The Court ruled that “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.” Common law “recognizes the importance of a free enterprise system but at the same time will provide the legal armor to protect and safeguard the prospective victim from the harshness of an unconscionable contract.”
By ruling in favor of Jones, the Court implies that the government should look out for the “uneducated and often illiterate individual who is the victim of gross inequality of bargaining power, usually the poorest members of the community.” In a contract with a buyer and seller, there is a significant information gap where the buyer may not know the market value of a good.
The seller may then easily take advantage of the buyer and overcharge a significant amount. Such deception is thus not permitted under law when in favor of the petitioner (Jones).
This ensures that sellers will offer a much more competitive and fair price.
Public policy dictates that uneducated consumers should be protected from greedy merchants and the dangers of unequal bargaining power. UCC Section:2-302 provides for a moral sense of community in commercial transactions and if a clause of a contract is unconscionable at the time it was made, the court may refuse to enforce the contract. The UCC applies to the price term of a contract.
The Term Paper on Selling Shareholder Seller Buyer Agreement
ASSET PURCHASE AGREEMENT (Corporation to Third Party) This Agreement entered into this the day of, 20 by and among, a corporation organized under the laws of the State of (hereinafter 'Seller'), (hereinafter individually and collectively 'Selling Shareholder (s) ') and, a corporation (hereinafter 'Buyer'). WHEREAS, Seller operates a business primarily engaged in the; and WHEREAS, Seller owns ...
There is a public necessity and desirability for installments sales contracts. However, the pricing scheme on such contracts must afford some protection to the seller for the risk of selling to those who may default on payment. The price terms set in the subject contract are in excess of any assurances and the result is an unconscionable contract.
What is the precedent
The court sees UCC Section:2-302 as applying to the price term of a contract. The purpose of Section:2-302 is to protect the unequal bargaining power that is often inherent in some contractual agreements.
