George Mason School of Law

transcript

Contracts I

Introduction

F.H. Buckley

fbuckley@gmu.edu

Makeup…

Next day: Syllabus 2: Economic Gains from Trade

Some housekeeping

The exam: Open Code

Optional upgrade based on classroom performance

Williams v. Walker-Thomas Furniture Co.

Williams v. Walker-Thomas Furniture Co.District of Columbia Court of Appeals

198 A.2d 914 (1964)

Williams v. Walker-Thomas Furniture Co.District of Columbia Circuit Court of Appeals

350 F.2d 445 (1965)

Walker-Thomas Furniture Store1074 Seventh St. NW (at L)

Williams v. Walker-Thomas

Who was Ora Lee Williams?

If you had to describe her in one word, what would that word be?

Who brought the action?

What remedy was sought?

And who won at trial?

Who won at the DC Court of Appeals?

And who won in the DC Circuit?

What gave Walker-Thomas a right of replevin?

Title to remain in seller until all goods paid for Walker-Thomas filed approximately 100

writs of replevin a year.

Conditional Sale:

(Title) (Possession)Vendor Purchaser

UCC Article 9:

(Security Interest) (Possession)Secured Party Debtor

Do we have a problem with this?

Is secured lending a problem?

Do we have a problem with this?

Secured lending? UCC 9-201. General Validity of Security

Agreement. Except as otherwise provided by this Act, a security agreement* is effective according to its terms between the parties, against purchasers of the collateral and against creditors.

*A security agreement creates a security interest in collateral

And if the debtor defaults?

SP has the right to retake possession SP can resell and:

Account to debtor for surplus if the resale price exceeds the indebtedness

Sue for the deficiency if the resale price is less than the indebtedness

And if the debtor defaults?

In Williams v. Walker-Thomas, are we talking about a surplus or a deficiency?

What was the “rather obscure clause” that permitted Walker-Thomas to repossess Mrs. Williams’ bed.

How would you have drafted it?

Do you think the Walker-Thomas lawyer was trying to hide the cross-collateral interest?

Suppose that, on the first loan, Walker-Thomas had taken a security interest in all the assets she acquired subsequently (from anyone)?

Suppose Walker-Thomas had taken a security interest in all the assets she acquired subsequently (from anyone)? UCC 9-204) After-acquired property (A) … a security

agreement may create or provide for a security interest in after-acquired collateral.

After-acquired CollateralCurrent assets financing

Inventory, Accounts receivable

Security Interest

Suppose Walker-Thomas had specified on the first loan five years earlier that money lent (or credit extended) subsequently (future advances) would be secured by assets acquired in the past?

What about a security interest which secures moneys loaned subsequently (future advances)? UCC 9-204(3) Obligations covered by a

security agreement may include future advances or other value

Future advances and line of credit loans

Collateral

Loan Loan

But no longer if consumer goods or household goods, under the UCC And why is that?

Substantive Unconscionability

Are there some bargains that are so vicious that they should be outlawed, even if the parties consent to them? How does one tell? Give me an example….

Are there some bargains that are so vicious that they should be outlawed, even if the parties consent to them? Is Walker-Thomas an example of this?

Why did Walker-Thomas insert the clause in the contract?

Why might Mrs. Williams rationally have agreed to it?

How would you expect Walker-Thomas to react if the clause is banned?

Substantive vs. Procedural Unconscionability

What’s the difference?

Substantive vs. Procedural Unconscionability

Substantive: The clause is never enforceable, even if agreed to consciously by a person of full capacity

Procedural: The clause is enforceable if agreed to consciously by a person of full capacity, but not otherwise

Substantive: Ban all consumer cross-collateral clauses

Procedural Unconscionability

Is there a problem of procedural unconscionability in Walker-Thomas?

In the DC Circuit: Skelly Wright

Where did he get the unconscionability doctrine from?

Was there an “absence of meaningful choice”?

Why didn’t she shop at Woodward & Lothrop?10 blocks from Walker-Thomas

Or Garfinckel’s? 11 Blocks from Walker-Thomas

What happened to Walker-Thomas? 1074 Seventh St. NW (at L)

When did it go dark, do you think?

Seventh Street NW, April 5, 1968What happened the day before?

An “absence of meaningful choice”?

To buy or not to buy?

Did it matter that she made the purchase in her house?

Is this how a monopolist would choose to exercise monopoly power?

“Gross inequality of bargaining power”

Is the inequality greater when you purchase at Macy’s?

$12.99!!!

I think we can do better than that, don’t you?

“An absence of meaningful choice” unless we can dicker?

Are purchases in the inner city intrinsically suspect? Let them shop at Garfinckels…for cake

Is her poverty relevant? What were her financial resources?

Is her poverty relevant? You mean we let poor people enter into

contracts!?!

Do you want to argue that Mrs. Williams was a person of diminished capacity?

Do you want to argue that Mrs. Williams was a person of diminished capacity? An “obvious … lack of education”?

Do you think, as an empirical matter, that all people stand on the same footing when it comes to bargaining ability or judgment?

Do you think, as an empirical matter, that all people stand on the same footing when it comes to bargaining ability or judgment? And would legal consequences follow

from this?

Did it matter what was purchased?

Suppose it had been a 10-year subscription to The New Republic?

Did it matter what was purchased?

“Man does not live by bread alone… He also needs strawberry jam.”Lionel Trilling

Should moral sentiments enter into it?

Distinguish vices of capacity and vices of consent

Did she give her consent to the clause?

Did she give her consent to the clause? And just why is that a big deal?

Did she give her consent to the clause? Should consent be conclusively

presumed if one signs a contract?

presumed if one signs a contract? If not, what’s the point of them?

presumed if one signs a contract? What if she was seen not to read the

contract?

presumed if one signs a contract? What about that “rather obscure clause”?

Did she give her consent to the clause? What about the size of the type? 4 point

Standard Form Contracts

Would Skelly Wright enforce any consumer contract based on a standard form? No “objective manifestation of consent”

Standard Form Contracts

Why do vendors employ them?

The Seven Children

Do they come into it?

What remedy was granted?

What would have happened on remand?

You’re Walker-Thomas

How do you react to the decision?

UCC 2-302: Does that clarify things?

§ 2-302. Unconscionable contract or Clause. (1) If the court as a matter of law finds

the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract…

Contracts I

II. DAY Why Enforce.ppt

F.H. Buckley

fbuckley@gmu.edu

Alexandria

The Birchmere

Eden Center

Five Guys

Misha’s CoffeePatrick at King, Alexandria

National Arboretum

Across from the National Gallery

Behind the Jefferson Memorial

Arlington Library

Walker-Thomas Furniture Store1074 Seventh St. NW (at L)

George Mason School of Law

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