Brief Fact Summary. Appellants, who all purchased household items from Defendant Walker-Thomas furniture, alleged that the installment contracts that were entered into with Defendant were unconscionable and should therefore, be unenforceable.
Synopsis of Rule of Law. Where the element of unconscionability is present at the time a contract is made, the contract should not be enforced.
Facts. Plaintiffs all entered into installment contracts with Defendant for the purchase of household goods. Plaintiffs were relatively unsophisticated buyers who, at the time of purchase, had little monthly income. The installment contracts contained boiler plate language which stated “all payments now and hereafter made by [purchaser] shall be credited pro rata on all outstanding leases, bills, and accounts due the Company by [purchaser] at the time each such payment is made.” The effect of this provision was to keep a balance on all items ever purchased under installment by Plaintiffs, so that if Plaintiff defaulted on payment, Defendants would have the ability to repossess each item, regardless of how much had actually been paid off, because each item would have an outstanding balance due until all items were paid off. The lower Court dismissed the case on the grounds that there was no statutory authority to provide protection to Plaintiffs in situations such as these.
Issue. Whether the contracts were unconscionable, and thus unenforceable, due to the boiler plate language on back of the installment contract.