Cengage Advantage Books: Business Law Today, The Essentials 10th Edition by Roger LeRoy Miller

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Jones v. Star Credit Corp.
HISTORICAL AND ECONOMIC SETTING In the sixth century C.E., Roman civil law allowed the courts to rescind a contract if the goods that were the subject of the contract had a market value that was less than half the contract price. This same ratio has appeared over the last decade in many cases in which courts have found contract clauses to be unconscionable under UCC 2-302 on the ground that the price was excessive. Most of the litigants who have used UCC 2-302 successfully have been consumers who were poor or otherwise at a disadvantage. In a Connecticut case, for example, the court held that a contract requiring a person who was poor to make payments totaling $1,248 for a television set that ordinarily sold for $499 was unconscionable.a The seller had not told the buyer the full purchase price. In a New York case, the court held that a contract requiring a Spanish-speaking consumer to make payments totaling nearly $1,150 for a freezer that had a wholesale price of less than $350 was unconscionable.b The contract was in English, and the salesperson did not translate or explain it.
FACTS The Joneses, the plaintiffs, agreed to purchase a freezer for $900 as the result of a salesperson's visit to their home. Tax and financing charges raised the total price to $1,234.80. At trial, the freezer was found to have a maximum retail value of approximately $300. The plaintiffs, who had made payments totaling $619.88, brought a suit in a New York state court to have the purchase contract declared unconscionable under the UCC.
ISSUE Can this contract be denied enforcement on the ground of unconscionability?
DECISION Yes. The court held that the contract was not enforceable as it stood, and the contract was reformed so that no further payments were required.REASON The court relied on UCC 2-302(1), which states that if "the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made, the court may... so limit the application of any unconscionable clause as to avoid any unconscionable result." The court then considered the disparity between the $900 purchase price and the $300 retail value, as well as the fact that the credit charges alone exceeded the retail value. These excessive charges were exacted despite the seller's knowledge of the plaintiffs' limited resources. The court reformed the contract so that the plaintiffs' payments, amounting to more than $600, were regarded as payment in full.
IMPACT OF THIS CASE ON TODAY'S LAW This early case illustrates the approach that many courts today take when deciding whether a sales contract is unconscionable-an approach that focuses on "excessive" price and unequal bargaining power.