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Williams v. Walker-Thomas Furniture Co.

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Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (C.A. D.C. 1965), is a classic contract case that discusses the concept of unconscionability as a defense to contract enforceability.

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Contents

Summary of Case Facts

Williams made a series of furniture purchases from Walker-Thomas furniture over a period of five years. The installment contracts contained boilerplate on the back of the contracts written in such a way that it considered any furniture currently financed with Walker-Thomas was to be considered cross-collateral in the event of a default on any of the furniture purchases made with Walker Thomas. Until all the furniture was paid off, none of it was owned by Williams, regardless of how much he had paid or for how long, and any and all of it could be used as security and repossessed in event of default. In 1962, Williams defaulted on a contract and Walker-Thomas sought to repossess not only the furniture on which he defaulted, but all of the furniture in his possession from Walker-Thomas.

Issue

Can a court hold a contract unenforceable due to its unconscionability?

Holding and Law

Yes. It was held that a court did have the power to hold a contract unenforceable where the element of unconscionability is present. They considered unconscionability to be a lack of meaningful choice (often due to a gross inequality of bargaining power) for one of the parties combined with unreasonably unfavorable contract terms to that party.

In this case, the court wrote that it was unlikely, given the lack of bargaining power and real choice, as well as William’s lack of sophistication, that he was able to truly give meaningful consent to all the terms in the contract. The court said in such a situation one should examine whether the contract terms are so unfair as to decline to uphold enforcement of the contract.

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