Williams v. Walker-Thomas Furniture Co.

Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965), was a court opinion, written by Judge J. Skelly Wright, that had a definitive discussion of unconscionability as a defense to enforcement of contracts in American contract law. As a staple of first-year law school contract law courses, it has been briefed extensively.[1][2]

Williams v. Walker-Thomas Furniture Co.
CourtUnited States Court of Appeals for the District of Columbia Circuit
Full case nameOra Lee WILLIAMS, Appellant, v. WALKER-THOMAS FURNITURE COMPANY, Appellee.
Citation(s)350 F.2d 445 (D.C. Cir. 1965)
Transcript(s)
Case opinions
J. Skelly Wright
Keywords
Unconscionability

It flows from interpretation of the Uniform Commercial Code § 2-302 (1954) and is relevant for the Restatement (Second) of Contracts § 208.

Facts

The case involved Walker-Thomas (Washington, D.C. at 7th St. & L St. NW) extending credit from 1957 to 1962 to Williams for a series of furniture purchases. The contract was written in such a way that no furniture could be paid off until all of it was. When Williams defaulted on the contract in 1962, Walker-Thomas tried to repossess all the furniture sold since 1957. The District of Columbia Court of Appeals ruled that the lower court could rule the contract unconscionable and refuse to enforce it, and returned the case to the lower court to decide whether or not the contract was in fact unconscionable.

Judgment

J. Skelly Wright held that the case needed to be sent back to trial to determine further facts, but in doing so, he held that a contract may be set aside if it was procured by unconscionable means.

...we hold that where the element of unconscionability is present at the time a contract is made, the contract should not be enforced ...

Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party....

In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power ...

The manner in which the contract was entered is also relevant to this consideration. Did each party to the contract, considering his obvious education or lack of it, have a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print and minimized by deceptive sales practices? Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But when a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all the terms. In such a case the usual rule that the terms of the agreement are not to be questioned should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld.

Significance

This case is often used by professors to question their students' ideology or presumptions.[3] It is also used as a case study in some modern economics classes.[4]

See also

Notes
  1. Russell B. Korobkin, "A 'Traditional' and 'Behavioral' Law-and-Economics Analysis of Williams v. Walker-Thomas Furniture Company," UCLA School of Law, Law & Econ. Research Paper No. 03-24 and University of Hawaii Law Review, Vol. 26, p. 441, 2004, found at SSRN papers web site. Accessed March 27, 2008.
  2. eTouch Briefs web site. Accessed March 27, 2008.
  3. The Conglomerate web site. Accessed March 27, 2008.
  4. Course syllabus, ECON 330, Bucknell University official web site. Accessed March 27, 2008.
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