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Williams v. Walker-Thomas Furniture Co.

Citation. 350 F.2d 445 (D.C. Cir. 1965)
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Brief Fact Summary.

Appellee Walker-Thomas Furniture Co., a retailer of furniture, leased items to consumers pursuant to a contract that stated Appellee would retain title of the furniture until the total of the lease payments made equaled the stated value of the piece of furniture, at which time the consumer would own the furniture.  Each contract inconspicuously contained a provision stating that if more than one item is purchased the monthly payments shall be applied pro rata among all the items purchased, thereby allowing Appellee to retain title on each piece of furniture longer.

Synopsis of Rule of Law.

An unreasonable and unconscionable contract, not void for fraud, will be enforced, but the damages will be only what the suing party is equitably entitled to.


Appellee operated a retail furniture store.  Appellee permitted consumers to purchase furniture by paying monthly installments.  Such purchases were governed by a form contract that provided the value of the item and purported to lease the item for a monthly payment.  The contract stated that the appellee would retain title to the furniture until the total of all monthly payments equaled the value of the item.  In the event of default, the appellee could repossess the item.  The contract also contained an obscure provision that allowed the appellee to apply each monthly payment pro rata to all outstanding leases.  The effect of such a provision is to keep a balance due on every item until there was no balance due on any of the items.  This gave Appellees the right to repossess all items in the case of a default.  Appellants Thorne and Williams both purchased items that were repossessed under a purchase contract.


Did the lower courts properly reject Appellants’ argument that the contracts are unconscionable and thus unenforceable?


No.  An unreasonable and unconscionable contract, not void for fraud, will be enforced, but the damages will be only what the suing party is equitably entitled to.  Unconscionability means the lack of meaningful choice for one party combined with unreasonably favorable terms for the other party.  Since the lower courts did not believe that enforcement of the contracts could be refused no factual findings were made.  Therefore, it was not determined whether these contracts were unconscionable.


The dissent (which, whether mislabeled or intentionally termed a dissent, is actually a concurrence) merely emphasizes that a cautious approach must be taken to solve the problem of unconscionable contracts in consumer transactions.


Unconscionable contracts are not void, but rather, the party who benefits from the unconscionable contract is only entitled to the remedies that equity demands.

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