Law Students: View the simply explained & summarized video of this case Brief Fact Summary.
Plaintiffs, welfare recipients, purchased a home freezer worth $300 for $900 from a door-to-door salesman. After various other charges, the total purchase price was $1,234.80. At the time of the lawsuit, Plaintiffs had paid $619.88 and still owed $819.81 on the freezer.
Synopsis of Rule of Law.
A purchase price substantially higher than the value of an item can render the sale unconscionable as a matter of law.
Facts.
Plaintiffs bought a home freezer unit for $900 from a door-to-door salesman representing Your Shop At Home Service, Inc. After the addition of time credit charges, credit life insurance, credit property insurance, and sales tax, the purchase price totaled $1,234.80. At trial, it was established that the freezer had a maximum retail value of $300. Plaintiffs had paid $619.88 at the time of trial but still owed $819.81.
Issue.
Is the sale of a freezer unit having a retail value of $300 for $900 unconscionable as a matter of law?
Held.
Yes. The mathematic disparity between $900 and $300 is the most compelling evidence leading to the conclusion that the contract is unconscionable. Additionally, the credit charges alone exceeded the value of the freezer by more than $100, and the seller knew that the financial resources of the buyers were limited.
Discussion.
The determination of whether a contract is unconscionable should not be reduced solely to a mathematical formula, but on the facts before the court here, paying $900 for a $300 freezer constituted an unconscionable contract.
