Sales and Leases | 90
Examples : (1) A municipal worker inquired about purchasing some chairs from a furniture store. To that end, the worker signed a form that she thought was a credit application but was actually a purchase and financing agreement. Later on, the furniture was delivered. Only then was the worker informed that the total price was $4,500. The furniture was of such a low quality that it virtually never lasted for longer than two years. What is more, the contract had a term limiting the seller’s total liability to whatever amount the buyer actually paid for the furniture. On similar facts, a court found that the price term was substantively unconscionable, calling it “ridiculous” not in isolation, but in light of the furniture’s shoddy quality. The court also found the liability limitation substantively unconscionable, because it unduly favored the seller. [ See Capitol Discount Corp. v. Rivera , No. CV–6114–12/KI, 2013 WL 692940 (N.Y. Civ. Ct. 2013).] (2) A consumer purchased a car from a dealer. The dealer’s form contract, which the consumer signed, contained provisions that required all disputes to be submitted to binding arbitration. However, the contract barred an arbitrator from awarding punitive and similar damages—even though various state statutes required these damages in similar disputes. On like facts, a court found the remedy limitation unconscionable as violative of public policy, considering the statutory requirements for punitive damages. But even apart from statutory considerations, the limitation was oppressive, unreasonably one-sided, and unrelated to achieving a fair, unbiased decision by a neutral decisionmaker. Thus, the remedy limitation was unconscionable—even considering the FAA’s policy of encouraging and enforcing arbitration agreements. The term was also procedurally unconscionable. Owing to the necessity of an automobile, the consumer’s lack of sophistication, and the contract’s hasty presentation, the consumer had little choice but to accept the dealer’s terms. [ Simpson v. MSA of Myrtle Beach, Inc. , 644 S.E.2d 663 (S.C. 2007).] 4. Time to Determine Unconscionability As mentioned, the court must generally determine whether the contract or any of its provisions was unconscionable when the contract was made. Thus, events occurring after that time should typically not be taken into account. There is one exception to this rule. Namely, a provision limiting consequential damages in a personal-injury case involving consumer goods is prima facie unconscionable. [ See U.C.C. §§ 2-302(1), 2-713(3) (1951); 2 Hawkland UCC Series § 2-302:2, n. 4, Westlaw (database updated June 2021).] 5. Process to Find Unconscionability If a party claims unconscionability, or if it appears to the court that the contract or any of its provisions is unconscionable, the parties must have a reasonable chance to present evidence
Made with FlippingBook - Online Brochure Maker