Case Study

Case Heading or citation

1.       Issue of law:  Explain what legal issue the court had to determine

2.       Facts:  Explain what happened but not analysis

3.       Holding:  A short statement of how the court resolved the issue

4.       Law:  Define the rules of law that were used to decided the issue

5.       Explanation:  The legal reasoning of why the court decided what it did

6.       Judgment:  The order of the court to the parties or lower court

7.       Opinion:  Share your opinion on the fairness or correctness of the decision

Jones v. Star Credit Corp.

Supreme Court of New York, Nassau County, 59 Misc.2d 189, 298 N.Y.S.2d 264 (1969).

The Joneses 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. Later, the Joneses, 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. At trial, the freezer was found to have a maximum retail value of approximately $300.

[Section 2–302 of the UCC] authorizes the court to find, as a matter of law, that a contract or a clause of a

contract was “unconscionable at the time it was made,” and upon so finding the court may refuse to enforce

the contract, excise the objectionable clause or limit the application of the clause to avoid an unconscionable

result.

The question which presents itself is whether or not, under the circumstances of this case, the sale of a freezer

unit having a retail value of $300 for $900 ($1,439.69 including credit charges and $18 sales tax) is

unconscionable as a matter of law.

Concededly, deciding [this case] is substantially easier than explaining it. No doubt, the mathematical disparity

between $300, which presumably includes a reasonable profit margin, and $900, which is exorbitant on its

face, carries the greatest weight. Credit charges alone exceed by more than $100 the retail value of the

freezer. These alone may be sufficient to sustain the decision. Yet, a caveat [warning] is warranted lest we

reduce the import of Section 2–302 solely to a mathematical ratio formula. It may, at times, be that; yet it may

also be much more. 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. Indeed, the value disparity itself leads inevitably to the felt

conclusion that knowing advantage was taken of the plaintiffs. In addition, the meaningfulness of choice

essential to the making of a contract can be negated by a gross inequality of bargaining power.

The defendant has already been amply compensated. In accordance with the statute, the application of the

payment provision should be limited to amounts already paid by the plaintiffs and the contract be reformed

and amended by changing the payments called for therein to equal the amount of payment actually so paid by

the plaintiffs.