As security for payment of the balance of the price, Walker Thomas included a “cross - collateralization clause” in the contract. This gave Walker Thomas a security interest in the goods bought under the new transaction, as well as in all goods that the customer had ever bought from it in the past . The effect of this provision was that if the customer defaulted on her most recent purchase, Walker Thomas could repossess not just the goods sold in that transaction, but all other goods bought in previous transactions (even if she had paid almost all of the other furniture off). At the time of the most recent transaction (bought multiple articles of furniture between 1957 and 1962), Walker-Thomas was aware (via the credit application) that Williams was living on public assistance — $218 a month. On this income, she was supporting seven children. Despite this, they sold her a $500 stereo. When she defaulted, Williams had paid off all but her most recent purchase (stereo). Court found that where there is unfairness in the bargaining process that results in unfair or oppressive contract terms , then the courts may provide relief based on the Doctrine of Unconscionability .
any unconscionable clause as to avoid any unconscionable result [ i.e., remedy of modification of the terms ] ….” Note : UCC §2-302 offers guidance on what remedies will be available where unconscionability is found (avoidance, excision, or modification). These are the familiar remedies typically available where improper bargaining is found. Note also : UCC §2-302 identifies the court and not the jury as the arbiter of unconscionability. In part a carryover from the fact that actions before courts in equity were tried before a judge, not a jury. But it is also because ( as we will see ) the doctrine itself is fluid — if not slippery — and it is perhaps best if it is decided before a well-trained and presumably dispassionate judge. Restatement §208 – Unconscionable Contract or Term “If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract , or it may enforce the remainder of the contract without the unconscionable term, or it may so limit the application of any unconscionable term as to avoid any unconscionable result.” ·Clearly modeled on the UCC. ·Also relies on judge rather than jury to decide. ·Same remedies as UCC. ·Like the UCC, Restatement fails to define or offer elements of unconscionability. Elements of Unconscionability Though no guidance is given by the language of the UCC and Restatement provisions, we can learn something form the comments and from the case law. Comment 1 to UCC 2-203 : “The basic test is whether, in light of the general commercial background and commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract….The principle is one of the prevention of oppression and unfair surprise .” Restatement §208 Comment c:
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