THE FACTS
These were the plaintiffs in the case
Welfare recipients
This section of the UCC governs unconscionability
Section 2-302
The court was heavily influenced by this gap between value and price
extreme price disparity
What are the three basic elements required to form a valid contract?
Offer, acceptance, and consideration
What did the court ultimately rule about the contract between the Jones family and Star Credit?
The contract was unconscionable
This was the product purchased
A home freezer
Unconscionability is determined at this point in time
At the time the contract was made
Credit charges alone exceeded this amount
The retail value of the freezer
What principle says courts generally enforce voluntary agreements between parties?
Freedom of contract
This was the freezer’s approximate retail value at the time of sale
$300
The court warned that unconscionability should not be reduced to just this kind of formula
mathematical ratio
Name one reason a court might refuse to enforce a contract
Duress, fraud, mistake, or unconscionability
What did the court decide about the remaining money Star Credit wanted to collect?
The seller could not collect the remaining balance
Before all added charges, the freezer was sold for approximately this amount
$900
The seller knew this about the plaintiffs at the time of sale
They had very limited financial resources
Besides price, what other factor did the court say must be considered when deciding if a contract is unconscionable?
The circumstances of the transaction and the parties involved
After credit charges, insurance, and tax, the total price came to approximately this amount
About $1,234.80
The extreme price difference led the court to conclude this about the seller’s behavior
Knowing advantage was taken of the plaintiffs
What economic problem discussed in the presentation refers to one party having more knowledge than the other?
Information asymmetry
Why did the court believe the buyers had already paid enough?
Because they had already paid about $600 for a freezer worth around $300, so the seller had already received more than the value