conduct should enable one to avoid an otherwise binding legal obligation. This belief is probably partially grounded upon the knowledge that the facts will seldom be as unambiguous as they are.here alleged and the party assert*260ing this defense will usually be an unfortunate and unsuccessful party opposing a fortunate and successful party. This could cause the trier of fact to find the facts to fit the result. The attitude of the business community is a consideration, although not a compelling one. In addition, I believe that other kinds of sanctions and grounds for relief are available and more desirable.① The well recognized doctrine that an agreement to release a debtor in consideration for a payment of a sum less than the acknowledged amount owing is not enforceable because of a lack of consideration affords relief in situations such as plaintiff has alleged.

I agree with the majority that the decisions of other jurisdictions are in conflict on this issue. I am of the opinion that the doctrine of economic duress is more supported by dicta in the opinions than in the decisions themselves. For example, see Hellenic Lines, Ltd. v. Louis Dreyfus Corporation, 372 F2d 753 (2d Cir 1967).

An example of a decision which refused to apply the doctrine of economic duress is Weinman Pump Manufacturing Co. v. Cline, 116 Ohio App 4, 183 NE2d 465 (1961), noted in 12 DePaul L Rev 351 (1963). In that case the plaintiff’s manufacturing plant was being appropriated for a freeway and it was imperative that he quickly relocate. Plaintiff owned some other property upon which he wished to relocate. Defend*261ant owned a parcel contiguous to plaintiff’s property and it was desirable for plaintiff to acquire this parcel to make the relocation feasible. The parties entered into a contract for the sale of the parcel for $8,000. The defendant could not give clear title, plaintiff commenced a specific performance suit, defendant then disclosed that he was married and he would not get a release of his wife’s dower interest unless plaintiff paid him an additional $7,000. Plaintiff paid the additional sum because he urgently needed the land and then commenced a suit to recover the $7,000. The court held for the defendant on the ground that the evidence of business duress did not prove a cause for relief.②

The opinion of the court was delivered by

Freund, J. A. D.

Plaintiffs, husband and wife, instituted this action in the Camden County Court to recover a deposit of $2,450 which they made under a contract to purchase a house to be built for them by the defendant, The Marlton Corporation. The sale was never consummated, and the *281defendant builder eventually sold to a third party the home which had been intended for the Wolfs. The theory of the action is that plaintiffs were at all times ready, willing, and able to comply with the building contract but that the builder unilaterally and unjustifiably terminated the contract without returning the down payment. The County Court judge, sitting without a jury, concluded in a written opinion that it was the defendant who refused to perform under the contract and that consequently a judgment in favor of plaintiffs was dictated. The Marlton Corporation (hereinafter “the builder”) appeals.

The agreement of sale, entered into by the parties on March 8, 1951, called for the construction of a dwelling in defendant’s housing development in Haddon Township upon the following terms:

“Cash at signing of this agreement (inclusive of any deposit heretofore paid) ........................ $2,450.00

An additional cash payment on or before house closed in ................................... 2,450.00

Cash at final settlement ....................... 3,100.00

Bond and mortgage in the sum of 25 yr. conv. 514% ■ ■ 16,500.00

Total Purchase Price..........................$24,500.00

it sis sj: >•< # # v *

Should Buyer fail to make payment of any additional moneys as herein mentioned, or fail to make settlement as herein provided, the sum or sums paid on account may be retained by Seller either on account of the purchase price or as compensation for the charges and expenses which Seller has sustained, as Seller may elect, in which latter ease this contract shall become null and void and all copies hereon shall be returned to the Seller for cancellation.”

It is undisputed that the builder had completed the “closing in” of the house sometime in June 1951 and that plaintiffs did not make the second payment. Their failure in this respect is attributed to the conceded fact that they were never personally notified by the builder that the house had been “closed in.” After reviewing the testimony, the trial judge stated in his opinion that the case presented a *282“simple question” as to whether “the plaintiffs were entitled to a notice that the house was closed in or whether the defendant, without giving such notice, could claim a default * * *•” He concluded that the agreement of sale contemplated the giving of such notice. Defendant does not, on appeal, challenge this portion of the opinion below. It does, however, claim that the buyers’ attorney was notified of the closing in on at least four occasions during the period from July 1957 to September 1957, and that notice to an attorney handling a transaction for his client is notice to the client.

This contention was not advanced at the trial level, and we find no occasion to explore it as a matter of principle here. The evidence clearly shows that the buyers’ attorney told defendant’s representatives that his clients would make the second payment if defendant insisted. Eor reasons presently to be stated, defendant’s president, Martin Field, elected not to demand the payment. Under these circumstances, defendant may not now declare a forfeiture on this basis; the doctrine of estoppel is applicable.

The alternative ground briefed on behalf of the builder as basis for a reversal fixes upon a matter of far greater import. The point is captioned: “Buyers breached the agreement of sale by preventing its performance through threats to resell the house to an undesirable purchaser and to ruin defendants’ building business if defendants carried out the contract.”

The factual basis for the argument raised is not developed systematically in the briefs. As to those events which contributed to a mutual unwillingness to perform the contract, we are compelled to reconstruct them piecemeal from the briefs, the opinion of the trial judge, and such portions of the testimony the appellant has seen fit to submit. It appears that the eventual collapse of negotiations had its genesis in marital difficulties between the plaintiffs experienced in the summer of 1957. Apparently because of this, plaintiffs instructed their attorney that they would like to get out of *283the agreement of sale. The attorney in turn informed defendant’s sales agent, Irving Gitomer, that there were “certain problems here,” and that plaintiffs would like “to get the money back.”

Mr. Gitomer testified that he spoke with plaintiffs’ attorney on at least three occasions during July and August of 1951'. In one such conversation, the attorney told him the Wolfs were ready, willing and able to purchase the home, even if the terms were cash, but, as Mr. Gitomer testified:

“[T]his conversation was coupled with the fact that they were reluctant to do it, but, if they had to do it, they would go through with the sale, and that a subsequent resale would be arranged to a purchaser who would be undesirable in our tract, and that we would not be happy with the results.”

Martin Pield had but one telephone conversation with plaintiffs’ attorney, which was in the second week of September. The two discussed the possibility of a settlement, Field agreeing to honor the request for cancellation if defendant were allowed to retain $1,000 of the $2,450 deposit. Field testified as to what then ensued:

“|TI]e reiterated in very strong and clear terms that if we did not accept his offer [of §450] it would be the sorriest move that I ever made in my building career. I accepted it as a threat, and I felt that at this point it was impossible to go ahead and continue with this thing. The threat was made in the terms that, ‘It’s all right. If you are going to force us — you have got us over a barrel, and, if you are going to force us to make this settlement, wo will make the settlement, but it will be 1he last settlement that you’ll ever make, and it will be the last tract that you will ever build in New Jersey, and it will be the last house that you will sell in this tract,’ and he continued, he named a few of the attorneys who lived in the tract, and said, ‘Don’t have the fellows who live in your tract tell me I shouldn’t do it. It doesn’t make any difference to me. I’m telling yon what I’m going to do. I’m going to do it, and it will be the sorriest thing that you have ever done.’ At this point, although I had offered to refund $1,450.00, it became apparent that he was using this as leverage to drive us down to the $450.00 figure, and I told him no, that we -wouldn’t do it, and that’s where the thing was left.”

*284The first question asked of Field on cross-examination was:

“Despite this conversation of which you speak, Mr. Field, you never notified the people to come to a settlement or closing of this thing, did you?”

He replied:

“I wasn’t going to make a closing after someone threatened to ruin my building career.”

Subsequently, by letter of December 30, 1957, the builder’s counsel advised the attorney that by reason of plaintiffs’ “material breach” of the contract, it had become “null and void” and that defendant would retain the down payment. The letter assigned as the cause of termination, “among other reasons,” plaintiffs’ failure to make the second payment. At the oral argument defense counsel (pro Tiac vice), who had prepared this letter for the builder, stated that he had advisedly used the phrase “among other reasons” because he did not deem it discreet to make written reference to the threat that had actually been made and to which Field testified.

Based upon this letter, which plaintiffs maintain constituted the first breach of contract, suit was instituted for the recovery of the deposit.

We have already stated the basis upon which the County Court entered judgment in favor of the plaintiffs. But contrary to the assertion in plaintiffs’ brief that the court found as a fact that the builder’s refusal to consummate the sale was not justified by any threats, we do not read the opinion below as reaching any express determination on whether the threats, assuming they were made, justified the builder in declaring a breach and refusing further performance. The court cited what it called “the so called threat” —not in relation to whether there existed any justification for the builder’s course of conduct, but rather to indicate that the builder was admittedly unwilling to perform under the contract and therefore would not be heard to contend *285plaintiffs should have made the second payment; the question of justification for the builder’s action in rescinding seems not to have been adjudged. Moreover, even if the opinion is to be construed as containing an implied determination on the issue, we do not conceive that such would be a finding of fact, as distinguished from the determination of a legal issue. Whether duress exists in a particular transaction is generally a matter of fact, but what in given circumstances will constitute duress is a matter of law. Accordingly, the scope of appellate inquiry as to the correctness of the trial result is not so limited as plaintiffs suggest.

It is clear that where one party to a contract, by prevention or hindrance, makes it impossible for the other to carry out the terms thereof, the latter may regard the contract as breached and recover his damages thereunder from the first party. Tanenbaum v. Francisco, 110 N. J. L. 599, 604-605 (E. & A. 1933); Hanig v. Orton, 119 N. J. L. 248, 252 (Sup. Ct. 1938); 4 Corbin, Contracts (1951), § 947, p. 813. It is also clear that if the performance is prevented by physical threats, the threatened party may desist from performing, treat the contract as breached, and recover damages. Pie need not seek police protection or a judicial order to shield him in his performance of the contract. Kroop v. Scala, 5 N. J. Misc. 89. 135 A. 501 (Sup. Ct. 1927). The builder directs our attention to the last-cited case in particular. There a house owner had threatened a painting contractor that “if he went into the house to work he would cut his head off.” 5 N. J. Misc. at page 90. The court held the contractor was entitled to terminate the contract and to recover his profits; he was not obliged to run the risk that the owner would carry out his threats. Defendant urges that, except for the degree of sophistication, there is no real difference between a threat to cut one’s head off, there, and a threat to cut one’s business head off, here.

Plaintiffs contend, however, that threats to do bodily injury involve an obviously distinguishable form of coercion *286and that the present case is not one in which a party has physically prevented the other from carrying out the terms of a contract. We readily assent to the latter part of this argument; defendant was not physically prevented from enforcing the contract. But a distinction depending on the kind of pressure exerted carries little weight. “[DJuress is tested, not by the nature of the threats, but rather by the state of mind induced thereby in the victim.” Rubenstein v. Rubenstein, 20 N. J. 359, 368 (1956). See also Wise v. Midtown Motors, Inc., 231 Minn. 46, 42 N. W. 2d 404, 20 A. L. R. 2d 735 (Sup. Ct. 1950); 17 C. J. S. Contracts § 175, p. 534, text at note 60. And in the present case, when plaintiffs’ attorney threatened the builder that he would be ruined if the Wolfs were to be held to the bargain, the impress was the same as if physical pressure had been exerted. In the light of the Bubenstein case, it is significant, and perhaps crucially so, that defendant was as effectively prevented from forcing the Wolfs to comply with the contract as if a more immediate form of coercion had been employed.

Yet it was not indicated in the Bubenstein case that a party is to be relieved of the consequences of his action in all instances where the pressure used has had its designed effect, in all cases where he has been deprived of the exercise of his free will and constrained by the other to act contrary to his inclination and best interests. So much is evident from the court’s qualification that “the pressure must be wrongful, and not all pressure is wrongful.” 20 N. J. at page 367. It is also evident from the reference to 5 Willision, Contracts (rev. ed. 1937), §§ 1606, 1607, pp. 4500, 4503. That authority, in language more nearly appropriate to the facts here, states:

“Save under exceptional circumstances, tlie threatened act must be wrongful; it is not enough that the person obtaining the benefit threatened intentionally to injure the business, provided his threatened act was legal; and certainly there is no broad doctrine forbidding a person from taking advantage of the adversity of another to drive a hard bargain.” IMA., § 1618, p. 4523.

*287In this regard, plaintiffs assert that, once they bought the house, they had a legal right to sell to whomever they wished. They rely on the familiar general rule to the effect that a threat to do what one has a legal right to do does not constitute duress. See, e.g., Smith v. White, 125 N. J. L. 498, 500 (E. & A. 1940); Standard Radio Corp. v. Triangle Radio Tubes, Inc., 125 N. J. L. 131 (Sup. Ct. 1940); 17A Am. Jur., Duress and Undue Influence, § 18, p. 580. Compare Id., § 11, p. 572, text at note 14. That proposition, however, is not an entirely correct statement of the law of duress as it has developed in this jurisdiction. Under the modern view, acts or threats cannot constitute duress unless they are wrongful; but a threat may be wrongful even though the act threatened is lawful. We have come to deal, in terms of the business compulsion doctrine, with acts and threats that are wrongful, not necessarily in a legal, but in a moral or equitable sense. See, generally, Woodside Homes, Inc. v. Town of Morristown, 26 N. J. 529, 544 (1958); S. P. Dunham & Co. v. Kudra, 44 N. J. Super. 565 (App. Div. 1957); Annotation, 79 A. L. R. 655 (1932).

The leading case in this State on the subject of moral duress is Miller v. Eisele, 111 N. J. L. 268, 275-276 (E. & A. 1933), where the court quoted approvingly the definition of duress set forth in the 'Restatement, Contracts, § 492(g), p. 941:

“Acts or threats cannot constitute duress unless they are wrongful, even though they exert such pressure as to preclude the exercise of free judgment. But acts may be wrongful within tile meaning- of this rule though they arc not criminal or tortious or in violation of a contractual duty. Just as acts contracted for may be against public policy and the contract vitiated for that reason, though the law imposes no penalty for doing them, so acts that involve abuse of legal remedies or that are wrongful in a moral sense, if made use of as a means of causing fear vitiate a transaction induced by that fear, though they may not in themselves be legal wrongs.”

Further instructive is the decision in Hochman v. Zigler’s, Inc., 139 N. J. Eq. 139, 143 (Ch. 1946). In that case, when the lease of a small businessman expired, the lessor refused *288to renew. The lessor said, however, that he would lease to a purchaser of the business if the tenant could find one. The tenant proceeded to find a buyer who agreed to pay $7,800, but the lessor refused to execute a lease with the buyer unless the tenant paid over to him $3,500 of the purchase price. The tenant, whose business was worth but a mere $500 if forced to liquidate, succumbed to the lessor’s pressure. Notwithstanding that the defendant-lessor had the undoubted legal right to refuse to execute a lease, the court concluded that any defense on this ground was but a “mere legalism.” The lessor was “compelled to disgorge,” the court stating:

“Judgment whether the threatened action is wrongful or not is colored by the object of the threat. If the threat is made to induce the opposite party to do only what is reasonable, the court is apt to consider the threatened action not wrongful unless it is actionable in itself. But if the threat is made for an outrageous purpose, a more critical standard is applied to the threatened action.”

See also Rubenstein v. Rubenstein, supra, 20 N. J. at page 367; Fowler v. Mumford, 9 Terry 282, 102 A. 2d 535 (Del. Super. Ct. 1954). Distinguish the circumstances in Ewart v. Lichtman, 141 N. J. Eq. 34 (Ch. 1947).

The sale of a development home to an “undesirable purchaser” is, of course, a perfectly legal act regardless of any adverse effect it majr have on the fortunes of the developer’s enterprise. But where a party for purely malicious and unconscionable motives threatens to resell such a home to a purchaser, specially selected because he would be undesirable, for the sole purpose of injuring the builder’s business, fundamental fairness requires the conclusion that his conduct in making this threat be deemed “wrongful,” as the term is used in the law of duress. In our judgment, wrongful pressure was brought to bear on the defendant; he was thereby compelled to forego the right to hold plaintiffs to the contract they voluntarily signed.

As we noted above, if one party prevents another from performing a contract, the latter may treat the contract as *289breached, and recover damages. There is no reason why, in the application of this rule, economic or moral duress should not be treated as the equivalent of physical duress. We therefore hold that if the threats were in fact made and if the defendant actually believed that they would be carried out. and Field’s will was thereby overborne, defendant was justified in treating the contract as breached and is entitled to recover whatever damages resulted therefrom.

We have decided that the interests of justice call for a remand of this case to the County Court. This disposition is made necessary by the circumstance that the record on appeal is somewhat obscure in several respects, now to be discussed. There is first the question as to whether the trial judge gave credence to the testimony of defendant’s representatives concerning the making of the threats by plaintiffs’ attorney. The opinion of the court makes reference to a “so called threat,” but this terminology does not clearly make known what the actual findings of the trial judge were in this respect. This important factual issue should not be permitted to remain in doubt. Attention should also be directed to the question of whether or not the defendant’s will was really overborne; that is, whether Field actually believed plaintiffs’ attorney would carry out his threat and whether Field was actually fearful of the result.

The trial judge may also want to explore just what was meant by the use of the words “among other reasons” in the letter which the builder’s counsel wrote plaintiffs’ attorney on December 30, 1957 advising that there had been a “material breach” of the contract rendering it “null and void.”

Moreover, should the trial judge decide in defendant’s favor on the issue of actual duress, there remains for adjudication the actual amount by which defendant was damaged by reason of plaintiffs’ breach. Although the agreement of sale provides for liquidated damages, such provision is operative only upon the contingency that the buyer failed to make additional payments or failed to make settlement, neither *290of which, as we have seen, is the gravamen of the defense. It will therefore be necessary for the court, upon remand, to determine, from the present record if it can, whatever damages defendant sustained as a result of plaintiffs’ breach.

In making these determinations, the trial judge may find useful the complete transcript of the testimony, which, as noted, has not been submitted on appeal; or he may depend upon his own recollection of the evidence, including the demeanor of the witnesses who testified. We leave to his discretion whether the taking of additional testimony is necessary.

The judgment is remanded for further proceedings not inconsistent with this opinion.

CADENA, Justice.

Defendant, Methodist Mission Home of Texas, a licensed adoption agency, appeals from a judgment declaring that certain instruments executed by plaintiff, surrendering parental custody and control of her infant illegitimate child to, and permitting placement of the child for adoption by, defendant are void. The judgment is based on a jury finding that the execution of the instruments by plaintiff was the result of undue influence exerted on her by defendant’s agents and employees.

Defendant seeks a reversal of the judgment and a remand of the case on the ground that there is insufficient evidence to support the jury finding of undue influence.

The parties agree that, since plaintiff consented to the placement of her child for adoption by an agency licensed by the State of Texas, the consent is revocable only on proof of “fraud, mistake, misrepresentation, overreaching and the like.” Catholic Charities of Diocese of Galveston Inc. v. Harper, 161 Tex. 21, 337 S.W.2d 111, 114-115 (1960). The case was tried below on the theory, not questioned here by either party, that a consent executed as the result of the exertion of undue influence on the consenting natural parent is subject to revocation under the Harper Rule.

The Methodist Mission Home in San Antonio is operated by the United Methodist Church as a maternity home to provide “proper care for the girl or woman who finds herself faced with an out-of-wedlock pregnancy.” The United Methodist Church is the principal source of financial support for the Home. Additional sources of revenue include fees paid by girls who are admitted to the Home,1 contributions made by other religious organizations, and donations made by individuals, including gifts made by persons who adopt the children surrendered to the Home.

In addition to board, lodging and medical care, girls admitted to the Home receive the benefit of counselling by trained social workers who are members of the Home’s counselling staff. This counselling concerns the girls’ personal problems and vocational plans as well as “plans for the unborn child.” Once each week, the residents participate in group counselling sessions, conducted by Rev. Don Lilljedahl, Director of Counselling, assisted by Mrs. Sharon Burrows. In addition, each resident meets privately with her individual counsellor about once a week. Plaintiff’s individual counsellor was Mrs. Jo Ann Burns. Plaintiff’s claim of undue influence concerns the conduct and statements of Rev. Lilljedahl, Mrs. Burrows and, particularly, Mrs. Burns.

*541When the question before us concerns the “sufficiency” of the evidence to support a jury finding, we must consider and weigh all of the evidence in the case, not merely that which supports the verdict. We may set aside the verdict and remand the cause for a new trial if we conclude that, in view of all the evidence, the verdict is manifestly unjust, even though the record contains som£ evidence of probative force in support of the jury finding.2

An examination of the entire statement of facts reveals that there is sufficient evidence to support the following conclusions:

1.It is the policy of the Home to encourage unwed mothers to release their children to the Home for placement for adoption.3

2. The Home’s counselling staff attempted to persuade the residents to release their children for adoption.4

3. During the time, prior to the birth of plaintiff’s son, that the Home’s staff believed plaintiff intended to give up her child no effort was made by the counsellors to induce plaintiff to reconsider her decision.5

4. After plaintiff, subsequent to the birth of her son, announced her decision to keep the child,6 Mrs. Burns initiated a series of interviews with plaintiff, extending over a period of about five days, as the result *542of which plaintiff consented to the placement of the baby for adoption.

5. Although Mrs. Burns testified that she initiated the interviews for the purpose of discussing with plaintiff the “pros and cons” of the problem, the counsellor’s contributions to the discussions consisted solely of a recital of the reasons why plaintiff should give up her baby.7

6. Mrs. Burns implanted in plaintiff’s mind the belief that plaintiff’s parents, who had announced they would support plaintiff in her decision to keep the child, were attempting to take advantage of plaintiff. As a result, plaintiff successfully insisted that her step-father and sister, who had started the journey to Texas for the purpose of driving plaintiff and the child to California, “turn around and go back” to California.8

During the period between Tuesday, November 26, and Tuesday, December 3, when *543plaintiff signed the instruments consenting to the adoption, plaintiff was very weak and Mrs. Burns, according to plaintiff, repeatedly and “emphatically stressed” that if plaintiff “was any sort of person” she would give up the child. Plaintiff described this period as a “nightmare” during which she was able to sleep only about three hours a day.9 She testified that, as a result of her discussions with Mrs. Burns, she felt “trapped,” and that on Monday, December 2, after Mrs. Burns had repeated everything that the counsellor had said before, she consented to the adoption of her child in order to avoid “harassment.”10

What constitutes “undue influence” depends on the particular facts and circumstances of each case, viewed in the light of applicable principles of law. It is said that a finding of undue influence is justified only where the actor’s free agency and will have been destroyed and subverted to the extent that his act, instead of expressing his own will, expresses the will of the person exerting the influence. Rothermel v. Duncan, 369 S.W.2d 917 (Tex.Sup.1963) ; Winn v. Daniel, 386 S.W.2d 293 (Tex.Civ. App. — Fort Worth 1965, writ ref’d n. r. e.). Such statements of principles of law, since they involve inquiry into the metaphysical concept of will, furnish no concrete guidelines which are helpful in the decisional process. Since each case is more or less sui generis, any attempt to formulate a precise definition will be futile.

It is true that exerted influence cannot be branded as “undue” merely because it is persuasive and effective, and that the law does not condemn all persuasion, entreaty, cajolery, importunity, intercession, argument and solicitation. Robinson v. Stuart, 73 Tex. 267, 11 S.W. 275 (1889); Winn v. Daniel, supra. It may be conceded that calling to the attention of an unwed mother the considerations which tend to show that her best interest, and that of her child, would best be served by placement of the child for adoption cannot be branded as undue influence, even though she is thereby induced to give up her child.11 See In re Surrender of Minor Children, 344 Mass. 230, 181 N.E.2d 836, 838 (1962).

But in this case we have testimony which amply supports the conclusion that plaintiff was subjected to excessive persuasion. All of the witnesses agreed that plaintiff was shy and reluctant to discuss her personal problems. Plaintiff’s testimony concerning her emotional distress during the critical period following the birth of her child is rendered credible by *544the fact that an unwed mother who has just given birth is usually emotionally distraught and peculiarly vulnerable to efforts, well-meaning or unscrupulous, to persuade her to give up her child. Immediately following plaintiff’s announcement that, contrary to the expectations of Mrs. Burns, she intended to keep her son, she was subjected to an intensive campaign, extending over a five-day period, designed to convince her to give up her baby, rather than to insure that her decision, whatever it might be, would be based on a consideration of all relevant factors, Plaintiff was told, falsely, that she had no right to keep her child. She was accused of being selfish and told that if she “was any kind of person” she would consent to the adoption of her baby. Her parents, the only persons who were willing to accept plaintiff’s decision to keep her child, were accused by Mrs. Burns, with no factual support, of acting out of improper motives and with the intention of “putting something over” on plaintiff. What Mrs. Burns described as a discussion of the “pros and cons” consisted entirely of an endless recital only of the “cons” — a repetitive monologue of the reasons why plaintiff should not keep her child. The polemic by Mrs. Burns was in keeping with the policy of the Home to encourage the residents to surrender their children to the Home’s placement agency. Further, this concentrated assault on plaintiff’s will came from a person to whom plaintiff was encouraged to look for guidance, a member of an organization to which plaintiff was undoubtedly indebted and on which, according to all the testimony, she was dependent for help in finding her employment and a place to live.

Viewing the totality of the situation, we cannot say that, under the evidence, the jury acted unreasonably in concluding that the influence exerted on plaintiff was such as to constrain her to execute a consent which she would not otherwise have executed. Nor can we say that, considering all of the evidence, the finding is such as to “shock the conscience,” or that it is “clearly unjust,” or that it “clearly indicates bias” so that a court would “have to go blind” in order to accept it. Garwood, The Question of Insufficient Evidence on Appeal, 30 Tex.L.Rev. 803, 811 (1952).

The judgment of the trial court is affirmed.

*158Fuld, J.

On this appeal, here by permission of the Appellate Division, a certified question calls upon us to say whether the court at Special Term was correct in granting defendants’ motion for judgment on the pleadings dismissing the complaint.

Although seeking varied relief, the complaint is primarily one for rescission of certain arrangements, made between plaintiff and the several defendants, on the ground of fraud. The plaintiff, an employee of defendant Delman, Inc., a manufacturer of women’s shoes, invented a machine and a cutting device, obtained patents for them and arranged with defendant Herman Delman (the president of Delman, Inc., until his death in 1955) for their exploitation. It was agreed, among other things, that, out of the proceeds from the sale or lease of the machines, Delman was to receive 75% and the plaintiff the remaining 25%. More specifically, the complaint alleges that in 1940, the plaintiff made an assignment of his applications for letters patent to defendant Delman and in 1942 and 1946 entered into written contracts with him concerning the assignment of the patents and the sharing of proceeds realized ; that, prior to the making of the original assignment and prior to entering into the later agreements, Delman represented to the plaintiff that, if the latter ‘ ‘ would ’ ’ execute the assignment and the contracts, he, “ Delman, would finance [or would undertake to finance] the manufacture of the patented machine ’ ’ and ‘ ‘ would use his best efforts to promote the sale or lease of the machine to other manufacturers. ” The complaint further alleges that the representations, made to induce *159the plaintiff to make the assignment and the contracts, were “ false,” that defendant Delman “ knew they were false” and made them ‘ ‘ fraudulently, falsely and deceitfully, wrongfully contriving and intending to deceive, defraud and injure ” the plaintiff and that he “relied” on the representations, believing them to be true and “ was thereby induced ” to make the assignment and execute the contracts in question. The complaint then goes on to assert that, “ contrary to the representations and promises ” made, defendant Delman “ never intended * * * to fulfill the said representations and promises ”, but intended “ to defraud the plaintiff of his interest and rights in [his] inventions ”; that “ all of the said agreements and representations inducing them were part of a continuing plan ’ ’ by defendant Delman ‘ ‘ to defraud plaintiff as aforesaid”; that defendant Delman failed to manufacture the machine “ except on two occasions ” and never made any attempt to promote its sale or lease; and, finally, the complaint alleges, the plaintiff, not discovering that the representations upon which he relied were untrue until 1954, has suffered irreparable damage.

These allegations, of “ representation, falsity, scienter, deception and injury ” (Ochs v. Woods, 221 N. Y. 335, 338), unquestionably state a cause of action in fraud, and the prayer for relief unmistakably sounds in rescission; the complaint should not have been dismissed. We do not agree with the Appellate Division that “ the alleged fraudulent statements were promissory in nature and therefore not the basis for an action based on fraud ” or that, since the alleged representations were not set forth in the written contracts, they could not be asserted or relied upon by the plaintiff.

Before discussing the relevant law, it is well to bear in mind that the complaint before us neither asserts a breach of contract nor attempts to enforce any promise made by defendants. On the contrary, as already noted, the plaintiff seeks to set aside the arrangements between defendants and himself on the ground of fraud in the inception. In the plainest of language, he alleges that he was “induced” to assign his patent rights and to enter into the contracts in reliance upon false and fraudulent representations by defendant Delman which he “ never intended * * * to fulfill ”.

*160While “ Mere promissory statements as to what will be done in the future are not actionable ” (Adams v. Clark, 239 N. Y. 403, 410), it is settled that, if a promise was actually made with a preconceived and undisclosed intention of not performing it, it constitutes a misrepresentation of “ a material existing fact ” upon which an action for rescission may be predicated. (See, e.g., Adams v. Gillig, 199 N. Y. 314, 319 et seq.; Ritzwoller v. Lurie, 225 N. Y. 464, 467-468; Adams v. Clark, supra, 239 N. Y. 403, 410; Shipman v. Bennett, 2 N Y 2d 966; see, also, Restatement, Contracts, § 473; 3 Pomeroy on Equity Jurisprudence [5th ed., 1941], § 877d, p. 439 et seq.)

The representations of the defendant Delman in this case, that he would finance plaintiff’s machine and use his best efforts to promote its sale and lease, related to something to occur in the future, but that does not prevent the plaintiff from relying upon them in an action brought to avoid the contracts which they induced. In the Ritzwoller case (supra, 225 N. Y. 465), which involved representations having an element of futurity just as pronounced as those here alleged, the court wrote in language exceedingly apt (pp. 467-468): “ While the representations * * * related to something which was to occur in the future * * * we think the allegations in the complaint describe a case where a defendant has fraudulently and positively as with personal knowledge stated that something was to be done when he knew all the time it was not to be done and that his representations were false. It is not a case of prophecy and prediction of something which it is merely hoped or expected will occur in the future, but a specific affirmation of an arrangement under which something is to occur, when the party making the affirmation knows perfectly well that no such thing is to occur. Such statements and representations when false are actionable within the authority of Adams v. Gillig (199 N. Y. 314).” The statements and representations here relied upon and alleged are likewise actionable, for here, too, there was “ specific affirmation ” of an arrangement under which something was to be done when the party making the affirmation knew perfectly well that no such thing would be done.

The agreements being attached to the complaint, we are brought to a consideration of the impact of the recital in each of them that “No verbal understanding or conditions, pot herein specified, shall be binding on either party.”

*161The parol evidence rule forbids proof of extrinsic evidence to contradict or vary the terms of a written instrument and, accordingly, one who seeks, in a breach of contract action, to enforce an oral representation or promise relating to the subject matter of the contract cannot succeed. (See Fogelson v. Rackfay Constr. Co., 300 N. Y. 334; Mitchill v. Lath, 247 N. Y. 377.) However, the parol evidence rule has no application in a suit brought to rescind a contract on the ground of fraud. In such a case, it is clear, evidence of the assertedly fraudulent oral misrepresentation may be introduced to avoid the agreement. (See, e.g., Adams v. Gillig, supra, 199 N. Y. 314, 319.)

The provision to which we above referred — that no verbal undertakings or conditions not contained in the writing were to be binding on either party—sometimes termed a merger clause, merely furnishes another reason for applying the parol evidence rule (see Fogelson v. Rackfay Constr. Co., supra, 300 N. Y. 334, 340), and, just as that rule is ineffectual to exclude evidence of fraudulent representations, so this provision max not be invoked to keep out such proof. Indeed, if it were other - xvise, a defendant would have it in his power to perpetrate a fraud with immunity, depriving the victim of all redress, if he simply has the foresight to include a merger clause in the agreement. Such, of course, is not the law. (See Bridger v. Goldsmith, 143 N. Y. 424, 427-429; Ernst Iron Works v. Duralith Corp., 270 N. Y. 165, 169; Angerosa v. White Co., 248 App. Div. 425, 431, affd. 275 N. Y. 524; see, also, 3 Williston on Contracts [rev. ed., 1936], §§ 811-811A, p. 2277 et seq.; 3 Corbin on Contracts, § 578, p. 242 et seq.; 2 Restatement, Contracts, § 573.)

“ I assume,” Judge O’Brien long ago declared on behalf of a unanimous court in Bridger v. Goldsmith (supra, 143 N. Y. 424, 428), “ that there is no authority that we are required to follow in support of the proposition that a party who has perpetrated a fraud upon his neighbor may, nevertheless, contract with him in the very instrument by means of which it was perpetrated, for immunity against its consequences, close his mouth from complaining of it and bind him never to seek redress. Public policy and morality are both ignored if such an agreement can be given effect in a court of justice. The maxim that fraud vitiates every transaction would no longer be the rule but the exception. It could be applied then only in *162such cases as the guilty party neglected to protect himself from his fraud by means of such a stipulation. Such a principle would in a short time break down every barrier which the law has erected against fraudulent dealing. ’ ’ In other words, ‘ ‘ the law does not temporize with trickery or duplicity. A contract, the making of which was induced by deceitful methods or crafty device, is nothing more than a scrap of paper, and it makes no difference whether the fraud goes to the factum, or whether it is preliminary to the execution of the agreement itself.” (Angerosa v. White Co., supra, 248 App. Div. 425, 431, affd. 275 N. Y. 524.) And, in the Ernst Iron Works case (supra, 270 N. Y. 165, 169), the.court wrote, “ A rogue cannot protect himself from liability for his fraud by inserting a printed clause in his contract. This principle disposes of the blanket clause providing that no representation shall be binding unless incorporated in the agreement.”

In short, a contractual promise made with the undisclosed intention not to perform it constitutes fraud and, despite the so-called merger clause, the plaintiff is free to prove that he was induced by false and fraudulent misrepresentations to assign his patents and execute the agreements. Whether he will be able to establish his allegations of fraud and deceit and whether he will be able to demonstrate that he failed for many years to discover the deception assertedly practiced upon him are questions necessarily reserved for trial. We decide only that the complaint before us states a cause of action for rescission.

The order of the Appellate Division should be reversed and the motion for judgment on the pleadings denied, with costs in all courts. The question certified should be answered in the negative.

Conway, Ch. J., Desmond, Froessel and Burke, JJ., concur with Fuld, J.; Dye and Van Voorhis, JJ., dissent and vote to affirm upon the ground that any obligation on defendants’ part to exploit this invention was of a contractual nature and does not sound in fraud.

Order reversed and matter remitted to Special Term for further proceedings in accordance with the opinion herein, with costs in all courts. Question certified answered in the negative.

Mr. JUSTICE O’CONNOR

delivered the opinion of the court:

Harry S. Posner and Diane M. Posner, plaintiffs, sued Sander A. Davis and Pearl E. Davis, defendants, for fraudulently concealing certain defects in a house in Evanston, which plaintiffs purchased from defendants in 1973. The alleged defects included basement flooding, rotted basement stairs, roof leakage and water-soaked and rotted plaster. After a bench trial, defendants were found guilty of fraud and judgment was entered for plaintiffs for $3,500. Defendants appeal, arguing that (1) plaintiffs failed to prove fraud and (2) the evidence did not support the award of $3,500.

Sander Davis testified that during the eight to 10 years prior to the sale the basement had flooded whenever there was a heavy rain, the flooding sometimes reaching three inches. After the water receded, defendants would have to wash and mop the basement. He also testified that approximately one year to 18 months before the house was sold to plaintiffs, he hired a roofer to deal with a leakage problem in the main roof. Sander Davis admitted that at the time of the sale this leakage had caused part of a third-floor bedroom wall to rot. In addition, he testified *641that the porch roof had leaked prior to the sale. He stated that he had never told plaintiffs about any of these defects.

Plaintiffs testified that after purchasing the house from defendants they owned it for approximately 10 months before selling it in May 1974. During that time, the basement flooded on at least six occasions, and in a few instances the water contained fecal matter. The water would usually take a day to a day and one-half to recede, after which plaintiffs had to mop and clean the basement. Plaintiffs also found that the bottom basement stair had rotted due to flooding.

Plaintiffs further testified that the main roof leaked, causing part of a third-floor bedroom wall to rot. This leakage also caused part of the bedroom’s ceiling to fall after plaintiffs had begun occupying the house. In addition, plaintiffs stated that the porch roof leaked and that water seeped into the ceiling of the dining room, which was adjacent to the porch.

Defendants contend that plaintiffs failed to prove fraud by clear and convincing evidence. (See Ray v. Winter (1977), 67 Ill. 2d 296, 367 N.E.2d 678.) On June 8, 1973, plaintiffs entered into a contract to purchase defendants’ home in Evanston. The sale was closed on July 25, 1973. Plaintiffs testified that the only statement either defendant made to them concerning any of the defects in the house took place on June 13, 1973, when Sander Davis allegedly told Harry Posner that defendants had never had a basement flooding problem. Defendants maintain that this alleged statement by Sander Davis, which at trial he denied having made, whs plaintiffs’ only evidence of fraud and that plaintiffs could not have relied on it when they entered into the real estate sales contract on June 8, 1973, because plaintiffs concede the statement was not made until five days later. Thus, defendants argue, plaintiffs failed to prove that when they purchased the house they detrimentally relied on a fraudulent statement or act by defendants concerning any of the defects, and that the judgment against them was against the manifest weight of the evidence, because detrimental reliance is an essential element of fraud. Defendants also argue that it is unlikely plaintiffs believed they had been defrauded, because plaintiffs did not file their complaint in this action until January 2, 1975, approximately 17 months after plaintiffs had begun occupying the house and eight months after plaintiffs had sold it.

Plaintiffs contend that, if the seller of a house at any time prior to closing misrepresents its condition, that misrepresentation may be the basis for a fraud action by a buyer who relied on it when closing the sale; that Sander Davis’ alleged misrepresentation concerning basement flooding was made on June 13, 1973; that the closing was not until July 25, 1973, and that plaintiffs detrimentally relied on Sander Davis’ *642misrepresentation when they closed the sale. Because of the conclusion we have reached, we need not consider this contention.

Plaintiffs argue that in addition to the misrepresentation by Sander Davis, there was clear and convincing evidence that defendants actively concealed the defects from plaintiffs prior to entering into the sales contract and that this constitutes fraud. We agree.

Both plaintiffs and defendants testified that defendants never told plaintiffs about the basement flooding problem. Plaintiffs also testified that the real estate broker did not inform them of the flooding. Furthermore, Sander Davis admitted he never advised the broker about the flooding or instructed the broker to inform prospective buyers of this condition.

In addition, plaintiffs and defendant Pearl Davis testified that plaintiffs made two visits to the house on a day shortly before June 8, 1973, the date of the sales contract. Harry Posner stated that on the first visit plaintiffs inspected the entire house, and Pearl Davis testified that Harry Posner examined the basement on this visit. Sander Davis testified that the main room in the basement had a tile floor and that flooding had, in part, caused some of the tiles there to flake and crack. He admitted he had removed many of these flaked and cracked tiles and had placed a large rug over the area where the tiles had been removed. This rug covered the entire floor of the main room in the basement, except for an approximately one foot border of intact tile extending around the room between the rug and the walls. Whenever the basement had flooded, defendants had taken the rug outside to dry, but Sander Davis admitted that the rug was never drying outside when plaintiffs visited the house. Moreover, Sander Davis admitted he never told plaintiffs that tiles under the basement rug were flaking and cracking, or that he had removed some of the tiles because of this damage. Sander Davis also testified that no watermarks were visible on the basement walls, and that the basement stairs were completely carpeted.

Harry Posner testified that on one occasion when the basement flooded after plaintiffs had moved into the house, he had to lift the carpet covering the bottom basement step in order to discover that the step had rotted and that water was seeping through there into the basement. In addition, Diane Posner stated that the flooding problem prompted plaintiffs to sell the house.

Sander Davis also testified that when the main roof leakage had caused plaster in part of the third-floor bedroom wall to rot, he had covered the damaged area with a vinyl fabric which was “maintainable and aesthetically acceptable.” Also, Harry Posner testified that when he visited the house, both prior to and after entering into the contract, he saw nothing to indicate there was any problem with roof leakage. He further *643testified that it was not until sometime after plaintiffs had occupied the house that he placed his hand against the vinyl covering on the third-floor bedroom wall and discovered that main roof leakage had caused a substantial amount of plaster underneath to become wet and crumble. In addition, plaintiffs testified that defendants and the broker never told them about the roof leakage, and Sander Davis admitted he never said anything to plaintiffs about this problem.

Finally, Harry Posner testified that when plaintiffs purchased the house, they relied on the fact defendants did not disclose anything about basement flooding or roof leakage. He also testified plaintiffs would not have bought the house if they had known about these conditions.

In Russow v. Bobola (1972), 2 Ill. App. 3d 837, 841, 277 N.E.2d 769, a suit involving active concealment of basement flooding in a house, the court stated:

9 9 Silence accompanied by deceptive conduct or suppression of material facts results in active concealment, and it then becomes the duty of a person to speak. In such case, if a party to a contract of sale does not disclose the whole truth, having the requisite intent to deceive, this amounts to fraud equally with an affirmative falsehood. 9 9 9”

The evidence here is clear and convincing that when plaintiffs entered the contract to purchase defendants’ home, they relied to their detriment on silence and conduct by defendants which resulted in active concealment of both the fact that there had been basement flooding which had caused the floor tiles to flake and crack and which had caused the bottom basement step to rot, and also the fact that there had been main-roof leakage which had damaged the plaster wall of the third-floor bedroom. Defendants testified that they did not intend to conceal these conditions from plaintiffs by silence or by the rug they had placed on the basement floor or by the vinyl with which they had covered the bedroom wall. However, their silence so resulted. A party is considered to intend the necessary consequences of his own acts or conduct. 37 Am. Jur. 2d, Fraud and Deceit §158 (1968).

Defendants argue that Sander Davis’ alleged misrepresentation was the only evidence on which the trial court relied in finding fraud. We disagree, because the record discloses that the court also stated that the evidence showed defendants had a “duty to speak.” This can be construed to be a finding of active concealment as to the basement flooding and main roof leakage. In addition, in a bench trial as here, “[n]o special findings of fact or propositions of law are necessary to support the judgment or as a basis for review in a non-jury case [citation]; and the appellee is permitted to endeavor to sustain the judgment of the trial court by any argument, for any reason, and upon any basis in the record *644showing that the judgment was proper.” (Long v. Arthur Rubloff & Co. (1975), 27 Ill. App. 3d 1013, 1022, 327 N.E.2d 346. See Ill. Rev. Stat. 1977, ch. 110A, par. 366(b)(3)(i).) The evidence here sustains the finding of fraud. The fact that plaintiffs did not file suit until January 2, 1975, does not militate against the finding of fraud.

Plaintiffs also argue that, although silence alone, absent the existence of a confidential relationship, generally does not amount to fraud (see Shockley v. Ryder Truck Rental, Inc. (1979), 74 Ill. App. 3d 89, 392 N.E.2d 675), and that the rule that liability for fraud ordinarily cannot be based on silence alone has been a corollary to the traditional doctrine of caveat emptor, the modern trend in the law regarding the sale of a home is away from strict adherence to the doctrine of caveat emptor. In Petersen v. Hubschman Construction Co. (1979), 76 Ill. 2d 31, 389 N.E.2d 1154, for example, our supreme court held that there is an implied warranty of fitness with the sale of a new house by a builder-vendor, and stated that the existence of such a warranty helped avoid “the harshness of caveat emptor.” 76 Ill. 2d 31, 38.

The amelioration of the doctrine of caveat emptor in a number of other jurisdictions has resulted in a used-home seller being liable for failing to disclose material defects of which he was aware at the time of sale. This view is succinctly expressed in Lingsch v. Savage (1963), 213 Cal. App. 2d 729, 735, 29 Cal. Rptr. 201, 204:

“It is now settled in California that where the seller knows of facts materially affecting the value or desirability of the property which are known or accessible only to him and also knows that such facts are not known to, or within the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them to the buyer.”

(See also Lawson v. Citizens & Southern National Bank (1972), 259 S.C. 477, 193 S.E.2d 124; Obde v. Schlemeyer (1960), 56 Wash. 2d 449, 353 P.2d 672.) We are of the opinion, in view of our supreme court’s amelioration of the doctrine of caveat emptor in Petersen, that this should also be the law in Illinois with reference to the sale of used homes.

The evidence clearly shows defendants knew of and failed to disclose that there had been problems with basement flooding and with main and porch roof leakage, and Harry Posner testified that plaintiffs would not have bought the house if they had known about the basement flooding or roof leakage. The finding of fraud on the part of defendants was correct.

Defendants’ second contention is that plaintiffs’ evidence did not support the award of *3,500 as damages. We agree.

A defrauded purchaser is entitled to damages which will give him the *645“benefit of his bargain.” Thus, the measure of damages for fraudulently concealing defects in property is the value the property would have had at the time of sale if the defects did not exist, less the value the property actually had at the time of sale due to the defects. See Ginsburg v. Bartlett (1931), 262 Ill. App. 14; 19 Ill. L. & Prac. Fraud §53 (1956).

Much of plaintiffs’ evidence on damages dealt with either the value the house had at the time when plaintiffs sold it, or with the amount of profit they would have made if the defects in the house had not existed. This particular evidence was not relevant to the question of plaintiffs’ damages. Instead, the actual value of the house and the value it would have had without the defects should have been determined as of the date plaintiffs purchased the house from defendants. Plaintiffs did state that they purchased the house for *130,000. This may have been sufficient evidence of the value the house would have had when it was sold to plaintiffs if the defects had not existed. (37 Am. Jur. 2d Fraud and Deceit §353 (1968).) However, no evidence was presented concerning the value the house actually had with the defects at the time plaintiffs purchased it.

An alternative measure of damages for fraudulent concealment is the cost of fixing the property to make it conform to the condition it would have had without the defects. (37 Am. Jur. 2d Fraud and Deceit §357 (1968).) Such evidence may also be probative of the value the property actually had at the time of sale. (37 Am. Jur. 2d Fraud and Deceit §357 (1968).) Plaintiffs did submit as evidence certain repair bills which they paid to have the defects fixed, and also testified that they themselves had to spend time cleaning the basement after it had flooded. However, the record is somewhat confusing concerning the amount plaintiffs paid to correct the defects, because plaintiffs also submitted evidence of expenditures they made for repairs and improvements to the house which had nothing to do with the complained-of defects. The record also shows that no attempt was made to place a value on the time plaintiffs themselves spent in dealing with the defects.

Absolute certainty concerning the amount of damage is not necessary to justify a recovery where the existence of damage is established; the evidence need only tend to show a basis for the computation of damages with a fair degree of probability. (DeKoven Drug Co. v. First National Bank (1975), 27 Ill. App. 3d 798, 327 N.E.2d 378.) However, “damages may not be predicated on mere speculation, hypothesis, conjecture or whim.” DeKoven Drug Co. v. First National Bank (1975), 27 Ill. App. 3d 798, 802, 327 N.E.2d 378.

The record does not indicate any basis for the trial court’s assessment of *3,500 damages. Plaintiffs’ evidence concerning damages was confusing and much of it was based on an incorrect assumption concerning the *646proper measure of relief for fraudulent concealment. The award of *3,500 is reversed and the cause is remanded for an evidentiary hearing on damages.

The judgment of the circuit court of Cook County is affirmed as to defendants’ liability and reversed and remanded for a new trial as to damages.

Affirmed in part and reversed and remanded in part.

GOLDBERG, P. J., and McGLOON, J., concur.

STRINE, Vice Chancellor.

This case involves a request by the buy-side of a corporate acquisition contract— the Stock Purchase Agreement — to rescind that contract. The plaintiffs — a group of entities affiliated with a sophisticated private equity firm named ABRY Partners (hereinafter, largely referred to collectively as the “Buyer”) — bought a portfolio company from an entity owned by another sophisticated private equity firm, Providence Equity Partners (hereinafter, largely referred to collectively as the “Seller”). The portfolio company that was purchased by the Buyer, F & W Publications (hereinafter, largely referred to as the “Company”), was in the business of publishing magazines and selling books.

As in many acquisition agreements involving private equity firms, the Stock Purchase Agreement carefully delineated the representations and warranties . that were being made by the portfolio Company that was being sold and by the owner of that Company. By its plain and unambiguous terms, the Stock Purchase Agreement stated the Buyer’s promise that it was not relying upon representations and warranties not contained within the Agree*1035ment’s four corners and that no such extra-contractual representations had been made.

More critically for purposes of this case, the Stock Purchase Agreement went further. By its terms, it purports to limit the liability of the Seller for any misrepresentation of fact contained within the Agreement to exposure for a claim for damages in arbitration (an “Indemnity Claim”) not to exceed the amount of a contractually-established Indemnity Fund. That fund is set at $20 million, or 4% of the $500 million purchase price paid by the Buyer for the portfolio company. By its terms, the Stock Purchase Agreement makes an Indemnity Claim the exclusive remedy of the Buyer for misrepresentation and bars a rescission claim of the nature the Buyer has pled in this court.

The Seller has moved to dismiss this case for failure to state a claim. It asserts that the contractual limitation on liability should be enforced and that the Buyer should be limited to the remedy of an Indemnity Claim for no more than $20 million. Given the sophisticated nature of the parties, and the express stipulation that the exclusive remedy provision of the Agreement was specifically bargained for and was reflected in setting the deal price, the Seller argues that there is no principled basis for the Buyer to escape its voluntarily-accepted limitation on its remedial options.

Although the Buyer makes many counter-arguments that I reject, its most forceful and convincing response is that the contractual limitation on liability is unenforceable as a matter of public policy. Recognizing that the case law of this court gives effect to non-reliance provisions that disclaim reliance on extra-contractual representations, the Buyer has premised its rescission claim solely on the falsity of representations and warranties contained within the Stock Purchase Agreement itself. In other words, the Buyer has accepted that it had promised that the only representations of fact it was relying upon and the only representations of fact made to it were contained within the Agreement itself, and that this court’s jurisprudence will hold it to that promise.

But the Buyer claims that this State’s public policy will not go further and tolerate an attempt by a contracting party to immunize itself from a rescission claim premised on false representations of fact contained within a written contract and recognized by the parties to be the factual predicate for their decision to contract. To do so would be to sanction unethical business practices of an abhorrent kind and to create an unwise incentive system for contracting parties that would undermine the overall reliability of promises made in contracts.

For reasons I explain, I conclude that Delaware law permits sophisticated commercial parties to craft contracts that insulate a seller from a rescission claim for a contractual false statement of fact that was not intentionally made. In other words, parties may allocate the risk of factual error freely as to any error where the speaking party did not consciously convey an untruth. In that context, there is no moral imperative to impinge on the ability of rational parties dealing at arms-length to shape their own arrangements, and courts are ill-suited to set a uniform rule that is more efficient than the specific outcomes negotiated by particular contracting parties to deal with the myriad situations they face.

But the contractual freedom to immunize a seller from liability for a false contractual statement of fact ends there. The public policy against fraud is a strong and venerable one that is largely founded on the societal consensus that lying is wrong. *1036Not only that, it is difficult to identify an economically-sound rationale for permitting a seller to deny the remedy of rescission to a buyer when the seller is proven to have induced the contract’s formation or closing by lying about a contractually-represented fact.

For these reasons, when a seller intentionally misrepresents a fact embodied in a contract — that is, when a seller lies — public policy will not permit a contractual provision to limit the remedy of the buyer to a capped damage claim. Rather, the buyer is free to press a claim for rescission or for full compensatory damages. By this balance, I attempt to give fair and efficient recognition to the competing public policies served by contractual freedom and by the law of fraud.

Implementing this balance, I dismiss the Buyer’s claims except insofar as it can prove that the Seller intentionally misrepresented a fact within the Stock Purchase Agreement or knew that the Company had misrepresented such a fact. In either situation, the Seller would have been responsible for the injury suffered by the Buyer in reliance upon a lie.

I. Facts

As required, the facts are drawn from the amended complaint and the Stock Purchase Agreement, which is incorporated therein.

A. The Pre-Agreement Status Of The Parties

This case includes the usual multiplicity of related entities involved when a portfolio company of one private equity firm is sold to another private equity firm. I start with the precise details about the status of these entities before the Stock Purchase Agreement was consummated and then define them in a simplified fashion that permits me to describe the relevant facts more clearly.

Plaintiff F & W Publications, Inc. (“F & W”) is the operating company whose ownership was the key asset effectively sold in the Stock Purchase Agreement. F & W was and is a publishing company based in Cincinnati, Ohio and incorporated in Delaware. F & W publishes special interest magazines and books both in the United States and internationally. Some of its representative publications include Popular Woodworking, Scuba Diving, Family Tree Magazine, Country’s Best Log Homes, and Writer’s Digest.

F & W Acquisition, Inc. (“F & W Acquisition”) owned all of the shares of F & W before the Stock Purchase Agreement was consummated. F & W Acquisition was in turn owned by defendant F & W Acquisition, LLC.

The complaint also names as defendants certain entities that were not signatories to the Stock Purchase Agreement. The reason is that these are the firms alleged to have owned F & W Acquisition, LLC, which as we shall see, was the “Selling Stockholder” in the Stock Purchase Agreement. Those defendants are Providence Equity Partners, Inc. and several of its affiliates (collectively, “Providence”). Providence Equity Partners is a Delaware corporation with its principal place of business in Providence, Rhode Island. The affiliates of Providence Equity Partners that are named defendants are alternative entities, including limited partnerships and limited liability companies, all of which are formed under Delaware law and have their principal places of business in Providence, Rhode Island. Providence is a private equity firm that specializes in communications and media companies. Providence, according to the amended complaint, owned or controlled F & W Acquisition, LLC.

*1037The plaintiffs in the case are associated with the bny-side of the Stock Purchase Agreement. ABRY Partners, L.P. and ABRY Partners V Affiliated Investors, L.P. (collectively, “ABRY”) are Delaware limited partnerships with their principal place of business in Boston, Massachusetts.1 ABRY is a media-focused private equity firm that currently owns several media companies, including F & W, throughout the United States. ABRY is the firm that caused F & W to become a plaintiff in its capacity as the successor by merger to New Publishing Acquisition, Inc. (“New Publishing”). New Publishing was the acquisition vehicle used by ABRY to acquire F & W Acquisition in the Stock Purchase Agreement.

Now for the simplification, which is bound up in an explanation of the basic transaction embodied in the Stock Purchase Agreement. Through the Stock Purchase Agreement, New Publishing sought to acquire all the stock of F & W Acquisition. In the Agreement, New Publishing was defined as the “Acquiror.” F & W Acquisition was defined as the “Company” because its stock was what was being sold. The only other party to the Agreement was F & W Acquisition, LLC, which owned all of F & W Acquisition, and was defined as the Selling Stockholder. Because the key asset of the F & W Acquisition was F & W, the Agreement required extensive representations and warranties and other commitments by F & W Acquisition, LLC and the Company on behalf of not only itself but its subsidiaries.

In essence, Providence controlled the Selling Stockholder side of the transaction. F & W Acquisition, LLC was the special-purpose vehicle used by Providence to hold its investment in the underlying F & W business. For that reason, I largely refer to the Providence side of the Stock Purchase Agreement, who are now present as defendants, as the Seller.

Likewise, ABRY controlled the Acquiror side of the deal. New Publishing was ABRY’s acquisition vehicle. For that reason, I largely refer to the ABRY side of the Stock Purchase Agreement, who are now present as plaintiffs, as the Buyer.

For purposes of clarity, I conflate the identity of F & W Acquisition and F & W. F & W Acquisition was the direct parent of F & W and was defined as the “Company” in the Stock Purchase Agreement. Collectively, I refer to F & W Acquisition and F & W as the Company.

B. The Relationship Of The Seller And The Company Before The Sale

Providence (the eventual Seller) became the indirect owner of the Company in 2002. Consistent with industry practice, the Company had its own key managers who had no previous affiliation with the Seller. They were CEO Stephen Kent and CFO Mark Arnett.2 Because of its ownership *1038interest, however, the Seller did interact with the Company’s management through its own principals, including Michael Dominguez, Michael Angelakis, and Chris Hal-pin, and allegedly took an intense interest in its affairs. In the complaint, the Buyer alleges that the Seller’s key operatives, Dominguez and Halpin, were knowledgeable about the Company’s operations and regularly discussed its operations and financial performance with Company management.

The complaint alleges that the Seller began contemplating a sale of the Company in late 2004. In March 2005, the Seller announced publicly that it would sell the Company through an auction conducted by Credit Suisse First Boston (“CSFB”), which began contacting and meeting with potential buyers at the Seller’s direction. One of the potential buyers contacted by CSFB was ABRY, the eventual Buyer.

According to the complaint, the Buyer expressed to the Seller and CSFB that.its offer would be based largely on the Company’s free cash flow, as measured by its earnings before interest, taxes, depreciation, and amortization (“EBITDA”). Specifically, the Buyer alleged that it would be willing to pay ten times EBITDA for the twelve months ending June 30, 2005, which would result in a price of approximately $480 million. According to the Buyer, the Seller, through Dominguez, suggested to Company management a desire to show the Buyer that the Company would generate EBITDA of approximately $51 million in that period, which would 'justify a purchase price of $510 million.3 The negotiations resulted in the Buyer agreeing to purchase all the stock of the Company for $500 million through the Stock Purchase Agreement. That Agreement was inked on June 11, 2005. The contemplated sale of stock closed on August 5, 2005.

C. After Closing The Sale, The Buy- ■ er Discovers That The Company’s Financial Statements Were Inaccurate

Once the Buyer assumed ownership of the Company, it began to uncover a host of serious financial and operational problems. So serious were these problems that the Buyer came to the conclusion that it had been defrauded by the Seller and the Company in connection with the Stock Purchase Agreement.

Specifically, the Buyer alleges that it has become apparent that the Seller and Company management, working in concert, schemed together to manipulate the Company’s financial statements in order to fraudulently induce the Buyer into purchasing the' Company at an excessive price. Thus, the Buyer claims that the Company’s December 2004, March 2005, and June 2005 financial statements contained material misrepresentations and did not accurately portray the Company’s financial condition.

With respect to the December 2004 financial statements, the Buyer alleges that the Company manipulated its earnings by overstating magazine revenues through a scheme known as “backstarting,” which involves inflating revenues by providing new magazine subscribers with back issues of a magazine when they receive their first issue under the subscription. This allows a publisher to report income earlier by using up more of a subscription in the first month. The Buyer also argues that the Company misstated its performance by using outdated estimates rather than actual numbers to reflect newsstand revenue, failing to account for book returns correctly, and establishing inadequate reserves for obsolete inventory and uncollectible accounts receivable. The Buyer contends *1039that this resulted in overstated net revenues, which in turn inflated the Company’s EBITDA.

The Buyer argues that the March 2005 financial statements continued the same transgressions that occurred in the December 2004 statements and then exacerbated them with other shenanigans. To wit, the Buyer claims that the Company did not merely inaccurately account for book returns, but that it fraudulently and intentionally reduced the Company’s book return reserves by $500,000 in order to increase reported earnings.4 Similarly, the Buyer also accuses the Company of “channel stuffing” in order to inflate the quarterly revenues reflected in the March 2005 statements. Channel stuffing, in this context, involved the Company offering higher-than-normal discounts to book retailers and discounts to more customers than normal, which artificially inflated revenues. Allegedly, this practice leads to more returns than normal because book retailers cannot sell the entire inventory and therefore return the unsold books to the Company, and the Buyer contends that the Company failed adequately to account for the expected increase in returns.

The Buyer avers that the manipulation of the Company’s financial statements became even more blatant and pervasive in the June 2005 financial statements. The Buyer argues that the June 2005 financial statements are particularly important because they were received from the Company less than a week before the August 5 closing. Therefore, the Buyer alleges, the Company and the Seller had an incentive to make them look good to ensure that the Buyer would close the deal.

The June 2005 financial statements are allegedly tainted with the same improprieties as the December 2004 and March 2005 financial statements. But the Company is alleged to have engaged in additional chicanery in order to show good end-of-quarter results. To that end, the Company: (1) extended, by a week, the quarterly reporting period of a subsidiary in the United Kingdom in order to increase the revenues and earnings depicted in the June 2005 financial statements; (2) shipped magazines in June that were scheduled to arrive in July in order to recognize revenues from those magazines in June rather than July; (3) manipulated its book club by moving a book club cycle from the second half of 2005 into June to inflate revenues; and (4) reported revenues related to a conference held in June 2005 but delayed reporting expenses from that same conference. That is, the Company allegedly made the quarter ending in June 2005 look artificially better by shorting later financial periods.

Aside from problems with financial statements, the Buyer also argues that the Company misrepresented the implementation status of a book order fulfillment system, which was named VISTA. In the Stock Purchase Agreement, the Company agreed to use “commercially reasonable efforts to implement the Vista Systems on or prior to July 15, 2005.”5 On July 5, outside the context of the Stock Purchase Agreement, the Company allegedly informed the Seller that VISTA was fully functional and was processing orders. But, according to the Buyer, that was not the case. VISTA was not functioning appropriately, and in fact, orders were not shipped for several weeks in July. The failure of VISTA allegedly caused several customers, including Amazon.com, to stop ordering products from the Company. *1040The Buyer alleges that the problems with VISTA were so serious that they constituted a material adverse effect (“MAE”) under the Stock Purchase Agreement.6 Yet, the Company did not give the Buyer any pre-closing notice of these problems, and the Seller certified, as required by § 8.2(h)(i) of the Stock Purchase Agreement, that no MAE occurred before closing.7

The Buyer contends that the various misrepresentations and non-disclosures resulted in it purchasing the Company for a grossly overstated value. Specifically, the Buyer alleges that the true value of the Company was more like $400 million than $500 million and that it would never have closed had it known that the Company was propping up its performance with unethical business and accounting practices.

When it learned of these improprieties, the Buyer asked the Seller to rescind the transaction and to take back ownership of' the Company. The Seller refused and this suit ensued.

II. The Claims In The Complaint

The Complaint contains three major counts. Count I asserts a fraudulent inducement claim and seeks rescission of the Stock Purchase Agreement and related relief. The basis for the fraudulent inducement is the course of financial manipulation and non-disclosure I just detailed. Counts II (also a claim for fraudulent inducement) and III (a claim for negligent misrepresentation) rely on the same conduct and set forth alternative claims for damages in the event that rescission is not awarded.8 The Buyer waited until approximately three months after closing to bring its complaint for rescission. This raised the hackles of the Seller, which immediately asserted an array of expected defenses, including laches. Expedited treatment of the case was granted but on the understanding that the first matter for expedited consideration would be the Seller’s attack on the complaint. To that end, the Buyer was granted permission to amend its complaint and expedited briefing on a motion to dismiss promptly ensued.

A. The Terms Of The Stock Purchase Agreement Bearing On The Seller’s Liability

Before discussing the Stock Purchase Agreement’s particular terms, it is important to place that Agreement in context. Both the Seller and the Buyer are private equity firms. The Company was a portfolio company of the Seller. That meant that the Seller had an intense interest in its value and in keeping with that, the Seller had assigned key personnel, specifically Dominguez, to monitor the performance of the Company and interact with the Company’s management during the sale. But that did not necessarily mean that the Seller knew the Company in the same intimate manner that the Company’s managers did. The managers had no prior affiliation with the Seller, and like any other private equity firm, the Seller was as *1041much a monitor of, as a partner with, the Company’s management.

In view of this common context, it is not surprising that the Stock Purchase Agreement’s terms recognized a distinction between the Seller and the Company and gave this distinction importance in addressing questions relating to liability. The Agreement did not conflate the Seller with the Company and make it responsible for everything the Company and the Company’s management did or said. Rather, the Seller only accepted responsibility for the Company’s actions and words to the extent set forth in the Agreement and the required Officer’s Certificate. Nothing about that arrangement is novel to anyone with any rudimentary familiarity with negotiated acquisition agreements, particularly those involving private equity firms.

The first specific provision of the Stock Purchase Agreement requiring recitation is § 7.8, which states:

Acquiror acknowledges and agrees that neither the Company nor the Selling Stockholder has made any representation or warranty, expressed or implied, as to the Company or any Company Subsidiary or as to the accuracy or completeness of any information regarding the Company or any Company Subsidiary furnished or made available to Ac-quiror and its representatives, except as expressly set forth in this Agreement ... and neither the Company nor the Selling Stockholder shall have or be subject to any liability to Acquiror or any other Person resulting from the distribution to Acquiror, or Acquiror’s use of or rebanee on, any such information or any information, documents or material made available to Acquiror in any “data rooms,” “virtual data rooms,” management presentations or in any other form in expectation of, or in connection with, the transactions contemplated hereby.

This is a critical provision. It operates to define what information the Buyer re-bed upon in deciding to execute the Agreement. By its plain terms, the Buyer promised that neither the Company nor the Seller had made any representation or warranty as to the accuracy of any information about the Company except as set forth in the Agreement itself. The Buyer further promised that neither the Seber nor the Company would have any bability to the Buyer or any other person for any extra-contractual information made available to the Buyer in connection with the contemplated sale of the Company. Because of this provision, the Buyer was careful to amend its complaint and to premise its claims solely upon alleged misrepresentations of facts that are represented and warranted in the Stock Purchase Agreement itself.

In important ways, the Stock Purchase Agreement goes further than simply limiting the information on which a misrepresentation may be based. The first way is in carefully debneating what party is responsible for which representations and warranties (or for complying with covenants or satisfying closing conditions). In that vein, the Agreement contains far more extensive representations and warranties by the Company than by the Seller. For example, the key representation and warranty that the Seber claims was breached is that which warranted the accuracy of the Company’s financial statements. That representation and warranty, contained in § 3.6, states as follows:

The Company Financial Statements: (i) are derived from and reflect, in all material respects, the books and records of the Company and the Company Subsidiaries; (n) fairly present in all material respects the financial condition of the Company and the Company Subsidiaries at the dates therein indicated and the *1042results of operations for the periods therein specified; and (iii) have been prepared in accordance with GAAP applied on a basis consistent with prior periods except, with respect to the unaudited Company Financial Statements, for any absence of required footnotes and subject to the Company’s customary year-end adjustments.

This is, one can say without danger of refutation, one of the most important representations in any acquisition agreement.9 And, by its plain terms, it is one made only by the Company and not by the Seller.

Likewise, § 7.10 of the Agreement contained a provision requiring the Company to provide unaudited, month-end financial statements for the period between signing and closing, and requiring the Company to represent that those financial statements were “true and correct in all material respects, were prepared in accordance with GAAP ... and present fairly in all material respects the financial position of the Company and the Company Subsidiaries on a consolidated basis.” Likewise, in § 6.2(j) of the Agreement, the Company covenanted that it would not change its accounting methods in effect as of December 31, 2004 unless mandated by law or a change in GAAP. Those covenants bound only the Company, not the Seller.

The Seller, of course, did make certain representations itself in a short section of the Agreement, Article IV. For example, it represented that it owned the shares of the Company that were to be transferred to the Buyer in the sale.10

But the plain terms and structure of the Agreement make it clear that the Seller was not making the much more extensive representations made by the Company in the much longer part of the Agreement setting forth the Company’s representations and warranties, which is Article III. Article III contains twenty-two general representations and warranties, many of which had extensive subparts. These representations and warranties were made only by the Company. Article III, in § 3.23, also reinforces the promise of the Buyer that it was not relying on extra-contractual representations by stating:

EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE III, THE COMPANY MAKES NO REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT LAW OR IN EQUITY IN RESPECT OF THE COMPANY OR THE COMPANY SUBSIDIARIES, OR ANY OF THEIR RESPECTIVE ASSETS, LIABILITIES OR OPERATIONS,. INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR *1043ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. ACQUIROR HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN THIS ARTICLE III, THE ACQUIROR IS ACQUIRING THE COMPANY ON AN “AS IS, WHERE IS” BASIS. THE DISCLOSURE OF ANY MATTER OR ITEM IN ANY SCHEDULE HERETO SHALL NOT BE DEEMED TO CONSTITUTE AN ACKNOWL-EDGEMENT THAT ANY SUCH MATTER IS REQUIRED TO BE DISCLOSED.

If this was all the Stock Purchase Agreement said, the contract’s plain terms would most logically be read to preclude any suit by the Buyer against the Seller for all representations and warranties made by the Company. Why? Because (i) the Buyer promised that it was only relying on representations and warranties expressly set forth in the Agreement and expressly disclaimed reliance on any other extra-contractual information; and (ii) the Agreement plainly indicates that the representations and warranties of the Company are those of the Company alone, and not those of the Seller.

For the obvious reason that it would own the Company after closing, the Buyer naturally wanted the Seller to back up the Company’s representations and warranties.11 The Buyer accomplished that objective to a precisely negotiated extent. For starters, as a closing condition, the Seller was required by § 8.2(h)(i) of the Stock Purchase Agreement to provide an Officer’s Certificate stating that the closing conditions relating to the accuracy of not only the Seller’s, but the Company’s, representations and warranties were satisfied, that the Company and Seller had complied with the covenants applicable to them, and also that the Company had not suffered events that had or would reasonably be expected to constitute an MAE. In compliance with that requirement, the Seller, through Dominguez, provided the Officer’s Certificate, which stated:

Pursuant to Section 8.2(h)(i) of the Agreement, the undersigned duly elected and authorized officer of the Selling Stockholder, hereby certifies that ... (1) Eách representation and warranty of the Company set forth in Article III and the Selling Stockholder set forth in Article IV of the Agreement or in each case deemed made pursuant to Section 7.10(a) is true and correct as of the Closing Date ... (2) Each of the Selling Stockholder and the Company have performed and complied in all material respects with the agreements and covenants required to be performed or complied with by it on or prior to the Closing Date ... (3) Since the date of the Agreement, there has been no change, event or condition of any character (whether or not covered by insurance) which, in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

The Seller also put its wallet behind the Company’s representations and warranties to a defined extent. This was accomplished through a promise by the Seller to indemnify the Buyer if the Company’s representations and warranties were incorrect or in other similar, broadly-defined circumstances.12 Section 9.1 of the Agreement *1044sets forth this obligation. It states in pertinent part at subsection (a) that:

[T]he Selling Stockholder agrees that, after the Closing Date, the Acquiror and the Company and ... each controlling shareholder of the Acquiror or the Company ... shall be indemnified and held harmless by the Selling Stockholder from and against, any and all claims, demands, suits, actions, causes of actions, losses, costs, damages, liabilities and out-of-pocket expenses incurred or paid, including reasonable attorneys’ fees, costs of investigation or settlement, other professionals’ and experts’ fees, and court or arbitration costs but specifically excluding consequential damages, lost profits, indirect damages, punitive damages and exemplary damages ... to the extent such Damages ... have arisen out of or ... have resulted from, in connection with, or by virtue of the facts or circumstances (i) which constitute an inaccuracy, misrepresentation, breach of, default in, or failure to perform any of the representations, warranties or covenants given or made by the Company or the Selling Stockholder in this Agreement ... 13

Section 9.1(c), however, goes on to limit the aggregate liability of the Seller for conduct covered by § 9.1(a) to the amount of the escrowed Indemnity Fund, which was established to be $20 million in § 2.4(b). This limitation is part of a very textured subsection that also permits the Buyer to seek damages for breaches of representations and warranties, without reference to materiality qualifications placed on them in the bring-down clause— that is, the clause of the Agreement that brings the representations and warranties down from the time of signing to the time of closing in the form of closing conditions.14 In other words, through the Indemnity Claim process, the Buyer clawed back the materiality qualifiers the Company and Seller extracted on the representations and warranties for purposes of closing.

The Stock Purchase Agreement also addresses the exclusivity of the Indemnity Claim provisions of the Agreement. To that end, § 9.9(a) (the “Exclusive Remedy Provision”) provides:

Except as may be required to enforce post-closing covenants hereunder ... after the Closing Date the indemnification rights in this Article IX are and shall be the sole and exclusive remedies of the Acquiror, the Acquiror Indemnified Persons, the Selling Stockholder, and the Company with respect to this Agreement and the Sale contemplated hereby; provided that this sentence shall not be deemed a waiver by any party of its right to seek specific performance or injunctive relief in the case of another party’s failure to comply with the covenants made by such other party.

In addition, § 9.9(b) clearly states that “[t]he provisions of Article IX were specifically bargained for and reflected in the amounts payable to the Selling Stockholder in connection with the Sale pursuant to Article II.” The provisions of Article IX *1045include the Exclusive Remedy Provision, the Indemnity Claim provision, and the Indemnity Fund provision.

Further, the Agreement requires that Indemnity Claims be arbitrated in Massachusetts if they cannot be resolved consensually. Despite the selection of Massachusetts as an arbitration forum, the Agreement, in § 9.5 and § 11.9, also makes clear that Delaware law governs any claim submitted to arbitration. First, § 9.5(e) provides that “[ejxcept as may be otherwise expressly provided herein, for any Contested Claim submitted to arbitration, the burden of proof shall be as it would be if the claim were litigated in a judicial proceeding governed exclusively by the internal Laws of the State of Delaware applicable to contracts executed and entered into within the State of Delaware.” Second, in a general choice of law provision in § 11.9(a), the parties also agreed that the Stock Purchase Agreement would be “governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of law.” Finally, § 11.9(c)® of the Agreement invests the courts of Delaware with exclusive jurisdiction over any dispute regarding the Agreement, including cases seeking review of an arbitrator’s ruling or award, and embodies the parties’ consent to the jurisdiction of this State’s courts.

In this case, the Buyer does not argue that it is suing the Seller to cause it to specifically perform, or to enjoin the Seller from failing to comply with, a covenant of the Seller itself. Rather, the Buyer seeks an order requiring the Seller to take back the Company and return to the Buyer $500 million largely on the basis that the Company made false representations and warranties and the Seller provided a false Officer’s Certificate, thereby fraudulently inducing the Buyer to sign the Agreement and later close the deal.

II. Procedural Framework

This motion arises under the familiar standards of Court of Chancery Rule 12(b)(6). When addressing a motion to dismiss under that Rule, I must assume the truthfulness of all well-pled facts in the complaint and draw all reasonable inferences in the light most favorable to the plaintiffs, the Buyer.15 But conclusory allegations that are unsupported by facts contained in the amended complaint will not be accepted as true.16 After evaluating the complaint in this manner, the court will dismiss the complaint if the pled facts do not support a cause of action.17

III. Legal Analysis

The Seller’s motion to dismiss raises a host of issues. In this opinion, I concentrate on the principal argument, which is the only one that has merit.18 That argument is that the Stock Purchase Agreement unambiguously bars the Buyer from seeking rescission and further limits the Buyer to recovery of damages for misrepresentation through an Indemnity Claim with damages limited to the extent of the Indemnity Fund. Before addressing that *1046central issue, it is useful to clear away two predicate issues: (1) what substantive law governs the Buyer’s claims; and (2) whether the Buyer has satisfied its duty under Court of Chancery Rule 9(b). to plead fraud with particularity.

A. Is The Buyer’s Claim For Fraudulent Inducement Covered By The Choice Of Law Provision Contained In The Stock Purchase Agreement?

The initial question I must grapple with is the relevant law governing the Buyer’s claims. The Buyer claims that Massachusetts law governs its claims because its operations were located in Massachusetts. Cutting against the importance of that contact are certain other realities: 1) the Buyer, a collective of Delaware entities, established a Delaware corporation to acquire the Company; 2) the Seller was located in Rhode Island but was also a Delaware entity; and 3) the Company was a Delaware corporation headquartered in Ohio. Most of all, the Stock Purchase Agreement itself minimizes the parties’ focus on Massachusetts. Even though it requires arbitration of an Indemnity Claim to occur in Massachusetts, Delaware law is to govern the burden of proof in such proceedings and Delaware courts are to review the arbitrators’ rulings.19 Even more important, § 11.9(a) of the Stock Purchase Agreement clearly states: “This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of law.”

The courts of Delaware are bound to respect the chosen law of contracting parties, so long as that law has a material relationship to the transaction.20 In this case, Delaware law clearly has a material relationship to the transaction among the Buyer, the Seller, and the Company. The Seller was a Delaware entity that sold a Delaware corporation to a Delaware limited partnership that used a Delaware corporation to acquire the Company. As, or even more, important, the Delaware General Assembly has instructed us on our State’s public policy in cases like this, through the enactment of 6 Del. C. § 2708, which states:

(a) The parties to any contract, agreement or other undertaking, contingent or otherwise, may agree in writing that the contract, agreement or other undertaking shall be governed by or construed under the laws of this State, without regard to principles of conflicts of laws, or that the laws of this State shall govern, in whole or in part, any or all of their rights, remedies, liabilities, powers and duties if the parties, either as provided by law or in the manner specified in such writing are, (i) subject to 'the jurisdiction of the courts of, or arbitration in, Delaware and, (ii) may be served with legal process. The foregoing shall conclusively be presumed to be a significant, material and reasonable relationship with this State and shall be enforced whether or not there are other relationships with this State ... (b) Any person may maintain an action in a court of competent jurisdiction in this State where the action or proceeding arises out of dr relates to any contract, agreement or other undertaking for which a choice of Delaware law has been made in whole or in part and which contains the provision permitted by subsection (a) of this section ... (c) This section shall not *1047apply to any contract, agreement or other undertaking ... (ii) involving less than $100,000.21

That statute applies here, as the Agreement involves a $500 million contract in which contractual parties who are Delaware citizens have chosen Delaware law and submitted themselves to the jurisdiction of this State’s courts.

As a matter of commercial logic, it also makes sense that the Buyer and Seller would choose Delaware law to govern their relations.22 Although each was physically located in a different New England state and although the Company was headquartered in Ohio, the Buyer and Seller were operating in interstate commerce and wanted a rehable body of law to govern their relationship. They therefore chose the law of the state each had looked to in choosing their juridical home and whose law they wished to have govern their entities. By this means, Buckeyes, Quahogs, and Minutemen could come together using the common language of the Blue Hen, which each embraced as setting forth a reliable and fair set of rules for their commercial relationship.

The Buyer asserts the proposition that the contracting parties only meant for Delaware law to govern contract claims that might arise among the parties, but not claims in tort seeking rescission of the Stock Purchase Agreement on grounds that false contractual representations were made. That division is not sensible. As § 201 of the Restatement (Second) of Conflict of Laws states: “[t]he effect of misrepresentation, duress, undue influence and mistake upon a contract is determined by the law selected by application of the rules of §§ 187-188.” In turn, § 187 allows the law of the state chosen by the parties to govern contractual rights and duties unless the chosen state lacks a substantial relationship to the parties or transaction or applying the law of the chosen state will offend a fundamental policy of a state with a material greater interest.23 Section 201’s reasoning is important.24

*1048Parties operating in interstate and international commerce seek, by a choice of law provision, certainty as to the rules that govern their relationship. To hold that their choice is only effective as to the determination of contract claims, but not as to tort claims seeking to rescind the contract on grounds of misrepresentation, would create uncertainty of precisely the kind that the parties’ choice of law provision sought to avoid.25 In this regard, it is also notable that the relationship between contract and tort law regarding the avoidance of contracts on grounds of misrepresentation is an exceedingly complex and unwieldy one, even within the law of single jurisdictions.26 To layer the tort law of one state on the contract law of another state compounds that complexity and makes the outcome of disputes less predictable, the type of eventuality that a sound commercial law should not seek to promote.

Here, the Stock Purchase Agreement makes even more plain the need to respect the parties’ choice of law. By its plain terms, § 9.1(a) addresses what remedies the Buyer has for damages caused by “inaccuracy, misrepresentation, breach of, default in, or failure to perform, any of the representations, warranties or covenants.” At issue in determining the sustainability of the Buyer’s claims is the meaning of this provision and whether it is broad enough to encompass even intentional misrepresentations — i.e., intentional fraud. Also at issue is whether the contract, if it does limit the Buyer’s right to seek relief *1049for intentional fraud, is contrary to public policy. When parties have chosen a state’s contract law to govern their contract, it is illogical to assume that they- wished to have the enforceability of that contract judged by another state’s law. Section 2708 of Title 6 of the Delaware Code represents our General Assembly’s intent to prevent perverse dichotomies in the linguistics used to determine the meaning and enforceability of contracts. When satisfied, as here, § 2708 also establishes that this State has a material relationship sufficient to satisfy § 187 of the Restatement (Second) of Conflict of Laws.27

Finally, in the present situation, I see no reason why Massachusetts law would be chosen, as the Buyer now advocates. That choice is obviously convenient for the Buyer now. The Buyer alleges that it was physically located in Massachusetts and received the contractual representations there, and it believes Massachusetts law is particularly favorable to it. But the buy-side that also received the representations is a group of Delaware entities that used a Delaware acquisition vehicle to be the actual buyer of the Company. Moreover, the Seller was a Delaware entity physically located in Rhode Island and there is no allegation that the transaction actually was haggled out in the home of the Bean and the Cod. Unlike a car accident case, in which a Rhode Island driver collided with a Massachusetts driver on 1-195 in Massachusetts and the Rhode Island driver should have expected to be judged under Massachusetts standards, the physical location of the Buyer in this case has less force as a choice of law factor.28 The Buyer was a sophisticated private equity buyer operating in interstate commerce. It was a Delaware entity buying a Delaware entity that owned another Delaware entity operating in Ohio from a Seller operating out of Rhode Island.

The self-evidence of the proposition that the Buyer’s physical location is important as a choice of law factor escapes me as this scenario is far removed from that which ordinarily makes geography a factor. As significant is the normative proposition that embracing Massachusetts law is founded upon, which is that the commercial interests of buyers in complex sales agreement in interstate commerce trump the interests of sellers. That is, to find that Massachusetts law governs here, one has to conclude that the interests of the Buyer in having the advantages of its home state’s law to potentially avoid the agreement in tort are somehow paramount to the interests of the Seller in having the contractual arrangements it negotiated enforced to the greatest extent consistent with the parties’ chosen law (or with its own home state of operations). And why slight Ohio?

In reality, Delaware has the greatest interest in having its law applied to this matter, and therefore the other element of § 187 of the Restatement does not require Delaware law to give way. All of the parties to the Agreement had in common that they were Delaware citizens. Our citizens ought to be able to use our law as *1050a common language for their commercial relationships, particularly when those relationships involve interstate commerce and do not center in any material manner on the geography of any particular party’s operational headquarters. Put simply, no state has a materially greater interest than Delaware in applying its law to this matter.

All in all, this scenario illustrates the obvious utility of choice of law provisions and the need to ensure that parties seeking to avoid contracts prove their claims under the law chosen by the parties to govern their contract. To enter into a contract under Delaware law and then tell the other contracting party that the contract is unenforceable due to the public policy of another state is neither a position that tugs at the heartstrings of equity nor is it commercially reasonable. The parties to the Stock Purchase Agreement made an effective choice of law, and that law governs the Buyer’s attempt to avoid the Agreement.

B. Does The Buyer’s Amended Complaint Plead Facts With Particularity To Establish A Claim Of Fraud As Required By Rule 9(b) ?

The elements of common law fraud that a plaintiff must plead are familiar. To state a claim, the plaintiff must plead facts supporting an inference that: (1) the defendant falsely represented or omitted facts that the defendant had a duty to disclose; (2) the defendant knew or believed that the representation was false or made the representation with a reckless indifference to the truth; (3) the defendant intended to induce the plaintiff to act or refrain from acting; (4) the plaintiff acted in justifiable reliance on the representation; and (5) the plaintiff was injured by its reliance.29 Most of those elements must be pled with particularity, as set forth in Court of Chancery Rule 9(b), which states: “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be' stated with particularity. Malice, intent, knowledge and other condition of mind of a person may be averred generally.” To satisfy Rule 9(b), á complaint must allege: (1) the time, place, and contents of the false representation; (2) the identity of the person making the representation; and (3) what the person intended to gain by making the representations.30 Essentially, the plaintiff is required to allege the circumstances of the fraud with detail sufficient to apprise the defendant of the basis for the claim.31

Despite these particularity requirements for the circumstances, though, state of mind and knowledge may be averred generally pursuant to Rule 9(b) because “any attempt to require specificity in pleading a condition of mind would be unworkable and undesirable.”32 While knowledge may be pled generally, when a plaintiff pleads a claim of fraud that charges that the defendants knew something, it must allege sufficient facts from which it can reasonably be inferred that this “something” was knowable and that the defendants were in a position to know it.33

*1051The Buyer’s amended complaint satisfies Rule 9(b). The Buyer has alleged, with specificity, precisely what financial statements were materially false and why they were false.34 These financial statements were represented and warranted in the Agreement and were therefore intended to induce the Buyer to sign the Agreement and close the sale to purchase the Company. Moreover, Dominguez signed the Officer’s Certificate required for the transaction to close in his capacity at both the Company and the Seller and certified that the Company’s representations as to the financial statements were correct at the closing on August 5, 2005. The Buyer pleads, and the Seller does not refute, that Dominguez is a principal of the Seller, which is being sued for fraudulent representation. Dominguez, as alleged in the complaint, was in close contact with the Company’s management on several occasions regarding the financials of the Company, and they discussed such subjects as the preparation of projections to provide potential buyers, the Company’s EBITDA, the Company’s poor financial performance, and the attainment of certain financial targets identified as important by the Buyer by June 30.35 Thus, for the purposes of pleading, the complaint adequately pleads that the Seller was in a position to know of the falsity of the financial statements. Likewise, the Seller had an obvious motive for engaging in wrongdoing — it wanted to sell the Company for the highest price possible. Dominguez stated that if the Buyer “is going to pay 10X [EBITDA], let’s try to use part of the day to get [it] to the right EBITDA number. On an adjusted basis, it should be ... north of $51 million.”36 To that end, Dominguez and Providence had reason to worry. Kent informed Dominguez that the first quarter of 2005 was “slow” and that numbers were “worrisome.”37 The Seller therefore had the opportunity and the motive to work with management to influence the financial statements and the operating decisions to achieve desired numbers. Whether the Buyer can prove, at trial, that certain false statements were made by or with the knowledge of the Seller is yet to be determined, but at the pleading stage, the Buyer’s fraudulent inducement claim is pleaded with the particularity required by Rule 9(b).

C. The Crux Of The Matter: Does The Stock Purchase Agreement Itself Bar Even An Otherwise Well-Pled Claim Of Rescission?

For the purposes of addressing the remaining substantive arguments in this motion, I therefore will accept two of the Buyer’s primary contentions as true for the sake of argument: (1) that the complaint sets forth facts supporting an inference that the Company made misrepresentations in its financial statements, the accuracy of which was represented and warranted in the Stock Purchase Agreement by the Company and in the Officer’s Certificate by the Seller; and (2) that the *1052problems with VISTA, particularly insofar as it led Amazon.com to terminate distribution of the Company's trade books, could have constituted a material adverse effect under § 8.2(c) of the Stock Purchase Agreement, thereby triggering a contractual duty to disclose the underlying facts to the Buyer on the Company’s part, and on the Seller’s part in the context of the Officer’s Certificate.38 Relatedly, I assume that the complaint sufficiently alleges that the Seller knew that the Company’s financial statements were not materially accurate. The Seller’s key contention, however, rests on the notion that even if these assumptions are correct, the Buyer is not entitled to press this lawsuit and obtain rescission.

The. Seller’s primary argument is that the Stock Purchase Agreement precludes the Buyer from obtaining the relief it seeks in this court. That argument is premised on several elements of the Agreement, which I have described in detail. In summary, though, the argument proceeds as follows. The Stock Purchase Agreement is a carefully negotiated document that allocates economic risk. It was entered into by sophisticated players in the private equity markets. In that Agreement, the parties carefully set forth which representations and warranties were made by the Company and which were made by the Seller. The Buyer also explicitly promised that the only information it relied upon in entering into the Agreement was that represented and warranted in the Agreement itself, thus contractually pledging that it had not relied on extra-contractual representations. In addition, the Buyer agreed to the Exclusive Remedy Provision stating that the only remedy that it had against the Seller for contractual misrepresentations was limited to a claim in arbitration for damages, i.e., an Indemnity Claim. And, in that event, the Seller’s liability is capped at the extent of the Indemnity Fund for $20 million. Furthermore, the Agreement explicitly indicated that the Exclusive Remedy Provision and limitation on liability contained in the contract were bargained for and reflected in the sale price.39

Instead of seeking the relief permitted to it by the Agreement — an Indemnity Claim — the Buyer is bringing a claim for rescission in court. Not only that, the Buyer is seeking to hold the Seller responsible for representations and warranties made by the Company,., when the Seller only agreed to back Company representations to the extent of the Indemnity Fund.

The Seller believes that the Buyer’s attempt to avoid the terms of the Stock Purchase Agreement is improper and mandates dismissal. Having signed a contract explicitly disclaiming access to the very remedy it now seeks, the Buyer has contractually forsaken its current preferred remedy and must be held to its bargain. The Seller contends that a deal between sophisticated parties with the free right to walk away is a deal, and the law of this State should honor it.

For its part, the Buyer makes two major counter-arguments. First, the Buyer argues that the Exclusive Remedy Provision of the Stock Purchase Agreement does not limit its remedial options in the manner that the Seller suggests. Second, the Buyer contends that even if the Stock Purchase , Agreement does limit the Seller’s *1053liability for misrepresentation to an Indemnity Claim by the Buyer, public policy overrides that aspect of the Agreement. According to the Buyer, a provision limiting in any manner the liability of a contracting party for misrepresentation is void. The public policy interest in deterring fraudulent conduct is, says the Buyer, so powerful that it prevents even sophisticated private equity firms from shaping acquisition agreements in which parties trade off price for limitations on liability. Given this background, I will now address the Seller’s arguments underlying the motion to dismiss.

1. Do The Terms Of The Stock Purchase Agreement Purport To Limit The Liability Of The Seller For Intentional, Fraudulent Misrepresentations ?

The Buyer argues that this court need not reach its argument that public policy precludes the Agreement from barring its fraud-based rescission claim. According to the Buyer, the Agreement cannot be reasonably read to subject fraud claims, rather than merely breach of contract claims, to the Exclusive Remedy Provision. I find that argument unpersuasive and inconsistent with the plain language of the Stock Purchase Agreement.

Section 9.1 clearly requires the Seller to indemnify the Buyer, but only to the extent of funds on deposit in the Indemnity Fund for damages determined “to have arisen out of or to have resulted from, in connection with, or by virtue of facts or circumstances (i) which constitute an inaccuracy, misrepresentation, breach of, default in, or failure to perform, any of the representations, warranties or covenants.” 40 The Exclusive Remedy Provision establishes an Indemnity Action as the sole remedy both “with respect to” the Stock Purchase Agreement and “the Sale contemplated hereby.”41

Recognizing the difficulties that this language presents for it, the Buyer advances two arguments to support its position. First, the Buyer asks me to interpret the word “misrepresentation” in § 9.1 of the Agreement as encompassing negligent and innocent misrepresentations only, not fraudulent misrepresentations. But that argument is not a convincing one, given the common understanding - of the term misrepresentation in our legal lexicon. Misrepresentation is defined by Black’s Law Dictionary as “the act of making a false or misleading statement about something, [usually] with the intent to deceive.” 42 Further, modern legal usage appears to place an even stronger emphasis on the breadth of the term. Specifically, “this word is broad enough to describe a fraudulent as well as a negligent or innocent statement.”43 Courts have embraced this definition.44

*1054The Buyer also asks me to construe the meaning of the term misrepresentation in the context of the surrounding words in § 9.1(a) on the ground that these surrounding words suggest a narrower meaning.45 But the surrounding words — “inaccuracy ... breach of, default in, or failure to perform, any of the representations, warranties or covenants” — do not clearly provide any context friendly to the Buyer. Arguably, any of these states of facts (e.g., an inaccuracy) or acts (e.g., a breach or default) can be the result of willful or unintentional conduct. Moreover, by including the term misrepresentation along with the term “inaccuracy,” the Agreement is more reasonably read as trying to cover all possible claims relating to false representations, including situations when a representation was not merely “inaccurate,” but also when the party making it had known it was inaccurate and nonetheless “misrepresented” the facts.

The Buyer’s second argument is no more convincing. The argument is that § 9.1(a) only addresses claims that sound purely in contract and not those that sound in tort. In other words, according to the Buyer, it is barred from seeking to avoid the Agreement on the grounds that false representations render the contract avoidable under contract law. Nonetheless, to the extent the Buyer couched its misrepresentation claim as one sounding in tort, the Buyer argues that the Exclusive Remedy Provision of the Agreement has no application.

I do not find this argument either linguistically or logically appealing. The term misrepresentation, as just discussed, is one commonly associated with fraud claims sounding in tort and must be given its plain meaning. And, as a matter of commercial logic, the Buyer’s separation of tort and contract claims has no more appeal. It is difficult to fathom why rational contracting parties would attempt to cut, by contract, a clear division that American jurisprudence has never been able to achieve: a division between the role of contract and tort law in addressing the consequences of false representations inducing the making and closing of contracts. Under American law, buyers claiming to be the victims of such representations have traditionally been able to seek to avoid a contract (or in the alternative, recover damages) in either contract or tort.46 For that reason, it would pro*1055vide little comfort to a Seller to limit its exposure to misrepresentation claims sounding only in contract and not to those arising in tort. In this respect, language and logic also connect, as no one seeking to draw this division would use the word misrepresentation without explicitly qualifying it to apply to only claims sounding in contract because that word is so redolent of tort.47 Furthermore, § 9.1 is written expansively to encompass “any and all claims, ... causes of action, [and] ... damages, ... to have arisen out of or to have resulted from, in connection with, or by virtue of facts or circumstances ... which constitute a[ ] ... misrepresentation.” This language bespeaks of breadth — not of an attempt to capture only contract claims.48

For all these reasons, I conclude that the Seller’s reading of the Exclusive Remedy Provision is correct. Absent an overriding public policy, the plain terms of the Exclusive Remedy Provision would limit the Buyer to an Indemnity Claim for damages capped at the amount of the Indemnity Fund, and would bar its claim for rescission.

2. Is The Buyer Permitted To Seek Rescission In This Court Despite The Exclusive Remedy Terms Of The Stock Purchase Agreement ?

Having determined that the Stock Purchase Agreement’s plain terms would, if given legal effect, preclude the Buyer from seeking rescission, I must now consider the Buyer’s argument that public policy intervenes to trump contractual freedom and to prevent that preclusion. That public policy argument continues a longstanding debate within American jurisprudence about society’s relative interest in contractual freedom versus establishing universal minimum standards of truthful conduct for contracting parties.

The present case is starker than the typical case. That reality is best illustrated by understanding the burden that the *1056Buyer has voluntarily taken on, -without raising a legal peep. The burden is that of demonstrating that its rescission claim is based on false representations of fact embodied within the four corners of the Stock Purchase Agreement itself.

There are several perspectives in American law regarding the extent to which a contract can define those representations of fact upon which the parties’ decision to contract was based. Some case law says that even if a contracting party explicitly promised that no representations of fact not contained in the contract had been made to it and further explicitly promised that it was only relying on representations of fact within the contract, that same contracting party could come forward later and assert that an extra-contractual representation of fact induced its decision to sign the contract.49

When addressing contracts that were the product of give-and-take between commercial parties who had the ability to walk away freely, this court’s jurisprudence has taken a different approach. We have honored clauses in which contracted parties have disclaimed reliance on extra-contractual representations, which prohibits the promising party from reneging on its promise by premising a fraudulent inducement claim on statements of fact it had previously said were neither made to it nor had an effect on it.50

*1057In fact, in H-M Wexford LLC v. Encorp, Inc., this court characterized its recent cases as “consistently holding that sophisticated parties to negotiated commercial contracts may not reasonably rely on information that they contractually agreed did not form a part of the basis for their decision to contract.”51 As an example, in Progressive Int’l Corp. v. E.I. Dupont de Nemours & Co., the parties entered into a License Agreement that contained an integration clause stating: “This LICENSE ... constitutes the entire agreement between the Parties ... and supercedes all prior and contemporaneous agreements, representations, and understandings ... [and] [e]ach of the Parties acknowledges that no other party, nor any agent or attorney of any other party, has made any promise, representation, or warranty whatsoever ... and acknowledges that the Party has not executed or authorized the execution of this instrument in reliance upon any such promise, representation, or warranty not contained herein.”52 This court dismissed an attempt by Progressive, which was an experienced commercial entity,53 to bring a fraudulent inducement claim alleging that it relied on extra-contractual promises made by DuPont. The integration clause in the License Agreement, signed by Progressive, clearly indicated that Progressive was relying on only those representations and promises contained within the four corners of the Agreement. The court refused to allow Progressive to state in a written agreement that it would not rely on extra-contractual representations and then, despite this promise, claim that it relied on these representations, which would effectively sanction “false promises” in negotiated agreements.54 DuPont, the other party to the contract, had specifically negotiated for that promise and was entitled to rely upon it. Expecting Progressive to honor its own contractual representation therefore effectuated the parties’ reasonable expectations.

The teaching of this court, through cases such as Great Lakes; H-M Wexford; Progressive, and Kronenberg is that a party cannot promise, in a clear integration clause of a negotiated agreement, that it will not rely on promises and representations outside of the agreement and then shirk its own bargain in favor of a “but we did rely on those other representations” fraudulent inducement claim. The policy basis for this fine of cases is, in my view, quite strong.55 If there is a public policy interest in truthfulness, then that interest applies with more force, not less, to contractual representations of fact. Contractually binding, written representations of fact ought to be the most reliable of representations, and a law intolerant of fraud should abhor parties that make such representations knowing they are false.

*1058To fail to enforce non-reliance clauses is not to promote a public policy against lying. Rather, it is to excuse a lie made by one contracting party in writing — the lie that it was relying only on contractual representations and that no other representations had been made — to enable it to prove that another party lied orally or in a writing outside the contract’s four corners. For the plaintiff in such a situation to prove its fraudulent inducement claim, it proves itself not only a liar, but a liar in the most inexcusable of commercial circumstances: in a freely negotiated written contract. Put colloquially, this is necessarily a “Double Liar” scenario. To allow the buyer to prevail on its claim is to sanction its own fraudulent conduct.

The enforcement of non-reliance clauses recognizes that parties with free will should say no rather than he in a contract. The enforcement of non-reliance clauses also recognizes another reality that is often overlooked in morally-tinged ruminations on the importance of deterring fraud. That reality is that courts are not perfect in distinguishing meritorious from non-meritorious claims of fraud. Permitting the procession of fraud claims based on statements that buyers promised they did not rely upon subjects sellers to a greater possibility of wrongful liability,56 especially because those statements are often allegedly oral, rather than in a writing, and thus there is often an evidentiary issue about whether the supposedly false statement ever was uttered. As important, even when a court rejects a buyer’s fraud claim that is grounded in a disclaimed statement, the seller does not get the full benefit of its bargain because the costs (both direct and indirect) of the litigation are rarely shifted in America to the buyer who made a meritless claim.

For these and other reasons explained in our decisions, this court has therefore honored contracts that define those representations of fact that formed the reality upon which the parties premised their decision to bargain.57 This sort of definition minimizes the risk of erroneous litigation outcomes by reducing doubts about what was promised and said, especially because the contracting parties have defined that in writing in their contract.

Nonetheless, this court consistently has respected the law’s traditional abhorrence of fraud in implementing this reasoning. Because of that policy concern, we have not given effect to so-called merger or integration clauses that do not clearly state that the parties disclaim reliance upon extra-contractual statements. In*1059stead, we have held, as in Kronenberg, that murky integration clauses, or standard integration clauses without explicit anti-reliance representations, will not relieve a party of its oral and extra-contractual fraudulent representations.58 The integration clause must contain “language that ... can be said to add up to a clear anti-reliance clause by which the plaintiff has contractually promised that it did not rely upon statements outside the contract’s four corners in deciding to sign the contract.” 59 This approach achieves a sensible balance between fairness and equity— parties can protect themselves against unfounded fraud claims through explicit anti-reliance language. If parties fail to include unambiguous anti-reliance language, they will not be able to escape responsibility for their own fraudulent representations made outside of the agreement’s four corners.

This case, however, raises a related, but more difficult, question: to what extent may a contract exculpate a contracting party from a rescission or damages claim based on a false representation of fact made within the contract itself? May parties premise a contract on defined representations but promise in advance to accept a less-than-adequate remedy if one of them has been induced by lies about one of those material facts?

As the Buyer notes, there is a strong tradition in American law that holds that contracts may not insulate a party from damages or rescission resulting from the party’s fraudulent conduct. In that vein, the Restatement of Contracts states: “[a] term exempting a party from tort liability for harm caused intentionally or recklessly is unenforceable on grounds of public policy.” 60 Specifically, “[a] provision in a bargain that fraud in its formation shall not be asserted is illegal.”61 The Restatement’s position finds resonance in a deep body of case law as well as in leading treatises.62 In addition, in the case of Turkish v. Kasenetz, 63 the Second Circuit reasoned that, contrary to the argument that only a full exemption of liability, not a mere limitation of liability, was contrary to public policy, “the rationale behind the doctrine — to prevent parties from shielding themselves from liability from their own fraud by inserting a clause into the very contract that was procured by the fraud — applies equally to the limitation of liability and to the exclusion of liability.”64 This sort of reasoning draws in no small measure from the nostrum fraus omnia corrumpit — fraud vitiates everything it touches.65

On the other hand, there is also a strong American tradition of freedom of contract, and that tradition is especially strong in our State,66 which prides itself on having *1060commercial laws that are efficient.67 The Seller stresses this strain in our law to buttress its argument that contracts between sophisticated parties with equal bargaining strength should be honored without intrusion by the policy concerns of unelected judges.

There are various reconciliations of this clash of interests. At one extreme, some courts are extremely grudging about enforcing contractual limitations on a buyer’s right to sue for rescission or damages for an innocent misrepresentation. This reluctance has generally manifested itself in refusals to preclude negligent misrepresentation claims based on general merger clauses and in requiring very specific waivers of negligence-based claims.68 The balancing possibilities extend from there, with some courts willing to tolerate waivers of the right to sue for negligent or even grossly negligent misrepresentations.69 As § 195 of the Restatement reflects, however, courts have generally refused to go further and allow a contractual waiver of the buyer’s right to sue on the basis that a contractually-represented fact was false as a result of the seller’s reckless or intentional conduct. Abundant case law to this effect exists.70

*1061Delaware courts have shared this distaste for immunizing fraud. As the Buyer notes, prior Delaware decisions have used language that is generally condemnatory of contractual limitations on a party’s exposure to a fraud claim for making a false statement. To wit, our courts have said that “[a] perpetrator of fraud cannot close the lips of his innocent victim by getting him blindly to agree in advance not to complain against it”71 and “fraud vitiates every contract, and no man may invoke the law to enforce his fraudulent acts.”72 Those decisions primarily involve the protection of a relatively unsophisticated party or a party lacking bargaining clout who signs a contract with a boilerplate merger clause.73

But, as our recent case law indicates, Delaware is also sensitive to the need for commerce to proceed in a rational and certain way. We also respect the ability of sophisticated businesses, such as the Buyer and Seller, to make their own judgments about the risk they should bear and the due diligence they undertake, recognizing that such parties are able to price factors such as limits on liability. Contributing to that respect is our knowledge that judicial decisions are not the only way that commercial norms of fair play are instilled. This case is a good example. If the Seller, a private equity firm, gets a rap as a fraudster who tries to sell portfolio companies based on false representations, that Seller will pay a price. Although there are a lot more private equity firms today than there were a decade ago, the nature of that market is still such that reputational factors are likely to be important. Having a bad reputation is likely to be costly, as buyers will tend to discount the value of the tainted seller’s portfolio companies as a form of self-protection as well as to demand greater remedial flexibility in the sales contract.74

When fashioning common law limits on contractual freedom, we must be mindful of these factors and other commercial realities, lest we inhibit economic activity that might be valuable to the parties and society more generally.75 In that respect, the common law ought to be especially chary *1062about relieving sophisticated business entities of the burden of freely negotiated contracts. There remains much harshness in the world, and such entities are unlikely candidates to place at the head of the line for judicial protection, especially when the legislature is free to consider providing such relief.76 Moreover, the litigation realities explored earlier in the context of the enforcement of non-reliance clauses has relevance here, too. Permitting a party to sue for relief that it has contractually promised not to pursue creates the possibility that buyers will face erroneous liability (when judges or juries make mistakes) and uncompensated costs (when they incur uncompensated costs in defending successfully against a contractually-barred claim that was permitted on public policy grounds).

At the same time, a concern for commercial efficiency does not lead ineluctably to the conclusion that there ought to be no public policy limitations on the contractual exculpation of misrepresented facts. Even commentators who recognize that there are aspects of bargaining in which it is often expected that parties will lie — such as when agents refuse to disclose or misrepresent their principals’ reservation price77 — there is little support for the notion that it is efficient to exculpate parties when they lie about the material facts on which a contract is premised.78

I use the plain word “lie” intentionally because there is a'moral difference between a lie and an unintentional misrepresentation of , fact. This moral difference also explains many of the cases in the fraus omnia commpit strain, which arose when the concept of fraud was more typically construed as involving lying, and thus it is understandable that courts would find it distasteful to enforce contracts excusing liars for responsibility for the harm their lies caused.

There is also a practical difference between lies and unintentional misrepresentations. A seller can make a misrepresentation of fact because it was misinformed by someone else, was negligent, or even was reckless. All of those possibilities can be enhanced if the seller does little to investigate its own representations and compounded if the buyer does little independent dtfe diligence of its own. The level of self-investigation expected from a seller, to me, seems to be a more legitimate subject for bargaining than whether the seller can insulate itself from liability for lies.79

This case involves a good example of this aspect of the problem. The Seller did *1063not manage the Company being sold directly. Most of the key representations of fact were made by the Company to the Buyer in the first instance, primarily through managers working directly for the Company who were not otherwise affiliated with the Seller.80 The Seller did not necessarily possess the same information as the managers of the Company.

In this circumstance, it seems legitimate for the Seller to create exculpatory distance between itself and the Company.81 That is, I find it difficult to fathom how it would be immoral for the Seller and Buyer to allocate the risk of intentional lies by the Company’s managers to the Buyer, and certainly that is so as to reckless, grossly negligent, negligent, or innocent misrepresentations of fact by the Company. Such an allocation of risk does not permit the Seller to engage in consciously improper conduct itself, it simply requires the Buyer to hold the Company and its speaking managers exclusively responsible for their own misstatements of fact.82

In considering how to allocate the risk of misrepresentations consistent with public policy, I also consider our General Assembly’s approach to exculpation in the case of business entities. In the corporate context, the General Assembly has permitted corporate charters to exculpate directors for liability for gross negligence.83 In the alternative entity context, where it is more likely that sophisticated parties have carefully negotiated the governing agreement, the General Assembly has authorized even broader exculpation, to the extent of eliminating fiduciary duties altogether.84

Given these statements of policy by our General Assembly, it is appropriate for the *1064judiciary in fashioning common law to give as much leeway to sophisticated business parties crafting acquisition agreements as is afforded to those who write the governing instruments of limited partnerships and limited liability companies. We should be reluctant to be more restrictive of freedom of contract than those elected by our citizens to write the statutory law.

With that in mind, I resolve this case in the following manner. To the extent that the Stock Purchase Agreement purports to limit the Seller’s exposure for its own conscious participation in the communication of lies to the Buyer, it is invalid under the public policy of this State. That is, I find that the public policy of this State will not permit the Seller to insulate itself from the possibility that the sale would be rescinded if the Buyer can show either: 1) that the Seller knew that the Company’s contractual representations and warranties were false; or 2) that the Seller itself, lied to the Buyer about a contractual representation and warranty. This will require the Buyer to prove that the Seller acted with an illicit state of mind, in the sense that the Seller knew that the representation was false and either communicated it to the Buyer directly itself or knew that the Company had. In this case, that distinction is largely of little importance because of the Officer’s Certificate provided by the Seller. In that certificate, the Seller certified that (1) each representation and warranty of the Company and Seller was true and correct as of the closing date; (2) the Seller and Company performed and complied in all material respects with the agreements and covenants required to be performed or complied with; and (3) between the date of signing the Stock Purchase Agreement and closing, there had been no change, event or condition of any character which had- or would reasonably be expected to constitute a material-adverse effect for the Company.

By contrast, the Buyer may not obtain rescission or greater monetary damages upon any lesser showing. If the Company’s managers intentionally misrepresented facts to the Buyer without knowledge of falsity by the Seller, then the Buyer cannot obtain rescission or damages, but must proceed with an Indemnity Claim subject to the Indemnity Fund’s liability cap. Likewise, the Buyer may not escape the contractual limitations on liability by attempting to show that the Seller acted in a reckless, grossly negligent, or negligent manner. The Buyer knowingly - accepted the risk that the Seller would act with inadequate deliberation. It is an experienced private equity firm that could have walked away without buying. It has no moral justification for escaping its own voluntarily-accepted limits on its remedies against the Seller absent proof that the Seller itself acted in a consciously improper manner.85

*1065In sum, I conclude that the Seller’s motion to dismiss the complaint in its entirety-must be denied. But the Buyer may only obtain its desired relief — rescission or in the alternative, full compensatory damages — if it meets the burden of proof described.86

IV. Conclusion

For the foregoing reasons, the Seller’s motion to dismiss is granted as to Count III, the negligent misrepresentation count, and granted as to the remaining counts to the extent described. The motion is otherwise denied. The parties shall confer and seek a conference with the court if they cannot reach agreement on the date to begin trial. In that respect, they should know that the case will proceed to trial directly and expeditiously without additional dispositive motion practice. IT IS SO ORDERED.

SCHAUER, J.

Defendants, who are a building contractor and his surety, appeal from an adverse judgment in this ac*382tion by plaintiff school district to recover damages allegedly resulting when defendant Kastorff, the contractor, refused to execute a building contract pursuant to his previously submitted bid to make certain additions to plaintiff’s school buildings. We have concluded that because of an honest clerical error in the bid and defendant’s subsequent prompt rescission he was not obliged to execute the contract, and that the judgment should therefore be reversed.

Pursuant to plaintiff’s call for bids, defendant Kastorff secured a copy of the plans and specifications of the proposed additions to plaintiff’s school buildings and proceeded to prepare a bid to be submitted by the deadline hour of 8 p. m., August 12, 1952, at Elsinore, California. Kastorff testified that in preparing his bid he employed work sheets upon which he entered bids of various subcontractors for such portions of the work as they were to do, and that to reach the final total of his own bid for the work he carried into the right hand column of the work sheets the amounts of the respective sub bids which he intended to accept and then added those amounts to the cost of the work which he would do himself rather than through a subcontractor; that there is “a custom among subcontractors, in bidding on jobs such as this, to delay giving . . . their bids until the very last moment”; that the first sub bid for plumbing was in the amount of $9,285 and he had received it “the afternoon of the bid-opening,” but later that afternoon when “the time was drawing close for me to get my bids together and get over to Elsinore (from his home in San Juan Capistrano) he received a $6,500 bid for the plumbing. Erroneously thinking he had entered the $9,285 plumbing bid in his total column and had included that sum in his total bid and realizing that the second plumbing bid was nearly $3,000 less than the first, Kastorff then deducted $3,000 from the total amount of his bid and entered the resulting total of $89,994 on the bid form as his bid for the school construction. Thus the total included no allowance whatsoever for the plumbing work.

Kastorff then proceeded to Elsinore and deposited his bid with plaintiff. When the bids were opened shortly after 8 p. m. that evening, it was discovered that of the five bids submitted that of Kastorff was some $11,306 less than the next lowest bid. The school superintendent and the four school board members present thereupon asked Kastorff whether he was sure his figures were correct, Kastorff stepped out into the *383hall to check with the person who had assisted in doing the clerical work on the bid, and a few minutes later returned and stated that the figures were correct. He testified that he did not have his work sheets or other papers with him to check against at the time. The board thereupon, on August 12, 1952, voted to award Kastorff the contract.

The next morning Kastorff checked his work sheets and promptly discovered his error. He immediately drove to the Los Angeles office of the firm of architects which had prepared the plans and specifications for plaintiff, and there saw Mr. Rendon. Mr. Rendon testified that Kastorff “had his maps and estimate work-sheets of the project, and indicated to me that he had failed to carry across the amount of dollars for the plumbing work. It was on the sheet, but not in the total sheet. We examined that evidence, and in our opinion we felt that he had made a clerical error in compiling his bill. ... In other words, he had put down a figure, but didn’t carry it out to the ‘total’ column when he totaled his column to make up his bid. . . . He exhibited ... at that time . . . his work-sheets from which he had made up his bid.” That same morning (August 13) Rendon telephoned the school superintendent and informed him of the error and of its nature and that Kastorff asked to be released from his bid. On August 14 Kastorff wrote a letter to the school board explaining his error and again requesting that he be permitted to withdraw his bid. On August 15, after receiving Kastorff’s letter, the board held a special meeting and voted not to grant his request. Thereafter, on August 28, written notification was given to Kastorff of award of the contract to him.1 Subsequently plaintiff submitted to Kastorff a contract to be signed in accordance with his bid, and on September 8, 1952, Kastorff returned the contract to plaintiff with a letter again explaining his error and asked the board to reconsider his request for withdrawal of his bid.

Plaintiff thereafter received additional bids to do the subject construction; let the contract to the lowest bidder, in the amount of $102,900; and brought this action seeking to recover from Kastorff the $12,906 difference between that *384amount and the amount Kastorff had bid.2 Recovery of $4,499.60 is also sought against Kastorff’s surety under the terms of the bond posted with his bid.

Defendants in their answer to the complaint pleaded, among other things, that Kastorff had made an honest error in compiling his bid; that “he thought he was bidding, and intended to bid, $9500.00 more, making a total of $99,494.00 as his bid”; that upon discovering his error he had promptly notified plaintiff and rescinded the $89,994 bid. The trial court found that it was true that Kastorff made up a bid sheet, which was introduced in evidence; that the subcontractor’s bids thereupon indicated were those received by Kastorff ■ that he “had 16 subcontracting bids to ascertain from 31 which were submitted”; and that Kastorff had neglected to . carry over from the left hand column on the bid sheet to the right hand column on the sheet a portion of the plumbing (and heating) subcontractor’s bid. Despite the uncontradicted evidence related hereinabove, including that of plaintiff’s architect and of its school superintendent, both of whom testified as plaintiff’s witnesses, the court further found, however, that “it is not true that the right hand column of figures was totaled for the purpose of arriving at the total bid to be submitted by E. J. Kastorff ... It cannot be ascertained from the evidence for what purpose the total of the right hand column of figures on the bid sheet was used nor can it be ascertained from the evidence for what purpose the three bid sheets were used in arriving at the total bid.” And although finding that “on or about August 15, 1952,” plaintiff received Kastorff’s letter of August 14 explaining that he “made an error of omitting from my bid the item of Plumbing,” the court also found that “It is not true that plaintiff knew at any time that defendant Kastorff’s bid was intended to be other than $89,994.00 ... It is not true that the plaintiff knew at the time it requested the execution of the contract by defendant Kastorff that he had withdrawn his bid because of an honest error in the compilation thereof. It is not true that plaintiff had notice of an error in the compilation of the bid by defendant Kastorff and tried nevertheless to take advantage of defendant Kastorff by forcing him to enter a contract on the basis *385of a bid he had withdrawn. ... It is not true that it would be either inequitable or unjust to require defendant Kastorff to perform the contract awarded to him for the sum of $89,994.00, and it is not true that he actually intended to bid for said work the sum of $99,494.00. ”3 Judgment was given for plaintiff in the amounts sought, and this appeal by defendants followed.

In reliance upon M. F. Kemper Const. Co. v. City of Los Angeles (1951), 37 Cal.2d 696 [235 P.2d 7], and Lemoge Electric v. County of San Mateo (1956), 46 Cal.2d 659, 662, 664 [la, lb, 2, 3] [297 P.2d 638], defendants urge that where, as defendants claim is the situation here, a contractor makes a clerical error in computing a bid on a public work he is entitled to rescind.

In the Kemper case one item on a work sheet in the amount of $301,769 was inadvertently omitted by the contractor from the final tabulation sheet and was overlooked in computing the total amount of a bid to do certain construction work for the defendant city. The error was caused by the fact that the men preparing the bid were exhausted after working long hours under pressure. When the bids were opened it was found that plaintiff’s bid was $780,305, and the next lowest bid was $1,049,592. Plaintiff discovered its error several hours later and immediately notified a member of defendant’s board of public works of its mistake in omitting one item while preparing the final accumulation of figures for its bid. Two days later it explained its mistake to the board and withdrew its bid. A few days later it submitted to the board evidence which showed the unintentional omission of the $301,769 item. The board nevertheless passed a resolution accepting plaintiff’s erroneous bid of $780,305, and plaintiff refused to enter into a written contract at that figure. The board then awarded the contract to the next lowest bidder, the city demanded forfeiture of plaintiff’s bid bond, and plaintiff brought action to cancel its bid and obtain discharge of the bond. The trial court found that the bid had been submitted as the result of an excusable and honest mistake of a material and fundamental character, that plaintiff *386company had not been negligent in preparing the proposal, that it had acted promptly to notify the board of the mistake and to rescind the bid, and that the board had accepted the bid with knowledge of the error. The court further found and concluded that it would be unconscionable to require the company to perform for the amount of the bid, that no intervening rights had accrued, and that the city had suffered no damage or prejudice.

On appeal by the city this court affirmed, stating the following applicable rules (pp. 700-703 of 37 Cal.2d) : “ [1] Once opened and declared, the company’s bid was in the nature of an irrevocable option, a contract right of which the city could not be deprived without its consent unless the requirements for rescission were satisfied. [Citations.] . . . [2] . . . the city had actual notice of the error in the estimates before it attempted to accept the bid, and knowledge by one party that the other is acting under mistake is treated as equivalent to mutual mistake for purposes of rescission. [Citations.] [3] Relief from mistaken bids is consistently allowed where one party knows or has reason to know of the other’s error and the requirements for rescission are fulfilled. [Citations.]

" [4] Rescission may be had for mistake of fact if the mistake is material to the contract and was not the result of neglect of a legal duty, if enforcement of the contract as made would be unconscionable, and if the other party can be placed in statu quo. [Citations.] In addition, the party seeking relief must give prompt notice of his election to rescind and must restore or offer to restore to the other party everything of value which he has received under the contract. [Citations.]

“ [5] Omission of the $301,769 item from the company’s bid was, of course, a material mistake. . . . [E]ven if we assume that the error was due to some carelessness, it does not follow that the company is without remedy. Civil Code section 1577, which defines mistake of fact for which relief may be allowed, describes it as one not caused by ‘the neglect of a legal duty’ on the part of the person making the mistake. [6] It has been recognized numerous times that not all carelessness constitutes a ‘neglect of legal duty’ within the meaning of the section. [Citations.] On facts very similar to those in the present case, courts of other jurisdictions have stated that there was no culpable negligence and have granted relief from erroneous bids. [Citations.] [7] The type of error here involved is one which will sometimes occur in .the conduct of reasonable and cautious businessmen, and, under all the eir*387cumstances, we cannot say as a matter of law that it constituted a neglect of legal duty such as would bar the right to equitable relief.

“[8] The evidence clearly supports the conclusion that it would be unconscionable to hold the company to its bid at the mistaken figure. The city had knowledge before the bid was accepted that the company had made a clerical error which resulted in the omission of an item amounting to nearly one third of the amount intended to be bid, and, under all the circumstances, it appears that it would be unjust and unfair to permit the city to take advantage of the company’s mistake. [9, 10] There is no reason for denying relief on the ground that the city cannot be restored to status quo. It had ample time in which to award the contract without readvertising, the contract was actually awarded to the next lowest bidder, and the city will not be heard to complain that it cannot be placed in statu quo because it will not have the benefit of an inequitable bargain. [Citations.] [11] Finally, the company gave notice promptly upon discovering the facts entitling it to rescind, and no offer of restoration was necessary because it had received nothing of value which it could restore. [Citation.] We are satisfied that all the requirements for rescission have been met.”

In the Lemoge case (Lemoge Electric v. County of San Mateo (1956), supra, 46 Cal.2d 659, 662, 664 [la, lb, 2, 3]), the facts were similar to those in Kemper, except that plaintiff Lemoge did not attempt to rescind but instead, after discovering and informing defendant of inadvertent clerical error in the bid, entered into a formal contract with defendant on the terms specified in the erroneous bid, performed the required work, and then sued for reformation. Although this court affirmed the trial court’s determination that plaintiff was not, under the circumstances, entitled to have the contract reformed, we also reaffirmed the rule that1 ‘ Once opened and declared, plaintiff’s bid was in the nature of an irrevocable option, a contract right of which defendant could not be deprived without its consent unless the requirements for rescission were satisfied. [Citation.] Plaintiff then had the right to rescind, and it could have done so without incurring any liability on its bond.” (See also Brunzell Const. Co. v. G. J. 'Weisbrod, Inc. (1955), 134 Cal.App.2d 278, 286-287 [1, 2] [285 P.2d 989]; Klose v. Sequoia Union High School Dist. (1953), 118 CaI.App.2d 636, 641-642 [5] [258 P.2d 515].)

The rules stated in the Kemper and Lemoge cases would *388appear to entitle defendant to relief here, were it not for the findings of the trial court adverse to defendant. However, certain of such findings are clearly not supported by the evidence and others are immaterial to the point at issue. The finding that it is not true that the right hand column of figures on the bid sheet was totaled for the purpose of arriving at the total bid, and that it cannot be ascertained from the evidence for what purpose either the bid sheets or the right hand column total thereon were used in arriving at the total bid, is without evidentiary support in the face of the work sheets which were introduced in evidence and of the uncontradicted testimony not alone of defendant Kastorff, but also of plaintiff’s own architect and witness Eendon, explaining the purpose of the work sheets and the nature of the error which had been made. We have examined such sheets, and they plainly show the entry of the sums of $9,285 and of $6,500 in the left hand columns as the two plumbing sub bids which were received by defendant, and the omission from the right hand totals column of any sum whatever for plumbing.

The same is true of the finding that although “on or about August 15” plaintiff received Kastorff’s letter of August 14 explaining the error in his bid, it was not true that plaintiff knew at any time that the bid was intended to be other than as submitted. Again, it was shown by the testimony of plaintiff’s architect, its school superintendent, and one of its school board members, all produced as plaintiff’s witnesses, that the board was informed of the error and despite such information voted at its special meeting of August 15 not to grant defendant’s request to withdraw his bid.

Further, we are persuaded that the trial court’s view, as expressed in the finding set forth in the margin,4 that “Kastorff had ample time and opportunity after receiving his last subcontractor’s bid” to complete and check his final bid, does not convict Kastorff of that “neglect of legal duty” which would preclude his being relieved from the inadvertent clerical error of omitting from his bid the cost of the plumbing. (See Civ. Code, §1577; M. F. Kemper Const. Co. v. City of Los Angeles (1951), supra, 37 Cal.2d 696, 702 [6].) Neither should he be denied relief from an unfair, inequitable, and unintended bargain simply because, in response to inquiry from the board when his bid was discovered to be much the lowest submitted, he informed the board, after cheeking with his clerical assistant, that the bid was correct. He did not have his *389work sheets present to inspect at that time, he did thereafter inspect them at what would appear to have been the earliest practicable moment, and thereupon promptly notified plaintiff and rescinded his bid. Further, as shown in the margin,5 Kastorff’s bid agreement, as provided by plaintiff’s own bid form, was to execute a formal written contract only after receiving written notification of acceptance of his bid, and such notice was not given to him until some two weeks following his rescission.

If the situations of the parties were reversed and plaintiff and Kastorff had even executed a formal written contract (by contrast with the preliminary bid offer and acceptance) calling for a fixed sum payment to Kastorff large enough to include a reasonable charge for plumbing but inadvertently through the district’s clerical error omitting a mutually intended provision requiring Kastorff to furnish and install plumbing, we have no doubt but that the district would demand and expect reformation or rescission. In the case before us the district expected Kastorff to furnish and install plumbing ; surely it must also have understood that he intended to, and that his bid did, include a charge for such plumbing. The omission of any such charge was as unexpected by the board as it was unintended by Kastorff. Under the circumstances the “bargain” for which the board presses (which action we, of course, assume to be impelled by advice of counsel and a strict concept of official duty) appears too sharp for law and equity to sustain.

Plaintiff suggests that in any event the amount of the plumbing bid omitted from the total was immaterial. The bid as submitted was in the sum of $89,994, and whether the sum for the omitted plumbing was $6,500 or $9,285 (the two sub bids), the omission of such a sum is plainly material to the total. In Lemoge (Lemoge Electric v. County of San Mateo (1956), supra, 46 Cal.2d 659, 661-662) the error which it was declared would have entitled plaintiff to rescind was the listing of the cost of certain materials as $104.52, rather than $10,452, in a total bid of $172,421. Thus the percentage of error here was larger than in Lemoge, and was plainly material.

The judgment is reversed.

Gibson, C. J., Traynor, J., McComb, J., Peters, J., White, J., and Dooling, J., concurred.

REILLY, Chief Judge, Retired:

This is an appeal from a judgment in the Small Claims Court1 dismissing an action to recover $157.50 — the total sales price of three paintings paid to a Georgetown retailer of antiques and miscellaneous secondhand furniture by appellants (a married couple). Their basic contention was that they had bought these paintings because the vendor had represented them to be the original productions of some 19th Century artist (or artists), notwithstanding the fact *880that these were merely copies (as the purchasers subsequently discovered) processed and placed in frames to convey the impression of age.

When this case was reached on the calendar, the trial judge, in compliance with Small Claims Rule 12(a), sought to elicit from the parties the information bearing on the case and attempted to obtain a pretrial settlement. The principal claimant, the husband, told the court that he and his wife had come to the defendant’s shop to purchase some antique paintings, where they inspected and touched several canvases. They selected three because the brittleness of the material, cracks in the paint, discoloration, grease stains on the back, and punctures in the frame, he asserted, led them to believe these particular items were old. The proprietor of the shop, conceding that these paintings were not genuine originals but recent reproductions, nevertheless insisted that they were worth considerably more than the purchasers had paid, saying that he had agreed to cut his prices in order to effectuate the sale. At the court’s suggestion, he offered the claimants $50 in settlement. This offer was rejected, and the parties were instructed to return that afternoon for trial.2

When court reconvened, the trial judge said that in his opinion the complainants had no cause of action. At the request of the principal claimant, however, the court permitted him to make a statement of the facts and to present argument.

In his presentation, this appellant repeated much of what he had said in the conciliation proceedings, conceded that the vendor had made no express representation that the paintings were either originals or ancient, but contended that because he and his wife had, in the course of their inspection, displayed such interest in indicia of age, it became the legal duty of the dealer to disclose the true facts before the sale was completed. The only new fact he adduced was that the dealer did make a comment on one of the paintings — a plantation scene in which a group of white men in costumes of a past century were depicted with a black man in one corner of the canvas. The dealer remarked that paintings with black men in them were unusual in the 19th Century.3 Plaintiff then argued that defendant was guilty of a breach of implied or express warranty. The court disagreed.

The trial judge found “no controverted issues of material fact.”4 Based on a “general knowledge of the economics of the locality,” the trial judge concluded that the average price paid for each of the three paintings — approximately $50 — was “. a sufficiently small amount to put any purchaser on notice that he was not buying a legitimate antique original work of art” and summarily dismissed the complaint.5

In the brief accompanying the application for allowance of appeal, appellants contended that the court erred in (1) ruling that the failure of a seller to disclose a material fact does not amount to a misrepresentation, (2) ruling that the doctrine of implied warranty of fitness has no application to secondhand goods, (3) relying upon its own knowledge and expertise in American art history to reach the conclusion that the purchasers should have known that the paintings were not old, but were reproductions, and (4) basing its judgment solely upon something said in the course of conciliation.

As abstract propositions of law, some of these contentions are not devoid of merit. This court has recognized that in certain circumstances, concealment of a “material fact is as fraudulent as a positive direct misrepresentation.” Andolsun v. Berlitz Schools of Languages of America, Inc., D.C.App., 196 A.2d 926, 927 (1964). Moreover, *881D.C.Code 1973, § 28:2-315 makes no distinction between new and used goods in its discussion of implied warranties of fitness for a particular purpose. This section was enacted as a part of the Uniform Commercial Code, and courts have adopted the view that secondhand goods are within its coverage. See Green v. Northeast Motor Co., D.C.Mun.App., 166 A.2d 923 (1961); Overland Bond and Investment Corp. v. Howard, 9 Ill.App.3d 348, 292 N.E.2d 168 (1972).

An examination of the proceedings—transcribed after appeal was allowed —reveals, however, that none of these issues is really raised by the record and that the judgment of the court does not rest upon any of the rulings attributed to it by appellants. What the court did hold was that a purchaser who bought artificially aged copies of primitive paintings for the low unit prices upon which he and the dealer ultimately agreed, could not credibly assign as fraud the fact that the articles purchased turned out not to be vastly more valuable—as, of course, original paintings would have been. Under the circumstances—the customer not having inquired as to whether the canvases were originals—we perceive no duty upon the part of the vendor to inform him of the obvious. If a customer went into a jewelry store and bought for $50 an item which looked like a diamond pendant set with pearls, it would plainly not be incumbent upon the sales clerk to warn the customer that what he had selected was a piece of costume jewelry with synthetic gems.

In taking this view of the matter, the record does not reflect that the trial judge6 relied upon—or took judicial notice of his own knowledge of the history of American art—although in the course of oral argument, appellant accused him of doing so. The trial judge disclaimed this approach and his written findings make clear that this was not a factor.

Although appellants strongly urge that they were aggrieved because the court entered judgment against them before any testimony was taken and thereby prevented their calling witnesses, it is fundamental that a court may direct a verdict where the opening statement of plaintiff reveals that no cause of action exists. Cook v. Safeway Stores, Inc., D.C.App., 354 A.2d 507 (1976) and cases cited at 508. Plainly, this principle also applies to jury-waived cases, including trials in the Small Claims Branch. Appellants argue, however, that it was improper for the court to decide the case simply upon something said in the conciliation proceedings. Presumably they are adverting to the familiar rule of evidence which excludes testimony of concessions made in settlement conferences.

It is not altogether clear that proceedings under Rule 12(a) fall into this category, for this rule requires the court to inquire into the nature of the claims and defenses— thereby implying that if there are no substantial issues of fact to support a valid claim, the court may take appropriate action even though Rule 12(b) provides for a trial when the parties fail to settle the controversy. But we need not decide this question here. Although the court expressed its view of the matter when the parties reconvened for trial, it did not enter formal judgment until it had heard the principal appellant’s opening statement and orally pointed out what it deemed to be the fatal flaws in the described claim. It then granted summary judgment.

It is immaterial that the defendant did not formally move for summary judgment, but rather was awarded judgment by the court sua sponte. In the Small Claims Branch, informal procedures govern and the relevant inquiry is whether “substantial justice” has been achieved. Interstate Bankers Corp. v. Kennedy, D.C.Mun.App., 33 A.2d 165, 166 (1943).

Affirmed.

Opinion by Judge GABRIEL.

Defendant, Goodyear Tire & Rubber Company (Goodyear), appeals from the district court’s order holding that Goodyear had entered into a valid and enforceable settlement agreement with Bob and Sallie Sumerel, Steven and Ann Berzin, Dane and Kerry Dicke, and Bart Kaufman (collectively plaintiffs). Because we conclude that the November 2, 2006 e-mail and erroneous charts that Goodyear’s counsel sent to plaintiffs’ counsel did not constitute an offer capable of acceptance, and because even if there were such an offer, any agreement based on it would be unenforceable, we reverse and remand to allow the parties to file a satisfaction of judgment for the amounts already paid by Goodyear.

I. Background

The facts before the district court were largely uncontested, and in the one instance where there was a dispute, the court assumed the truth of the facts as asserted by Goodyear. The undisputed and assumed facts are as follows:

In 2002, plaintiffs and two entities successfully tried a products liability action against Chiles Power Supply Company, which is not a party to this appeal, and Goodyear, which designed and manufactured a defective hose that was installed in plaintiffs’ and the two entities’ heating systems. After trial, the jury awarded plaintiffs and the two entities approximately $1.3 million against Goodyear, including, as applicable to plaintiffs and the two entities, repair and replacement costs, diminution in value damages, and “other costs and losses” incident to having to repair and replace their heating systems. In addition, the jury found that Goodyear was responsible for 36% of such “other costs and losses” suffered by the Berzins and Dickes and 48% of those incurred by the Sumerels and Mr. Kaufman.

The district court entered judgment on the jury’s verdict and awarded prejudgment interest on the repair costs but not on the “other costs and losses” awarded to plaintiffs. Both sides then appealed. Specifically, plaintiffs appealed, among other things, the court’s decision not to award prejudgment interest with respect to the “other costs and losses” awarded them. Goodyear appealed, among other things, the award of the “other costs and losses” damages. As pertinent here, a division of this court upheld the award of “other costs and losses” to plaintiffs and further held that plaintiffs were entitled *131 to prejudgment interest on those damages. Sumerel v. Goodyear Tire & Rubber Co., 2005 WL 1476425 (Colo.App. No. 02CA1997, June 23, 2005) (not published pursuant to C.A.R. 35(f)). The division, however, remanded the case to the district court “to determine from the existing record the proper accrual dates for prejudgment interest on other costs and losses” and to calculate and award such interest. Id.

After the case was remanded, Goodyear’s lead attorney, Roger Thomasch of Ballard Spahr Andrews & Ingersoll, LLP, discussed with plaintiffs’ lead attorney, William May-whort of Holland & Hart LLP, a potential compromise on the applicable accrual dates. Thomasch proposed certain accrual dates and advised Maywhort of the amount of prejudgment interest that would result from using these proposed dates. Thomaseh’s calculation of these amounts took into account the jury’s 36% and 48% allocations of fault, and Thomasch expressly conveyed that fact to Maywhort.

Following up on the discussion between Thomasch and Maywhort, co-counsel for plaintiffs, Lee Gray, an associate at Holland & Hart, called Michael Brooks of Wells Anderson & Race, co-counsel for Goodyear. Although the parties appear to have agreed on the applicable accrual dates with little difficulty, they had trouble getting their calculations of prejudgment interest based on these dates to match. Thus, in mid-October 2006, Brooks advised Gray that his calculations showed a total amount owed by Goodyear of approximately $2.7 million. At some point within the following few days, Gray responded that this amount appeared to be larger than his own estimates by “about six figures.” Gray did not elaborate or share any more information regarding his calculations.

After attempting to determine the source of the discrepancy, on October 23, 2006, Brooks called Gray and speculated that the “six-figure” discrepancy may have resulted from a failure by plaintiffs to include in their calculations the full amount of post-judgment interest applicable to Mr. Kaufman, who had been awarded additional sums as a result of the prior appeal. Gray responded, “[T]hat could be it,” “[Tjhat might be it,” or words to that effect. Brooks took from Gray’s response that Gray either agreed or had no basis to disagree that Brooks had found the source of the discrepancy, although the parties had not yet exchanged their respective calculations. Without Gray’s calculations, Brooks could not be sure whether he had, in fact, resolved the discrepancy.

Believing that he may have discovered the source of the discrepancy, however, on November 2, 2006, Brooks sent Gray an e-mail, stating, “Here are our charts providing the numers [sic] that Goodyear believes are appropriate .... Please review these, then let’s discuss.” Attached to this e-mail were charts that reflected Goodyear’s then existing calculations as to the total amounts due to each plaintiff.

After reviewing these charts, Maywhort noticed that Goodyear’s calculations did not agree with plaintiffs’ numbers. Moreover, as plaintiffs concede, plaintiffs’ counsel recognized that Goodyear’s calculations had failed to reduce the damages for “other costs and losses” according to the jury’s finding that Goodyear was only liable for 36% of the Berzins’ and Dickes’ and 48% of the Sumer-els’ and Mr. Kaufman’s “other costs and losses.” Instead, Goodyear’s calculations were erroneously based on an allocation of 100% of those costs and losses to Goodyear. This was in contrast to other categories of damages set forth in Goodyear’s charts, in which Goodyear had correctly applied the jury’s fault allocations. Goodyear’s error resulted in an overstatement of the damages due by more than $550,000.

Plaintiffs’ counsel did not call this obvious error to Brooks’s attention or to the attention of any other representative of Goodyear. Instead, Maywhort later claimed that he and his firm had surmised that since Goodyear alone had invited the jury to award “other costs and losses,” Goodyear may have concluded that it was solely responsible for any such damages awarded. Maywhort took this position even though (1) the parties had tried the allocation of fault issue and the jury had allocated only 36% and 48% of such losses to Goodyear, and (2) Maywhort had previously discussed prejudgment interest calculations *132 with Thomasch, Thomasch provided calculations that were based on the correct allocated fault percentages, and Thomasch called these allocations to Maywhort’s attention.

Gray, in contrast, attributed the more than $550,000 overstatement of damages to a possible desire on Goodyear’s part to “sweeten the pot.” As noted above, however, the jury had already determined liability, and the record shows that the parties were not negotiating the amounts due but rather were attempting to determine why there was a discrepancy in their mathematical calculations. Accordingly, the record belies the existence of any pot to be sweetened.

Ultimately, neither Gray nor any of plaintiffs’ co-counsel called Brooks to discuss his charts, as Brooks had requested. Rather, Maywhort, who had not been directly involved in the more recent discussions regarding the calculations, left a voicemail message for Thomasch, who also had not been directly involved, stating that plaintiffs accepted Goodyear’s November 2, 2006 “offer.” May-whort then followed his voicemail with a fax confirming plaintiffs’ acceptance of that purported “offer.” Notably, neither Maywhort nor Gray informed Brooks of plaintiffs’ “acceptance,” nor was Brooks copied on May-whort’s fax to Thomasch.

Thereafter, Brooks and Gray discussed, among other things, whether the parties needed a settlement agreement or release, or whether a satisfaction of judgment would suffice to conclude the case. They agreed on the latter, and Brooks prepared a form of satisfaction of judgment that he sent to Gray on November 16, 2006, with a notation that the document was a draft for discussion purposes only. That same day, before anyone had signed the satisfaction of judgment, Brooks realized the error in his earlier calculations. He immediately called the error to Gray’s attention and sent Gray corrected versions of the charts and a revised satisfaction of judgment with corrected numbers.

Rather than acknowledging the error, signing the revised satisfaction, and concluding the action for the amounts actually awarded by the jury, Gray indicated that he needed to consult with his colleagues and would get back to Brooks. Then, on November 21, 2006, Maywhort wrote Brooks and demanded that Goodyear adhere to the parties’ alleged agreement, which would have resulted in plaintiffs’ receiving over $550,000 more than what was due them. When Goodyear refused to do so, plaintiffs filed a motion to enforce the purported “settlement agreement.” The district court granted plaintiffs’ motion, and Goodyear now appeals, having paid, and plaintiffs having accepted, the amounts that the parties agreed were due and owing, without prejudice to plaintiffs’ claims for the additional amounts.

II. Existence of an Offer

Goodyear first argues that the district court erred by concluding that Goodyear and plaintiffs formed a valid and enforceable agreement because the November 2, 2006 email and erroneous charts that Brooks sent to Gray did not constitute an offer. We agree.

In contract cases, when the facts are undisputed and the pertinent documents are before us, we are not bound by the district court’s findings and conclusions and may resolve the issues as a matter of law. See Connell v. Sun Oil Co., 42 Colo.App. 311, 313, 596 P.2d 1215, 1216 (1979); see also Bolser v. Bd. of Comm’rs, 100 P.3d 51, 53 (Colo.App.2004) (“[B]ecause the judgment here was entered based upon stipulated facts and documentary evidence, we are obligated to make an independent judgment on the merits.”). We review matters of law de novo. Microsemi Corp. v. Broomfield County Bd. of Equalization, 200 P.3d 1123, 1124-25 (Colo.App.2008).

Here, as noted above, the facts relevant to plaintiffs’ motion to enforce were largely uncontested, and where there was a dispute, the district court assumed the truth of the facts as asserted by Goodyear. The court then ruled on the basis of the undisputed facts as set forth in the documentary evidence and the parties’ affidavits. In light of this procedure, for the reasons stated above, we review de novo the question of whether Brooks’s e-mail and erroneous charts constituted an offer. See Bolser, 100 P.3d at 53; *133 Connell, 42 Colo.App. at 313, 596 P.2d at 1216.

“A court may only enforce a settlement agreement if it constitutes an enforceable contract.” Yaekle v. Andrews, 195 P.3d 1101, 1111 (Colo.2008). A contract is formed when one party makes an offer and the other accepts it, and the agreement is supported by consideration. Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo.App.2008).

“An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” Restatement (Second) of Contracts § 24 (2008), quoted in Castle Rock Constr. Co. v. Dep’t of Transp., 74 P.3d 491, 493 (Colo.App.2003), and cited with approval in Indus. Prods. Int’l, Inc. v. Emo Trans, Inc., 962 P.2d 983, 988 (Colo.App.1997); see also Soto v. Progressive Mountain Ins. Co., 181 P.3d 297, 302 (Colo.App.2007) (defining an offer as “ ‘[t] he act or instance of presenting something for acceptance’”) (quoting Black’s Law Dictionary 1112 (8th ed.2004)).

Settlement offers must be definitive. Ci tywide Bank v. Herman, 978 F.Supp. 966, 977 (D.Colo.1997). Moreover, even where there is unequivocal language suggesting that an offer is intended, such language cannot be taken in isolation from other, qualifying language in the document. Bourque v. FDIC, 42 F.3d 704, 709 (1st Cir.1994). Indeed, where both unqualified and qualified statements exist, the qualification is likely to control. Id.

The First Circuit applied this principle in Bourque, 42 F.3d at 706-12, In Bourque, the plaintiff offered to purchase certain real property from the FDIC. Id. at 706. The FDIC rejected the plaintiffs offer but made an express “counter offer” and told the plaintiff that if he wished to accept it, he should return a form of purchase and sale agreement that was provided. Id. The FDIC further advised the plaintiff that all offers were subject to FDIC approval. Id. The plaintiff signed the agreement provided, but the FDIC then received a more attractive offer and refused to sell the property to the plaintiff unless he matched that offer. Id. at 706-07. The plaintiff refused and sued to enforce the agreement, but the court rejected his request, concluding that the counteroffer was not an offer that the plaintiff could accept, because, as here, further discussion was contemplated. Id. at 711-12 (additional FDIC approval was required). The court thus construed the FDIC’s counteroffer as an invitation to the plaintiff to make an offer in the amount set forth in the FDIC’s counteroffer. Id. at 712; see also Citywide Bank, 978 F.Supp. at 979 (holding that a defendant’s use of qualifying language, such as “proposed resolution,” “potential issue,” and “We hope this letter will be helpful,” demonstrated that there was no definitive offer).

Further, there is no offer properly capable of acceptance where the purported offeree “knows or has reason to know that the person making [the purported offer] does not intend to conclude a bargain until he has made a further manifestation of assent.” Restatement (Second) of Contracts § 26 (1981). Indeed,

[i]f the addressee of a proposal has reason to know that no offer is intended, there is no offer even though he understands it to be an offer. “Reason to know” depends not only on the words or other conduct, but also on the circumstances, including previous communications of the parties and the usages of their community or line of business.

Id. § 26 cmt. a. Thus, in Nations Enterprises, Inc. v. Process Equipment Co., 40 Colo.App. 390, 394, 579 P.2d 655, 658 (1978), a division of this court held that a letter proposing to supply certain goods but recognizing that further negotiations between the parties were necessary did not constitute an offer capable of acceptance. Instead, it constituted preliminary negotiations soliciting an offer from the opposing party. Id.

Applying these principles here, we conclude that Goodyear’s November 2, 2006 e-mail and attached erroneous charts did not constitute an offer that was properly capable of acceptance. Accordingly, we hold for several reasons that there was no agreement that could be enforced.

*134 First, the e-mail and charts were sent in a context in which the parties were attempting to complete a mathematical computation but had a discrepancy in their respective calculations, which Brooks was attempting to resolve. Specifically, by the time the e-mail and charts were sent, the parties had already reached agreement on the relevant accrual dates. Accordingly, the record demonstrates that the parties were not negotiating dollar amounts or anything else at this point in time. Rather, they were beginning to exchange mathematical calculations based on the agreed accrual dates, while simultaneously attempting to identify the six-figure discrepancy in those calculations. Thus, Brooks’s e-mail, using qualifying and indefinite language, noted that the calculations were what “Goodyear believes are appropriate” (emphasis added). See Citywide Bank, 978 F.Supp. at 977-79 (use of qualifying language showed no definitive offer).

Second, Brooks’s e-mail did not solicit an acceptance but rather solicited a return call: “Please review these, then let’s discuss.” Accordingly, on their face, Brooks’s e-mail and charts represented a continuation of the parties’ preliminary discussions, particularly as to their effort to determine the source of the discrepancy in their respective calculations. See Nations Enters., 40 Colo.App. at 394, 579 P.2d at 658 (letter recognizing need for further negotiations was not an offer); Restatement (Second) of Contracts § 24 (offer must justify another in understanding that his assent is invited and will conclude a bargain).

For these reasons alone, Brooks’s e-mail and charts did not constitute an offer capable of acceptance.

Our conclusion finds additional support in the “well-settled rule” that “an offer-ee may not snap up an offer that is on its face manifestly too good to be true.” See Lange v. United States, 120 F.2d 886, 889 (4th Cir.1941) (citing 1 Williston on Contracts § 94 (1936), and Restatement (First) of Contracts § 71(c) (1932)); accord Speckel v. Perkins, 364 N.W.2d 890, 893 (Minn.Ct.App.1985); Limestone Realty Co. v. Town & Country Fine Furniture & Carpeting, Inc., 256 A.2d 676, 679 (Del.Ch.1969). In Speckel, 364 N.W.2d at 893-94, for example, an attorney sent a letter to opposing counsel regarding a potential settlement agreement. In this letter, the attorney stated that the case at issue was not worth the policy limits of $50,000. The letter, which was dictated but not read, then proceeded to offer $50,000, rather than the $15,000 that the attorney had intended to offer. Although opposing counsel formally accepted the $50,000 offer, the court held that there was no offer capable of acceptance, because the letter on its face raised a presumption of error, due to its internal inconsistency, as well as a consequential duty on the recipient’s part to inquire. Id. at 894. Similarly, in Limestone Realty, 256 A.2d at 679, a lessee, despite his suspicions that a release had been sent to him in error and his knowledge that he was not entitled to the release, immediately executed the document and then tried to enforce it. The court rejected the lessee’s attempt to do so, noting that “he should have known [an offer] was unintended and on its face was too good to be true,” and holding, “Such an offer is not susceptible of acceptance.” Id.

In our view, the present case is a prototype for a purported offer that was “on its face manifestly too good to be true.” The jury had already spoken, and the parties had agreed on the relevant accrual dates. All that should have been left was a simple mathematical calculation. Moreover, when plaintiffs’ counsel received Goodyear’s calculations, they immediately recognized that Brooks’s calculations assumed that Goodyear was 100% liable for the “other costs and losses,” rather than the 36% and 48% allocation of fault that the jury had found, resulting in an error in their favor of over $550,000. On these undisputed facts, we conclude that Brooks’s e-mail and erroneous charts raised a presumption of error because they were inconsistent with (1) the jury’s award; (2) Thomasch’s prior discussion with Maywhort, in which Thomasch specifically pointed out that the calculations that he had provided were based on the percentages of fault that the jury had allocated to Goodyear; and (3) other calculations in the same charts, in which Goodyear consistently used the jury’s allocations of fault. At a minimum, these obvious inconsistencies gave rise to a *135 duty on the part of plaintiffs’ counsel to inquire before attempting to accept the purported “offer.” See Speckel, 364 N.W.2d at 893-94. Without such an inquiry, there was no offer capable of acceptance here. See Limestone Realty, 256 A.2d at 679.

Notwithstanding the foregoing, plaintiffs contend that Goodyear’s conduct after plaintiffs purported to accept Brooks’s alleged November 2, 2006 offer belies Goodyear’s argument that it never made a valid offer. We reject this contention for several reasons.

First, plaintiffs note that Goodyear did not immediately deny that the e-mail and charts constituted an offer and then included the erroneous calculations in a draft satisfaction of judgment. Such conduct by Goodyear, however, does not change the fact that, for the reasons discussed above, plaintiffs were not justified in treating the e-mail and charts as an offer capable of acceptance in the first place. Cf. Newman v. Schiff, 778 F.2d 460, 466-67 (8th Cir.1985) (holding that a purported offeror’s subsequent conduct and letter stating that a news rebroadcast of an offer may have itself been an offer was indefinite and did not change the fact that the rebroadcast was merely a news report and that it was not reasonable for the hearer to construe the news report as a new offer). Nor did Goodyear’s subsequent conduct constitute ratification of the alleged agreement. “Ratification serves to authorize that which was unauthorized. Ratification cannot, however, give legal significance to an act which was a nullity from the start.” Id. at 467.

Second, even if Goodyear’s subsequent conduct could be used as evidence of whether there was a valid offer here, we conclude that, on the record before us, Goodyear’s conduct does not support a finding that it made an offer capable of acceptance in this ease. For example, plaintiffs rely heavily on Goodyear’s failure to deny the existence of an offer after Maywhort’s oral and written acceptance of Goodyear’s purported “offer.” As stated above, however, Maywhort did not inform Brooks, who actually sent the e-mail and charts, that he was accepting the purported offer. Instead, he contacted Tho-masch, who worked at a different law firm from Brooks and had not been directly involved in drafting or sending the e-mail and charts. These circumstances, created by plaintiffs’ counsel, made it unlikely that either Thomasch or Brooks would have immediately denied that there was an offer, because neither would necessarily have been privy to conversations that the other may have had with plaintiffs’ counsel.

. Similarly, given that Brooks and Gray had been trying to identify the source of the six-figure discrepancy in their numbers, that Brooks thought he had identified the discrepancy, and that Brooks had sent his e-mail and charts with a request for a return telephone call, Brooks could reasonably have anticipated that plaintiffs’ counsel would contact him if the discrepancy was other than what he had identified earlier. Having heard nothing from plaintiffs’ counsel, Brooks had no reason to believe that there was an ongoing problem. These circumstances, too, made it unlikely that Brooks would have been concerned with whether his e-mail could be construed as an offer, because the record shows that his principal focus was on concluding the matter and satisfying the judgment expeditiously.

For the foregoing reasons, we conclude that the November 2, 2006 e-mail and charts did not constitute an offer by Goodyear.

III. Unilateral Mistake

Goodyear also contends that, even if its counsel’s November 2, 2006 e-mail and attached erroneous charts constituted an offer, any agreement based on such an offer would be unenforceable. We again agree and thus hold, in the alternative, that any agreement reached by the parties here is unenforceable.

Regarding unilateral mistake, Professor Corbin states, “[Tjhere is practically universal agreement that, if the material mistake of one party was ... known by the other or was of such character and accompanied by such circumstances that the other had reason to know of it, the mistaken party has the power to avoid the contract.” 7 Joseph M. Perillo, Corbin on Contracts § 28.41, at 255 (rev. ed.2002). Corbin further states that relief due to unilateral mistake is available even if *136 the offeree neither knew of nor had reason to know of the mistake, if enforcement of the contract would be “oppressive” to the mistaken party, and relief from the contract “would impose no substantial hardship” on the other party. Id. § 28.39, at 224.

Pronouncements by our supreme court and the Restatement (Second) of Contracts are consistent with these principles. Thus, in Powder Horn Constructors, Inc. v. City of Florence, 754 P.2d 356, 363 (Colo.1988), the supreme court held that a contractor was entitled to equitable relief from the consequences of a bid containing mathematical or clerical errors where the errors were made in good faith and related to a material part of the bid, and where the city that received the bid had not relied to its detriment on the mistaken bid. In such circumstances, the court held that equitable relief was appropriate because the bid that was apparently accepted was not the bid that was intended and, therefore, was not a valid bid. Id. The supreme court further stated that the contractor was entitled to equitable relief, because, where the contractor acted in good faith and where the city knew of the mistake before accepting the bid, it would “contravene fundamental principles of fairness” to allow the city to “take advantage of [the contractor’s] mistake and gain a windfall profit.” Id. at 364.

Similarly, Restatement (Second) of Contracts §§ 153-54 (1981), which have not yet been expressly adopted in Colorado (although § 153 was cited with approval in Powder Horn), are fully consistent with these principles.

Restatement (Second) of Contracts § 153 provides:

Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and

(a)the effect of the mistake is such that enforcement of the contract would be unconscionable, or

(b)the other party had reason to know of the mistake or his fault caused the mistake.

Restatement (Second) of Contracts § 154 in turn provides:

A party bears the risk of a mistake when

(a) the risk is allocated to him by agreement of the parties, or

(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or

(c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

Notably, comment f to § 153 states, “It is, of course, unusual for a party to bear the risk of a mistake that the other party had reason to know of. ... ” Restatement (Second) of Contracts § 153 cmt. f.

Applying these principles here, we conclude for the following reasons that even if an agreement had been formed, it was voidable under the circumstances.

First, it cannot reasonably be disputed that Goodyear’s calculations were in error, and plaintiffs admit that they knew or had reason to know of the error.

Second, the purported agreement would clearly be oppressive and unconscionable, and relief from such an agreement would pose no substantial hardship on plaintiffs. Simply stated, plaintiffs are attempting to exploit Goodyear’s mistake to gain a windfall of over $550,000 more than the jury in this case awarded to them. Such a windfall is most certainly oppressive to Goodyear and, in our view, would be unconscionable. Conversely, avoiding the purported agreement and awarding plaintiffs only what the jury awarded works no hardship on plaintiffs. They would receive the amount to which they are entitled.

Third, we reject plaintiffs’ assertion that the risk of mistake here rested with Goodyear. As in Powder Horn, we perceive no basis for a determination that Goodyear did not act in good faith. Moreover, as noted above, it is unusual for a party to bear the risk of a mistake that the other party had *137 reason to know of. Restatement (Second) of Contracts § 153 cmt. f. Nor do we perceive any basis for concluding, as plaintiffs contend, that Brooks chose to charge ahead in conscious ignorance, believing that his limited knowledge was sufficient. The record reflects that someone had to share the first set of calculations here. Brooks did so, knowing that there was still a possible ■ six-figure discrepancy. Hence, he asked Gray to review the calculations and to call him to discuss the numbers. Further, as was obvious from the November 2, 2006 e-mail, Brooks was continuing to try to identify the discrepancy and, thus, was seeking further discussion. In short, the record demonstrates that Brooks did not seek an agreement through conscious ignorance. Rather, the record shows that he sought further dialogue because he knew of the discrepancy in the parties’ calculations.

Poly Tmcking, Inc. v. Concentra Health Services, Inc., 93 P.3d 561 (Colo.App.2004), on which plaintiffs rely, does not mandate a different result. In Poly Trucking, 93 P.3d at 562-63, the decedent was killed in an auto accident when a truck driver had a seizure that caused his truck to strike the decedent’s vehicle. The decedent’s widow filed a wrongful death action against, among others, the truck driver’s trucking company (Poly). Id. Poly then filed third-party claims against Concentra, which allegedly improperly issued a medical certification to the truck driver and whose doctors conducted the related medical examinations. Id. at 563. Poly did not, however, bring any third-party claims against the individual doctors, because it had been advised by counsel that Colorado lacked personal jurisdiction over those doctors. Id.

Poly and Concentra eventually entered into settlement discussions, and Concentra prepared various draft settlement agreements. Although Concentra’s initial draft included a release of its officers, agents, and employees, it omitted this language from several subsequent drafts, even after Poly added its own related entities and employees to the release it was receiving. Id.

Eventually, Poly and Concentra signed a final settlement agreement omitting the individual doctors, and Poly then sued the doe-tors in Texas, which had personal jurisdiction over them. Id. Concentra moved to reform the settlement agreement to include a release of its doctors. Id. The district court reformed the agreement, but a division of this court reversed, holding that although there was a unilateral mistake, there was no basis for reformation absent inequitable conduct by Poly, which the division refused to find. Id.

We view Poly Trucking as distinguishable from this case. In Poly Trucking, unlike here, there was no evidence to suggest that Poly knew of Concentra’s intent to obtain a release of the doctors. Id. at 564-66. To the contrary, Concentra provided repeated drafts of the release language that omitted the doctors, even when Poly added its own employees and others to the release. Id. at 563. Nor does it assist plaintiffs to argue, based on Poly Trucking, that contract reformation is an appropriate remedy for a unilateral mistake only if the other party engaged in fraud or inequitable conduct. Rather, this principle supports Goodyear’s position here, because, in our view, plaintiffs’ efforts to exploit Goodyear’s obvious mathematical or clerical error, thereby obtaining a windfall of over $550,000, were clearly inequitable. See Kish v. Kustura, 190 Or.App. 458, 79 P.3d 337, 340 (2003) (“ ‘[T]he range of misconduct termed “inequitable” is quite broad, varying from the most egregious and concrete, such as fraud, to more amorphous and somewhat less egregious misconduct, sometimes described as “overreaching” or “sharp practice.’” Inequitable conduct includes a party’s silence where that ‘party knows that the other party is materially mistaken as to a writing’s scope and effect, but remains silent, hoping to take advantage of the other’s mistake.’”) (citation omitted) (quoting in part Murray v. Laugsand, 179 Or.App. 291, 39 P.3d 241, 248 (2002), and Pioneer Res., LLC v. D.R. Johnson Lumber Co., 187 Or.App. 341, 68 P.3d 233, 253 (2003)).

For these reasons, we hold that even if Brooks’s November 2, 2006 e-mail and charts could be characterized as an offer and that offer was accepted, Goodyear may properly avoid the resulting agreement on the facts presented here.

*138 IV. Conclusion

The current phase of this litigation could, and should, have been avoided. When plaintiffs’ counsel reviewed Brooks’s charts, they immediately recognized the cause of the parties’ six-figure discrepancy. At this point, the proper course was obvious to us: plaintiffs’ counsel should have called Brooks, identified the discrepancy, and concluded the matter without further delay. Had plaintiffs’ counsel done so, plaintiffs would have immediately received the considerable sums to which they were entitled, and all parties would have been spared the undoubtedly substantial expense of the current litigation over what can only be viewed as a quest by plaintiffs to obtain a substantial windfall. For the reasons set forth above, on the facts presented here, the law will not countenance the patently inequitable result that plaintiffs seek. See, e.g., Lange, 120 F.2d at 889.

In light of our foregoing disposition, we need not address Goodyear’s remaining contention on appeal.

The order is reversed, and the case is remanded for the sole purpose of allowing the parties to file a satisfaction of judgment for the amounts already paid by Goodyear.

Mr. Justice Schaeper

delivered the opinion of the court:

This is an action to recover for injuries allegedly caused by the defendant’s negligence in maintaining and operating a large apartment building. Mrs. Ella O’Callaghan, a tenant in the building, was injured when she fell while crossing the paved courtyard on her way from the garage to her apartment. She instituted this action to recover for her injuries, alleging that they were caused by defective pavement in the courtyard^ Before the case was tried, Mrs. O’Callaghan died and her administratrix was substituted as plaintiff. The jury returned a verdict for the plaintiff in the sum of $14,000, and judgment was entered on the verdict. Defendant appealed. The Appellate Court held that the action was barred by an exculpatory clause in the lease that Mrs. O’Callaghan had signed, and that a verdict should have been directed for the defendant. (15 Ill. App. 2d 349.) It therefore reversed the judgment and remanded the cause with directions to enter judgment for the defendant. We granted leave to appeal.

In reaching its conclusion the Appellate Court relied upon our recent decision in Jackson v. First National Bank, 415 Ill. 453. There we considered the validity of such an exculpatory clause in a lease of property for business purposes. We pointed out that contracts by which one seeks to relieve himself from the consequences of his own negligence are generally enforced “unless (1) it would be against the settled public policy of the State to do so, or (2) there is something in the social relationship of the parties militating against upholding the agreement.” (415 Ill. at 460.) And we held that there was nothing in the public policy of *438the State or in the social relationship of the parties to forbid enforcement of the exculpatory clause there involved.

The exculpatory clause in the lease now before us clearly purports to relieve the lessor and its agents from any liability to the lessee for personal injuries or property damage caused by any act or neglect of the lessor or its agents. It does not appear to be amenable to the strict construction to which such clauses are frequently subjected. (See 175 A.L.R. 8, 89.) The plaintiff does not question its applicability, and she concedes that if it is valid it bars her recovery. She argues vigorously, however, that such a clause is contrary to public policy, and so invalid, in a lease of residential property.

Freedom of contract is basic to our law. But when that freedom expresses itself in a provision designed to absolve one of the parties from the consequences of his own negligence, there is danger that the standards of conduct which the law hasjdeveloped for the protection of others may be diluted. , These competing considerations have produced results that are not completely consistent. This court has refused to enforce contracts exculpating or limiting liability for negligence between common carriers and shippers of freight or paying passengers, (Chicago and Northwestern Railway Co. v. Chapman, 133 Ill. 96,) between telegraph companies and those sending messages, (Tyler, Ullman & Co. v. Western Union Telegraph Co. 60 Ill. 421,) and between masters and servants, (Campbell v. Chicago, Rock Island and Pacific Railway Co. 243 Ill. 620.) The obvious public interest in these relationships, coupled with the dominant position of those seeking exculpation, were compelling considerations in these decisions, which are in accord with similar results in other jurisdictions. See 175 A.L.R. 8.

On the other hand, as pointed out in tht'-Ias-kson^^ase, the relation of lessor and lessee has been considered a matter of private concern. Clauses-that exculpate the land-lord-fre-m *439the consequences of his negligence have been sustained in residential as well as commercial leases. (Manaster v. Gopin, 330 Mass. 569 (1953), 116 N.E.2d 134; Mackenzie v. Ryan, 230 Minn. 378 (1950), 41 N.W.2d 878; Kirshenbaum v. General Outdoor Adv. Co. 258 N.Y. 489 (1932), 180 N.E. 245; King v. Smith, 47 Ga. App. 360 (1933), 170 S.E. 546; Wright v. Sterling Land Co. 157 Pa. Super. 625 (1945), 43 A.2d 614; 6 Williston on Contracts, sec. 1715D; 6 Corbin on Contracts, sec. 1472.) There are intimations in other jurisdictions that run counter to the current authority. (See Kuzmiak v. Brookchester, Inc. 33 N.J. Super. 575 (1955), III A.2d 425; Kay v. Cain (App. D.C. 1946), 154 E.2d 305.) The New Hampshire court applies to exculpatory clauses in all leases its uniform rule that any attempt to contract against liability for negligence is contrary to public policy. (Papakalos v. Shaka, 91 N.H. 265 (1941), 18 A.2d 377.) But apart from the Papakalos case we know of no court of last resort that has held such clauses invalid in the absence of a statute so requiring.

A contract shifting the risk of liability for negligence may benefit a tenant as well as a landlord. ( See Cerny-Pickas & Co. v. C. R. Jahn Co. 7 Ill.2d 393.) ! Such an agreement transfers the risk of a possible financial burden and so lessens the impact of the sanctions that induce adherence to the required standard of care. But this consideration is applicable as well to contracts for insurance that indemnify against liability for one’s own negligence. Such contracts are accepted, and even encouraged. ¡ See Ill. Rev. Stat. 1957, chap. 953/2, pars. 7 — 202(1) and 7 — 315.Í

The plaintiff contends that due to a shortage of housing there is a disparity of bargaining power between lessors of residential property and their lessees that gives landlords an unconscionable advantage over tenants. And upon this ground it is said that exculpatory clauses jn residential leases must be held to be contrary to public pol/cy. No attempt was made upon the trial to show that Mrs. O’Callaghan was at *440all concerned about the exculpatory clause, that she tried to negotiate with the defendant about its modification or elimination, or that she made any effort to rent an apartment elsewhere. To establish the existence of a widespread housing shortage the plaintiff points to numerous statutes designed to alleviate the shortage, (see Ill. Rev. Stat. 1957, chap. 6jt/2, passim) and to the existence of rent control during the period of the lease. 65 Stat. 145 (1947), 50 append. U.S.C., sec. 1894.

Unquestionably there has been a housing shortage. That shortage has produced an active and varied legislative response. Since legislative attention has been so sharply focused upon housing problems in recent years, it might be assumed that the legislature has taken all of the remedial action that it thought necessary or desirable. One of the major- legislative responses was the adoption of rent controls which placed ceilings upon the amount of rent that landlords could charge. But the very existence of that control made it impossible for a lessor to negotiate for an increased rental in exchange for the elimination of an exculpatory clause. We are asked to assume, however, that the legislative response to the housing shortage has been inadequate and incomplete, and to augment it judicially.

The relationship of landlord and tenant does not have the monopolistic characteristics that have characterized some other relations with respect to which exculpatory clauses have been held invalid. There are literally thousands of landlords who are in competition with one another. The rental market affords a variety of competing types of housing accommodations, from simple farm house to- luxurious apartment. The use of a form contract does not of itself establish disparity of bargaining power. That there is a shortage of housing at one particular time or place does not indicate that such shortages have always and everywhere existed, or that there will be shortages in the future. Judicial determinations of public policy cannot readily take account *441of sporadic and transitory circumstances. They should rather, we think, rest upon a durable moral basis. Other jurisdictions have dealt with this problem by legislation. (McKinney’s Consol. Laws of N.Y. Ann., Real Property Laws, sec, 234, Vol. 49, Part I; Ann. Laws of Mass., Vol. 6, c. 186, sec. 15.) In our opinion the subject is one that is appropriate for legislative rather than judicial action.

The judgment of the Appellate Court is affirmed.

Judgment affirmed.

Bristow, J., and Dairy, C.J.,

dissenting:

We cannot accept the conclusions and analysis of the majority opinion, which in our judgment not only arbitrarily eliminates the concept of negligence in the landlord and tenant relationship, but creates anomalies in the law, and will produce grievous social consequences for hundreds of thousands of persons in this State.

According to the undisputed facts in the instant case, this form lease with its exculpatory clause, was executed in a metropolitan area in 1947, when housing shortages were so acute that “waiting lists” were the order of the day, and gratuities to landlords to procure shelter were common. (U.S. Sen. Rep. 1780, Committee on Banking & Currency, vol. II, 81st Cong., 2nd Sess. (1950), p. 2565 et seq.; Cremer v. Peoria Housing Authority, 399 Ill. 579, 589.) While plaintiff admittedly did not negotiate about the exculpatory clause, as the majority opinion notes, the' record shows unequivocally that the apartment would not have been rented to her if she had quibbled about any clause in the form lease. According to the uncontroverted testimony, “If a person refused to sign a [form] lease in the form it was in, the apartment would not be rented to him.”

Apparently, the majority opinion has chosen to ignore those facts and prevailing circumstances, and finds instead that there were thousands of landlords competing with each other with a variety of rental units. Not only was the *442element of competition purely theoretical — and judges need not be more naive than other men — but there wasn’t even theoretical competition, as far as the exculpatory clauses were concerned, since these clauses were included in all form leases used by practically all landlords in urban areas. (Simmons v. Columbus Venetian Stevens Building, Inc., 20 Ill. App. 2d 1, 155 N.E.2d 372; 1952 Ill. L. Forum, 321, 328.) This meant that even if a prospective tenant were to “take his business elsewhere,” he would still be confronted by the same exculpatory clause in a form lease offered by another landlord.

Thus, we are not construing merely an isolated provision of a contract specifically bargained for by one landlord and one tenant, “a matter of private concern,” as the majority opinion myoptically views the issue in order to sustain its conclusion. We are construing, instead, a provision affecting thousands of tenants now bound by such provisions, which were foisted upon them at a time when it would be pure fiction to state that they had anything but a Hobson’s choice in the matter. Can landlords, by that technique, immunize themselves from liability for negligence, and have the blessings of this court as they destroy the concept of negligence and standards of law painstakingly evolved in the case law? That is the issue in this case, and the majority opinion at no time realistically faces it.

In resolving this issue, it is evident that despite the assertion in the majority opinion, there is no such thing as absolute “freedom of contract” in the law. (West Coast Hotel Co. v. Parrish, 300 U.S. 379, 392, 81 L. ed. 703.) As Mr. Justice Holmes stated, “pretty much all law consists in forbidding men to do some things that they want to do, and contract is no more exempt from the law than other acts.” (Dissent, Adkins v. Children’s Hospital of the District of Columbia, 261 U.S. 525, 568, 67 L. ed. 785.) Thus, there is no freedom to contract to commit a crime; or to *443contract to give a reward for the commission of a crime; or to contract to violate essential morality; or to contract to accomplish an unlawful purpose, or to contract in violation of public policy. 12 I.L.P., Contracts, secs. 151» 154.

In the instant case we must determine whether the exculpatory clause in the lease offends the public policy of this State. We realize that there is no precise definition of “public policy” or rule to test whether a contract is contrary to public policy, so that each case must be judged according to its own peculiar circumstances. (First Trust & Savings Bank of Kankakee v. Powers, 393 Ill. 97, 102.) None would dispute, however, that there is a recognized policy of discouraging negligence and protecting those in need of goods or services from being overreached by those with power to drive unconscionable bargains.

Even the majority opinion recognizes this policy as a possible limitation on the concept of “freedom-of contract” in its statement, “when that freedom expresses itself in a provision designed to absolve one of the parties from the consequences of his own negligence, there is danger that the standards of conduct which the law has developed for the protection of others may be diluted.” Diluted? As applied in the instant case, the word is “destroyed.” When landlords are no longer liable for failure to observe standards of care, or for conduct amounting to negligence by virtue of an exculpatory clause in a lease, then such standards cease to exist: They are not merely "diluted.” Negligence cannot exist in abstraction. The exculpatory clause destroys the concept of negligence in the landlord-tenant relationship, and the majority opinion, in sustaining the validity of that clause, has given the concept of negligence in this relationship a “judicial burial.”

This court, however, has refused to countenance such a destruction of standards of conduct and of the concept of negligence in other relationships. We have invalidated *444such exculpatory clauses as contrary to our public policy in contracts between common carriers and shippers or paying passengers (Checkley v. Illinois Central Railroad Co. 257 Ill. 491; Chicago and Northwestern Railway Co. v. Chapman, 133 Ill. 96) ; between telegraph companies and those sending messages (Tyler, Uliman & Co. v. Western Union Telegraph Co. 60 Ill. 421) ; and between employers and employees (Campbell v. Chicago, Rock Island and Pacific Railway Co. 243 Ill. 620; Devine v. Delano, 272 Ill. 166; Consolidated Coal Co. v. Lundak, 196 Ill. 594; Himrod Coal Co. v. Clark, 197 Ill. 514.)

By what logic and reasoning can you hold that such clauses are void and contrary to public policy in an employer-employee contract, but valid in contracts between landlords and tenants, as the majority opinion does? If the criterion for invalidating exculpatory clauses is the presence of “monopolistic characteristics” in the relationship, as the majority opinion suggests, then do employers have a greater monopoly on the labor market than landlords have on the tenant market ? Is there less competition among employers for employees than among landlords for tenants? The facts defy any such reasoning. Nor are there any other cogent groúnds for distinguishing between these categories.

The legal anomaly of sustaining such clauses in leases, while voiding them in other types of contracts, when the grounds on which they are held void can be matched by similar grounds in the relationship of landlord and tenant, is pointed out by the court in the aforementioned Simmons case, where the court made a scholarly review of the decisions in Illinois and other jurisdictions respecting exculpatory clauses in leases and other contracts. The court stated : “Is it more important that a man should have a safe place to work than that he should have a safe place to live, and is there any more reason in the employer-employee relationship that the employer should not be allowed to avoid *445liability for his negligence than there is that a landlord should not be able to avoid the liability for negligence in maintaining the common area which must be used by people to attain ingress and egress when they rent a portion of the premises? Is safety while working more important than safety while living?”

This patent inconsistency respecting the validity of an exculpatory clause, created by the majority opinion, is in no way required by Illinois precedents. The only Illinois authority cited — and this is done indirectly by referring to the Appellate Court’s reliance on the case — is Jackson v. First National Bank of Lake Forest, 415 Ill. 453. However, even a cursory reading of that case reveals that the court, in sustaining an exculpatory clause in a business lease, inferred that a different result would have followed if there was anything in the record indicating that the parties were not on an equal footing, or that the lessee had no freedom of choice, or had to accept what was offered. That court stated at page 463: “This is a business lease. There is nothing to suggest that the parties were not dealing at arms’ length and upon equal footing. No facts are brought to our attention from which it might be reasonable to infer that the lessee was forced to take the storeroom upon lessor’s terms.”

Compare that situation with the facts in the instant case, where it is admitted that there were waiting lists for the apartment and that if a person refused to sign the lease with the exculpatory clause in the form it was in, the apartment would not be rented to- him. Only by the blind application of precedent can the Jackson case be deemed determinative herein. Nor is there any established line of authority elsewhere sustaining exculpatory clauses in leases, but only conflicting decisions, and a disposition to emasculate such exculpatory clauses by giving them a strict, if not distorted construction. 175 A.L.R. 8, go; 15 Univ. Pitt. L. Rev. 493, 496.

*446Furthermore, while stare decisis has a strong social justification, it should not be used to stifle the growth of the law. When experience, which Mr. Justice Holmes has stated is the “life of the law,” makes manifest that a rule is without vitality, a court cannot abdicate its responsibility of reappraisal.

The basis of voiding exculpatory clauses is that they are contrary to the public policy of discouraging negligence and protecting those in need of goods or services from being overreached by those with power to drive unconscionable bargains. (Bisso v. Inland Waterways Corp. 349 U.S. 85, 91, 99 L. ed. 911.) In determining whether such clauses should be deemed void, the courts have weighed such factors as the importance which the subject has for the physical and economic well-being of the group agreeing to the release; their bargaining power; the amount of free choice actually exercised in areeing to the exemption; and the existence of competition among the group to be exempted. (Williston, Contracts, vol. 6, p. 4968: “The Significance of Bargaining Power in the Law of Exculpation,” 37 Col. L. Rev. 248; 175 A.L.R. 8, 48; 15 Univ. Pitt. L. Rev. 493.) Adjudged by such criteria, it is evident that the subject matter of the exculpatory clause herein— shelter — is indispensable for the physical well being of tenants; that they have nothing even approaching equality of bargaining power with landlords and no free choice whatever in agreeing to the exemption, since they will be confronted with the same clause in other form leases if they seek shelter elsewhere. Although the majority opinion claims that such clauses may also benefit tenants, it is hard for us to envisage a tenant on a waiting list for an apartment, insisting that the lease include a provision relieving him from liability for his negligence in the maintenance of the premises. Consequently, in our judgment, every material ground for voiding the exculpatory clause exists in the lease involved in the instant case.

*447Similar conclusions have been reached by other courts, after recognizing the change in the status and bargaining power in the landlord-tenant relationship that has taken place. (Kuzniak v. Brookchester, 33 N.J. Super. 575, III A.2d 425; Kay v. Cain (D.C. Cir.) 154 F.2d 305.) Thus, the New Jersey court stated in the Kuzniak case at page 432: “Under present conditions the comparative bargaining position of landlords and tenants in housing accommodations within many areas of the state are so unequal that tenants are in no position to bargain, and an exculpatory clause which purports to immunize the landlord from all liability would be contrary to public policy.” (Italics ours.)

In the same vein, the Federal court in Kay v. Cain, 154 F.2d 305, stated at page 306: “Moreover, it is doubtful whether such a clause which would undertake to exempt a landlord from responsibility for such negligence would now be valid. The acute housing shortage in or near the District of Columbia gives a landlord so great a bargaining advantage over a tenant that such an exemption might well be invalid on the grounds of public policy.” The majority opinion, however, labels such changed conditions as “sporadic” and.chooses to1 ignore them because they may change again at some future time. It holds that judicial determinations of public policy should “rest upon a more durable moral basis.” Our concept of the judicial function is not so circumscribed, nor is it elastic in one case and restrictive in another, depending upon economic predilections. It is hard for us to fathom that this same court which enunciated the liberal and scholarly approach of interpreting common-law concepts in the light of contemporary conditions and social needs in Nudd v. Matsoukas, 7 Ill.2d 608, 619, Amann v. Faidy, 415 Ill. 422, and Brandt v. Keller, 413 Ill. 503, can now hold with academic detachment that landlords, who are in the position to dictate whatever terms they choose to those in need of shelter, have a right to immunize themselves by contract from lia*448bility for failure to make essential repairs of areas which the tenants cannot legally repair, and that such contracts do not offend the public policy of this State. Upon what “durable moral basis” does that public policy determination rest?

We prefer to consistently follow our realistic policy of interpreting common-law concepts created by the courts in the light of contemporary conditions, as pledged in Nudd v. Matsoukas and the other cases, in accordance with the traditions of the creative jurists of our time. Holmes, Southern Pacific Co. v. Jensen, 244 U.S. 205, 221, 61 L. ed. 1086; Cardozo, “Growth of the Law.”

As Mr. Justice Cardozo explained in his treatise, “Growth of the Law,” (Selected Writings of Benjamin Nathan Cardozo, p. 246) : “A rule which in its origin was the creation of the courts themselves and was supposed in the making to express the mores of the day, may be abrogated by the courts when the mores have so changed that perpetuation of the rule would do violence to the social conscience. * * * This is not usurpation. It is not even innovation. It is the reservation for ourselves of the same power of creation that built up the common law through its exercise by the judges of the past.”

In this connection, Mr. Chief Justice Warren more recently observed: “A * * * reason for the success of our legal system is its adaptability to changing circumstances. As Pollack said, all courts have a duty, which ours generally try to perform, ‘to keep the rules of law in harmony with the enlightened common sense of the nation.’ ” “The Law of the Future,” Mr. Chief Justice Warren, Fortune Magazine, Nov. 1955, p. 107.

The majority opinion apparently dismisses whatever misgivings it has for the resulting social consequences of its decision with the observation that the problem is “appropriate for legislative rather than judicial action,” and refers to the New York and Massachusetts statutes. McKinney’s *449Consol. Laws of N.Y. Ann., Real Prop. Laws, sec. 234, vol. 49, part I; Ann. Laws of Mass, vol. 6, chap. 186, sec. 15.

Future legislation on this subject will be of small comfort to the hundreds of persons with cases pending in our courts for injuries sustained through conduct of landlords tantamount to common-law negligence. What help can the legislature give to such persons? Their only protection lies in the inherent power of the courts to adjudicate common-law rights and their duty to strike down contracts in derogation of the public policy of the State. That duty is in no way abridged by the fact that some legislatures have declared such exculpatory clauses contrary to public policy. We cannot perceive how such legislative action elsewhere relieves this court from its duty of also recognizing the public policy in the case law, which is an equally cogent source of a State’s public policy. People ex rel. Nelson v. Wiersema State Bank, 361 Ill. 75, 86.

Moreover, for this court, which has recently and repeatedly expressly refused to relegate to the legislature the task of reinterpreting common-law concepts necessary in the development of the law (People ex rel. Noren v. Dempsey, 10 Ill.2d 288, 293; Nudd v. Matsoukas, 7 Ill.2d 608), to now adbdicate to the legislature, as the majority opinion has done, is not only inconsistent but an admission of failure to resolve the problem. Legislative intrusion into the field of the common law can only be justified when courts have refused to exercise their own function. (Green, “Freedom of Litigation,” 38 Ill. L. Rev. 355, 378, 382.) There should be no such refusal by this court in the instant case.

In our judgment, authorizing landlords to immunize themselves from liability for negligence, as the majority opinion has done, at a time of critical housing shortages, recognized by Congress and the courts, is not only inconsistent with much law and the public policy of this State, but it is in derogation of our duty “to keep the rules of law *450in harmony with the enlightened common sense of the nation.” Therefore, we believe it our obligation to dissent from that opinion, and to protest against the destruction of the common-law rights of a significant proportion of the population of this State.

OPINION

WALTERS, Justice.

Under the provision of NMSA 1978, Section 34-2-8 (Repl.Pamp.1981), we accepted certification of a question of state law from the Tenth Circuit Court of Appeals. That question is:

Whether, in a sale of goods context governed by the New Mexico Commercial Code, a commercial purchaser of a computer system (hardware and programmable software) may maintain an action in tort against the seller for pre-contract negligent misrepresentations regarding the system’s capacity to perform specific functions, where the subsequently executed written sales contract contains an effective integration clause, and an effective provision disclaiming all prior representations and all warranties, express or implied, not contained in the contract.

We hold that the action for negligent misrepresentation may not be maintained.

FACTS.

Rio Grande Jewelers Supply, Inc. (Rio Grande) purchased computer hardware from Data General Corporation (Data General), and computer software from Automated Quill, Inc. (Automated Quill), in 1975. The system performed below Rio Grande’s expectations and Rio Grande brought suit in the federal district court in 1978 against Data General and Automated Quill, alleging negligent misrepresentation, fraud, negligence, breach of express and implied warranties, and strict liability. Only the negligent misrepresentation claim against both Data General and Automated Quill, and the breach of express warranties claim against Automated Quill, went to the jury, the trial court having disposed of the other claims in favor of Data General and Automated Quill. The jury awarded Rio Grande $10,000 against Automated Quill and $115,000 against Data General on its negligent misrepresentation claims. Judgment was entered accordingly. Data General appealed, raising the issue certified to us by the Tenth Circuit Court of Appeals.

DISCUSSION.

Citing Bell v. Lammon, 51 N.M. 113, 179 P.2d 757 (1947), Data General contends that the parol evidence rule (incorporated into the Commercial Code through NMSA 1978, Section 55-2-202), precludes the admission of any evidence of representations made prior to the formation of the written contract. To admit evidence of the prior representations on Rio Grande’s tort claim of negligent misrepresentation, it urges, would negate the intended effect of NMSA 1978, Section 55-2-316, which provides that warranties may be disclaimed, and would be contrary to the favored policy of “freedom of contract” discussed in Lynch v. Santa Fe National Bank, 97 N.M. 554, 627 P.2d 1247 (Ct.App.), cert. denied (1981).

In support of allowing such evidence, Rio Grande points to NMSA 1978, Section 55-1-103, where it is expressly provided that the law of misrepresentation shall supplement the provisions of the Commercial Code unless displaced by a particular provision of the Code. Rio Grande also argues, citing Maxey v. Quintana, 84 N.M. 38, 499 P.2d 356 (Ct.App.). cert. denied 84 N.M. 37, 499 P.2d 355 (1972), that a cause of action for negligent misrepresentation is recognized in New Mexico, and recovery for economic loss suffered as a result of the commission of that tort is allowed.

We are persuaded that, in the context of this case, Rio Grande’s action for negligent misrepresentation is in direct conflict with Section 55-2-316 of the Commercial Code and with the policy favoring freedom of contract.

Four factors are of critical importance in our disposition of the question in this case. First, the contract between Data General and Rio Grande specifically provided that it was to be the “complete and exclusive statement” of the agreement between the parties. Second, the question certified contains the datum that there was an effective disclaimer by Data General of warranties *800not contained within the written contract. Third, the representations alleged by Rio Grande in the negligent misrepresentation count are precisely the same representations alleged in the counts for breach of express and implied warranties. Fourth, fraud was not argued as an issue on appeal. See Bell v. Lammon. Under these circumstances, Rio Grande’s claim for negligent misrepresentation can be nothing more than an attempt to circumvent the operation of the Commercial Code and to allow the contract to be rewritten under the guise of an alleged action in tort.

In Smith v. Price’s Creameries, Division of Creamland Dairies, Inc., 98 N.M. 541, 650 P.2d 825 (1982), plaintiff sued when defendant terminated their contractual agreement. He alleged breach of contract, misrepresentation, and slander. Although defendant was permitted to terminate by the terms of the written contract, plaintiff alleged that defendant had made prior oral representations to the effect that the contract would not be terminated. The trial court granted summary judgment for defendant. The issue before us in that case was not whether an action for misrepresentation could be brought (the issue was the “unconscionability” of the termination clause in the contract); we nevertheless emphasized the rule that parties will be bound by the terms of written agreements to which they freely commit themselves. “[Wjhere the parties are otherwise competent and free to make a choice as to the provisions of their contract, it is fundamental that [the] terms of the contract made by the parties must govern their rights and duties.” 98 N.M. 544, 650 P.2d at 828. Addressing Smith’s claim of a prior oral representation by defendant that the contract would not be terminated as long as performance was satisfactory, we stated:

Even assuming the truth of this assertion, in the face of the clear wording of the rights of the parties under the termination clause, the oral statement of Price’s made prior to execution of the agreement cannot be deemed to constitute fraud or misrepresentation.

Id. Sections 55-2-202 and 55-2-316 codify that rule in transactions under the Commercial Code.

The contract between the parties here specifically provided, in bold-face type, that no warranties except those specifically listed in the contract were granted. There is no indication or claim that the transaction was not undertaken at arm’s length or freely entered into by two commercial entities. Under such circumstances, New Mexico’s Commercial Code precludes a claim of pre-contract negligent misrepresentation in suits concerned with sale of goods under the Code.

The question of law certified to us in this case is answered in the negative.

FEDERICI, C.J., SOSA, Senior Justice, and STOWERS, J., concur.

RIORDAN, J., dissents.

RIORDAN, Justice

(dissenting).

The majority opinion condones the unconscionable conduct of allowing statements, promises or inferences to be made that lead the purchaser to believe that a product will do certain things that it cannot without having to be concerned about their inaccuracy as long as the written contract contains the usual “boiler plate” language that “no warranties except those contained in the printed contract are granted.”

I believe that this disclaimer language should not and does not negate a cause of action for negligent misrepresentation. I do not believe that was the intent of the legislature in adopting the Uniform Commercial Code. NMSA 1978, Section 55-1-103 states in part:

Unless displaced by the particular provisions of this act, the principles of law and equity, ... principal and agent, estoppel, fraud, misrepresentation, ... shall supplement its provisions.

The majority holds that the remedy of negligent misrepresentation is in conflict with Section 55-2-316 of the Code which covers exclusions or modification of warranties. I do not agree.

TOBRINER, J.

This case concerns the validity of a release from liability for future negligence imposed as a condition for admission to a charitable research hospital. For the reasons we hereinafter specify, we have concluded that an agreement between a hospital and an entering patient affects the public interest and that, in consequence, the exculpatory provision included within it must be invalid under Civil Code section 1668.

Hugo Tunkl brought this action to recover damages for personal injuries alleged to have resulted from the negligence of two physicians in the employ of the University of California Los Angeles Medical Center, a hospital operated and maintained by the Regents of the University of California as a nonprofit charitable institution. Mr. Tunkl died after suit was brought, and his surviving wife, as executrix, was substituted as plaintiff.

The University of California at Los Angeles Medical Center admitted Tunkl as a patient on June 11, 1956. The Regents maintain the hospital for the primary purpose of aiding and developing a program of research and education in the field of medicine; patients are selected and admitted if the study and treatment of their condition would tend to achieve these purposes. Upon his entry to the hospital, Tunkl signed a document setting forth certain “Conditions of Admission.” The crucial condition number six reads as follows: “Release: The hospital is a nonprofit, charitable institution. In consideration of the hospital and allied services to be rendered and the rates charged therefor, the patient or his legal representative agrees to and hereby releases The Regents of the University of California, and the hospital from any and all liability for the negligent or wrongful acts or omissions of its employees, if the hospital has used due care in selecting its employees.”

Plaintiff stipulated that the hospital had selected its employees with due care. The trial court ordered that the issue of the validity of the exculpatory clause be first submitted to the jury and that, if the jury found that the provision did not bind plaintiff, a second jury try the issue of alleged malpractice. When, on the preliminary issue, the jury returned a verdict sustaining the validity of the executed release, the *95 court entered judgment in favor of the Regents. 1 Plaintiff appeals from the judgment.

We shall first set out the basis for our prime ruling that the exculpatory provision of the hospital’s contract fell under the proscription of Civil Code section 1668; we then dispose of two answering arguments of defendant.

We begin with the dictate of the relevant Civil Code section 1668. The section states: “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”

The course of section 1668, however, has been a troubled one. Although, as we shall explain, the decisions uniformly uphold its prohibitory impact in one circumstance, the courts’ interpretations of it have been diverse. Some of the cases have applied the statute strictly, invalidating any contract for exemption from liability for negligence. The court in England v. Lyon Fireproof Storage Co. (1928) 94 Cal.App. 562 [271 P. 532], categorically states, “The court correctly instructed the jury that: ‘The defendant cannot limit its liability against its own negligence by contract, and any contract to that effect would be void.’ ” (P. 575.) (To the same effect: Union Constr. Co. v. Western Union Tel. Co. (1912) 163 Cal. 298, 314-315 [125 P. 242].) 2 The recent case of Mills v. Ruppert (1959) 167 Cal.App.2d 58, 62-63 [333 P.2d 818], however, apparently limits “ [Negligent . . . violation of law” exclusively to statutory law. 3 Other cases hold that *96 the statute prohibits the exculpation of gross negligence only ; 4 still another case states that the section forbids exemption from active as contrasted with passive negligence. 5

In one respect, as we have said, the decisions are uniform. The cases have consistently held that the exculpatory provision may stand only if it does not involve “the public interest.” 6 Interestingly enough, this theory found its first expression in a decision which did not expressly refer to section 1668. In Stephens v. Southern Pac. Co. (1895) 109 Cal. 86 [41 P. 783, 50 Am. St. Rep. 17, 29 L.R.A. 751], a railroad company had leased land, which adjoined its depot, to a lessee who had constructed a warehouse upon it. The lessee covenanted that the railroad company would not be responsible for damage from fire “caused from any . . . means.” (P. 87.) This exemption, under the court ruling, applied to the lessee’s damage resulting from the railroad company’s carelessly burning dry grass and rubbish. Declaring the contract not “violative of sound public policy” (p. 89), the court pointed out “. . .As far as this transaction was concerned, the parties when contracting stood upon common ground, and dealt with each other as A and B might deal with each other with reference to any private business undertaking. ...” (P. 88.) The court concluded “that the in *97 terests of the public in the contract are more sentimental than real” (p. 95; italics added) and that the exculpatory provision was therefore enforceable.

In applying this approach and in manifesting their reaction as to the effect of the exemptive clause upon the public interest, some later courts enforced, and others invalidated such provisions under section 1668. Thus in Nichols v. Hitchcock Motor Co. (1937) 22 Cal.App.2d 151, 159 [70 P.2d 654], the court enforced an exculpatory clause on the ground that “the public neither had nor could have any interest whatsoever in the subject-matter of the contract, considered either as a whole or as to the incidental covenant in question. The agreement between the parties concerned ‘their private affairs’ only.” 7

In Barkett v. Brucato (1953) 122 Cal.App.2d 264, 276 [264 P.2d 978], which involved a waiver clause in a private lease, Justice Peters summarizes the previous decisions in this language: ‘ These cases hold that the matter is simply one of interpreting a contract; that both parties are free to contract; that the relationship of landlord and tenant does not affect the public interest; that such a provision affects only the private affairs of the parties. ...” (Italics added.)

On the other hand, courts struck down exculpatory clauses as contrary to public policy in the case of a contract to transmit a telegraph message (Union Constr. Co. v. Western Union Tel. Co. (1912) 163 Cal. 298 [125 P. 242]) and in the instance of a contract of bailment (England v. Lyon Fireproof Storage Co. (1928) 94 Cal.App. 562 [271 P. 532]). In Hiroshima v. Bank of Italy (1926) 78 Cal.App. 362 [248 P. 947], the court invalidated an exemption provision in the form used by a payee in directing a bank to stop payment on a check. The court relied in part upon the fact that “the banldng public, as well as the particular individual who may be concerned in the giving of any stop-notice, is interested in seeing that the bank is held accountable for the ordinary and regular performance of its duties and, also, in seeing that di *98 rection in relation to the disposition of funds deposited in [the] bank are not heedlessly, negligently, and carelessly disobeyed and money paid out, contrary to directions given.” (P. 377.) The opinion in Hiroshima was approved and followed in Grisinger v. Golden State Bank (1928) 92 Cal.App. 443 [268 P. 425]. 8

If, then, the exculpatory clause which affects the public interest cannot stand, we must ascertain those factors or characteristics which constitute the public interest. The social forces that have led to such characterization are volatile and dynamic. No definition of the concept of public interest can be contained within the four corners of a formula. The concept, always the subject of great debate, has ranged over the whole course of the common law; rather than attempt to prescribe its nature, we can only designate the situations in which it has been applied. We can determine whether the instant contract does or does not manifest the characteristics which have been held to stamp a contract as one affected with a public interest.

In placing particular contracts within or without the category of those affected with a public interest, the courts have revealed a rough outline of that type of transaction in which exculpatory provisions will be held invalid. Thus the attempted but invalid exemption involves a transaction which exhibits some or all of the following characteristics. It concerns a business of a type generally thought suitable for public regulation. 9 The party seeking exculpation is engaged *99 in performing a service of great importance to the public, 10 which is often a matter of practical necessity for some members of the public. 11 The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards. 12 As a result of the essential nature of the *100 service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services. 13 In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, 14 and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protec *101 tion against negligence. 15 Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, 16 subject to the risk of carelessness by the seller or his agents.

While obviously no public policy opposes private, voluntary transactions in which one party, for a consideration, agrees to shoulder a risk which the law would otherwise have placed upon the other party, the above circumstances pose a different situation. In this situation the releasing party does not really acquiesce voluntarily in the contractual shifting of the risk, nor can we be reasonably certain that he receives an adequate consideration for the transfer. Since the service is one which each member of the public, presently or potentially, may find essential to him, he faces, despite his economic inability to do so, the prospect of a compulsory assumption of the risk of another’s negligence. The public policy of this state has been, in substance, to posit the risk of negligence upon the actor; in instances in which this policy has been abandoned, it has generally been to allow or require that the risk shift to another party better or equally able to bear it, not to shift the risk to the weak bargainer.

In the light of the decisions, we think that the hospital-patient contract clearly falls within the category of agreements affecting the public interest. To meet that test, the agreement need only fulfill some of the characteristics above outlined; here, the relationship fulfills all of them. Thus the contract of exculpation involves an institution suitable for, and a subject of, public regulation. (See Health & Saf. Code, §§ 1400-1421, 32000-32508.) 17 That the services of the hospital to those members of the public who are in special need of the particular skill of its staff and facilities constitute a practical and crucial necessity is hardly open to question.

*102 The hospital, likewise, holds itself out as willing to perform its services for those members of the public who qualify for its research and training facilities. While it is true that the hospital is selective as to the patients it will accept, such selectivity does not negate its public aspect or the public interest in it. The hospital is selective only in the sense that it accepts from the public at large certain types of eases which qualify for the research and training in which it specializes. But the hospital does hold itself out to the public as an institution which performs such services for those members of the public who can qualify for them. 18

In insisting that the patient accept the provision of waiver in the contract, the hospital certainly exercises a decisive advantage in bargaining. The would-be patient is in no position to reject the proffered agreement, to bargain with the hospital, or in lieu of agreement to find another hospital. The admission room of a hospital contains no bargaining table where, as in a private business transaction, the parties can debate the terms of their contract. As a result, we cannot but conclude that the instant agreement manifested the characteristics of the so-called adhesion contract. Finally, when the patient signed the contract, he completely placed himself in the control of the hospital; he subjected himself to the risk of its carelessness.

In brief, the patient here sought the services which the hospital offered to a selective portion of the public; the patient, as the price of admission and as a result of his inferior bargaining position, accepted a clause in a contract of adhesion waiving the hospital’s negligence; the patient thereby subjected himself to control of the hospital and the possible infliction of the negligence which he had thus been compelled to waive. The hospital, under such circumstances, occupied a status different than a mere private party; its contract with the patient affected the public interest. We see no cogent current reason for according to the patron of the inn a greater protection than the patient of the hospital; we cannot hold the innkeeper’s performance affords a greater public service than that of the hospital.

We turn to a consideration of the two arguments urged by *103 defendant to save the exemptive clause. Defendant first contends that while the public interest may possibly invalidate the exculpatory provision as to the paying patient, it certainly cannot do so as to the charitable one. Defendant secondly argues that even if the hospital cannot obtain exemption as to its “own” negligence it should be in a position to do so as to that of its employees. We have found neither proposition persuasive.

As to the first, we see no distinction in the hospital’s duty of due care between the paying and nonpaying patient. (But see Rest., Contracts, § 575(1) (b).) The duty, emanating not merely from contract but also tort, imports no discrimination based upon economic status. (See Malloy v. Fong (1951) 37 Cal.2d 356, 366 [232 P.2d 241]; Rest., Torts, §§ 323-324.) Rejecting a proposed differentiation between paying and nonpaying patients, we refused in Malloy to retain charitable immunity for charitable patients. Quoting Rutledge, J. in President & Directors of Georgetown College v. Hughes (1942) 130 F.2d 810, 827, we said: “Retention [of charitable immunity] for the nonpaying patient is the least defensible and most unfortunate of the distinction’s refinements. He, least of all, is able to bear the burden. More than all others, he has no choice. . . . He should be the first to have reparation, not last and least among those who receive it.” (P. 365.) To immunize the hospital from negligence as to the charitable patient because he does not pay would be as abhorrent to medical ethics as it is to legal principle.

Defendant’s second attempted distinction, the differentiation between its own and vicarious liability, strikes a similar discordant note. In form defendant is a corporation. In everything it does, including the selection of its employees, it necessarily acts through agents. A legion of decisions involving contracts between common carriers and their customers, public utilities and their customers, bailees and bailors, and the like, have drawn no distinction between the corporation’s “own” liability and vicarious liability resulting from negligence of agents. We see no reason to initiate so far-reaching a distinction now. If, as defendant argues, a right of action against the negligent agent is in fact a sufficient remedy, then defendant by paying a judgment against it may be subrogated to the right of the patient against the negligent agent, and thus may exercise that remedy.

*104 In substance defendant here asks us to modify our decision in Malloy, which removed the charitable immunity; defendant urges that otherwise the funds of the research hospital may be deflected from the real objective of the extension of medical knowledge to the payment of claims for alleged negligence. Since a research hospital necessarily entails surgery and treatment in which fixed standards of care may not yet be evolved, defendant says the hospital should in this situation be excused from such care. But the answer lies in the fact that possible plaintiffs must prove negligence; the standards of care will themselves reflect the research nature of the treatment; the hospital will not become an insurer or guarantor of the patient’s recovery. To exempt the hospital completely from any standard of due care is to grant it immunity by the side-door method of a contractual clause exacted of the patient. We cannot reconcile that technique with the teaching of Malloy.

We must note, finally, that the integrated and specialized society of today, structured upon mutual dependency, cannot rigidly narrow the concept of the public interest. Prom the observance of simple standards of due care in the driving of a car to the performance of the high standards of hospital practice, the individual citizen must be completely dependent upon the responsibility of others. The fabric of this pattern is so closely woven that the snarling of a single thread affects the whole. We cannot lightly accept a sought immunity from careless failure to provide the hospital service upon which many must depend. Even if the hospital’s doors are open only to those in a specialized category, the hospital cannot claim isolated immunity in the interdependent community of our time. It, too, is part of the social fabric, and prearranged exculpation from its negligence must partly rend the pattern and necessarily affect the public interest.

The judgment is reversed.

Gibson, C. J., Traynor, J., Schauer, J., Me Comb, J., Peters, J., and Peek, J., concurred.