Jones v. Star Credit Corp.
Supreme Court of NY - 1969 (298 N.Y.S.2d 264)
- P, welfare recipients, agreed to purchase a freezer for $900 from D. After finance charges, the total would be more than $1200. The retail price of the freezer was $300.
- At the time of the suit, P had paid about $600 towards the purchase.
- P sued D and prayed for contract rescission.
- NY Supreme Court found for P, terms unconscionable, contract amended. P gets freezer for the $600 already paid.
- Can gross inadequacy between an item's value and its purchase price be used by courts to determine the unconscionability of a contract?
- Gross inadequacy between an item's value and its purchase price can be used by courts to determine the unconscionability of a contract.
- It is important to preserve the integrity of agreements and the right of parties to contract freely; however, there is concern for the uneducated and often illiterate individual who is the victim of gross inequality of bargaining power.
- The law is beginning to fight back against those who once took advantage of the poor and illiterate without risk of either exposure or interference.
- The principle of unconscionability is one that attempts to prevent oppression and unfair surprise.
- It permits a court to accomplish directly what was often accomplished by construction of language, manipulations of fluid rules of contract law, and determinations based upon a presumed public policy.
- The UCC section on unconscionability was meant to encompass the price term of an agreement.
- Credit charges alone exceed the value of the freezer.
- The very limited financial resources of the purchaser, known to the sellers at the time of the sale, is entitled to weight in the balance.
- There have been numerous other courts that have used gross inadequacy of consideration in deciding a contract is unconscionable.
- There is a doctrine of price unconscionability.
- There is a 3x rule. If a party is selling something for three times the value, there is a good chance it will be found to be substantially unconscionable.
- Procedural unconscionability was found because it was an in-home sale because people are too polite when people come to their home.