Case Brief

Ashley Ludwick

Style: Clifton James v. Star Credit Corporation

Court: Supreme Court of New York, Special Term, Nassau County

Citation: 59 Misc. 2d 189; 298 N.Y.S.2d 264;(1969)

Issue: Can the monetary difference of an over charged price and actual value price of an object be adequate grounds for the unconscionability of a contract?

Facts: The plaintiff agreed to buy a freezer for $900 from the defendant. The plaintiffs are welfare recipients. The defendant is a salesman for Your Shop At Home Service, Inc. The total after taxes, the freezer, and various insurances totaled exactly $ 1,234.80. Up to this point the plaintiffs have paid $ 619.88 towards the freezer. The defendant stated that there is additional fees for prolonging payments and the remaining balance is $ 819.81. The maximum value of the freezer is $300.

Holding: Yes, indeed a drastic difference between an items actual value and the contractual sale price can be used in accordance to determine the unconscionability of an existing contract.

Law: Section 2-302 of the Uniform Commercial Code which provides in part: "(1) 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 refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result”.

Explanation: The defendants were uneducated in their purchase of the freezer. The use of section 2-302 determines the fact that there was indeed the presence of unconscionability within the use of the contract imposed by the defendant. A wide range of courts use the 3X rule. If the businesses sell the product for over three times the actual value then most likely it will be found to be substantially unconscionable

Judgment: As a result of the courts finding the contract to be substantially unconscionable,...