Toker v. Westerman

Superior Court of New Jersey, District Court, Union County · 1970 · Contracts

ContractsUnconscionabilityUCC 2-302SalesunconscionabilityUCC 2-302excessive priceretail installment contract

Facts

On November 7, 1966, plaintiff's assignor sold defendants a refrigerator-freezer under a retail installment contract. The cash price was $899.98, and with sales tax, group life insurance, and time price differential, the total contract price was $1,229.76, payable in 36 monthly installments of $34.16. Defendants made payments but refused to pay the remaining $573.89. At trial, defendants' appliance dealer testified that the unit was a stripped, non-frost-free 18-cubic-foot refrigerator-freezer with a reasonable retail value of $350 to $400, and that even the most expensive comparable unit at the time sold for $500.

Issue

Can a sales contract be found unconscionable under N.J.S. 12A:2-302 solely because the purchase price is grossly excessive relative to the goods' reasonable retail value? If so, may the court refuse to enforce the unpaid balance of that contract?

Rule

Under N.J.S. 12A:2-302, a court may refuse to enforce a contract when, at the time it was made, the price charged for goods is so grossly excessive as to be shocking and therefore unconscionable. The statute should not be used merely to relieve a buyer from a bad bargain, but it applies where the sale price is approximately two and one-half times the goods' reasonable retail value.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Newark, Dana Mercer bought a basic washing machine from Harborline Home Sales under a retail installment contract. The total contract price was $1,050, and credible testimony at trial showed that at the time of sale the machine's reasonable retail value was about $420, with better-equipped comparable models selling for no more than $550.

If Dana stops paying and argues that the contract is unconscionable under UCC 2-302 solely because of the price, which is the strongest result?

Explanation. The majority held that purchase price alone may render a sales contract unconscionable under UCC 2-302 when the price is grossly excessive and shocking compared with the goods' reasonable retail value at the time of contracting. Fraud is not required, and the court focused on reasonable retail value rather than seller cost alone. (Derived from Toker v. Westerman (n.d.).)