Citation. 350 F. 2d 445 (D.C. Cir 1965)
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Furniture burdened by a cross-collateral clause was sold by Walker-Thomas (P) to Williams (D) and subsequent to Williams’s default, sought to replevin all goods bought by Williams (D).
Synopsis of Rule of Law.
It is within the court’s power to refuse enforcement of contracts found to be unconscionable.
Facts.
The furniture which Walker-Thomas (P) sold to Williams (D) was under a printed form contract containing a cross-collateral clause which specified that a balanced due on every item purchased was to be kept until the balance due on all items, whenever purchased was liquidated. The terms of the contract conferred upon Walker-Thomas (P), the right to repossess all items previously purchased in the event of any default.
Williams (D) payment of $1,400 was not enough to clear her previous outstanding balance she had with Walker-Thomas (P), and at the time of her last purchase, Williams (D) had a an outstanding of $164 to balance. Thereafter, Walker-Thomas sought to replevy all goods previously sold to Williams after she defaulted on her payment. The trial court ruled in favor of Walker-Thomas (P) and this ruling was affirmed by the intermediate court. However, the federal district court granted review due to the fact that the case was in the District of Colombia.
Issue.
Is it within the court’s power to refuse enforcement of contracts found to be unconscionable?
Held.
(Wright, J) Yes. It is within the court’s power to refuse enforcement of contracts found to be unconscionable. “The contract should not be enforced where the element of unconscionability is present at the time the contract was formed. Unconscionability has generally been accepted to include an absence of meaningful choice on the part of one of the parties together with contract terms which are reasonably favorable to the other party.” In light of all the circumstances, it is important that meaningfulness of choice is determined, for instance, gross disparity of bargaining power. The ruling was remanded in other to determine whether the contract was unconscionable.
Dissent.
(Danaher, J) the judicial approach to the issues brought up by this case should be a cautious one that gives parties enough in making their own contracts. The responsibility of protecting the public from exploitative contracts lies squarely with the legislature (in this case, the Congress) because numerous public policy issues are implicated. Otherwise, the risk of the decisions like the one handed down by the majority is that legislative and non-exploitative credit contracts into which the parties have knowing entered will be undone by the majority.
Discussion.
(Danaher, J) the judicial approach to the issues brought up by this case should be a cautious one that gives parties enough in making their own contracts. The responsibility of protecting the public from exploitative contracts lies squarely with the legislature (in this case, the Congress) because numerous public policy issues are implicated. Otherwise, the risk of the decisions like the one handed down by the majority is that legislative and non-exploitative credit contracts into which the parties have knowing entered will be undone by the majority.
