Jones v. Star Credit Corp.
Citation and Court
Jones v. Star Credit Corp., 59 Misc. 2d 189 (N.Y. Sup. Ct. 1969)
Facts
The Joneses, welfare recipients, purchased a home freezer from a salesperson who came to their home. The freezer was sold on credit for a total price of 300. By the time of the lawsuit the Joneses had paid over $600 and still owed the remainder. They sought to have the contract declared unconscionable under UCC § 2-302.
Issue
Whether a contract for the sale of a freezer at more than four times its retail value to low-income buyers is unconscionable under UCC § 2-302.
Holding
The court held the contract unconscionable as to the price term and reformed it to limit recovery to the amount already paid, finding no further obligation owed by the buyers.
Rule / Doctrine
Under UCC § 2-302, a court may refuse to enforce, or may limit the application of, a clause or contract it finds to have been unconscionable at the time of contracting. Unconscionability encompasses both procedural unconscionability (unfair bargaining process, lack of meaningful choice) and substantive unconscionability (oppressive terms, grossly excessive price). A price disparity of four-to-one against unsophisticated buyers who lack bargaining power may constitute unconscionability.
Significance
One of the leading judicial applications of UCC § 2-302. Demonstrates that courts will police extreme price terms and not simply defer to freedom of contract when the disparity in price and sophistication between the parties is gross. An important case in discussions of consumer protection and contract policing doctrines.