Post on 31-Dec-2015
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George Mason School of Law
Contracts I
Introduction
F.H. Buckley
fbuckley@gmu.edu
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George Mason School of Law
Makeup…
Next day: Syllabus 2: Economic Gains from Trade
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Some housekeeping
The exam: Open Code
Optional upgrade based on classroom performance
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Williams v. Walker-Thomas Furniture Co.
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Williams v. Walker-Thomas Furniture Co.District of Columbia Court of Appeals
198 A.2d 914 (1964)
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Williams v. Walker-Thomas Furniture Co.District of Columbia Circuit Court of Appeals
350 F.2d 445 (1965)
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Walker-Thomas Furniture Store1074 Seventh St. NW (at L)
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Williams v. Walker-Thomas
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Who was Ora Lee Williams?
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Who was Ora Lee Williams?
If you had to describe her in one word, what would that word be?
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Who brought the action?
What remedy was sought?
And who won at trial?
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Who brought the action?
What remedy was sought?
Who won at the DC Court of Appeals?
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Who brought the action?
What remedy was sought?
And who won in the DC Circuit?
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What gave Walker-Thomas a right of replevin?
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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.
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What gave Walker-Thomas a right of replevin?
Conditional Sale:
(Title) (Possession)Vendor Purchaser
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What gave Walker-Thomas a right of replevin?
UCC Article 9:
(Security Interest) (Possession)Secured Party Debtor
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Do we have a problem with this?
Is secured lending a problem?
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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
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And if the debtor defaults?
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And if the debtor defaults?
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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
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And if the debtor defaults?
In Williams v. Walker-Thomas, are we talking about a surplus or a deficiency?
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What gave Walker-Thomas a right of replevin?
What was the “rather obscure clause” that permitted Walker-Thomas to repossess Mrs. Williams’ bed.
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What gave Walker-Thomas a right of replevin?
How would you have drafted it?
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What gave Walker-Thomas a right of replevin?
Do you think the Walker-Thomas lawyer was trying to hide the cross-collateral interest?
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What gave Walker-Thomas a right of replevin?
Suppose that, on the first loan, Walker-Thomas had taken a security interest in all the assets she acquired subsequently (from anyone)?
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What gave Walker-Thomas a right of replevin?
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
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Security Interest
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What gave Walker-Thomas a right of replevin?
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?
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What gave Walker-Thomas a right of replevin?
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
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What gave Walker-Thomas a right of replevin?
Future advances and line of credit loans
Collateral
Loan Loan
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What gave Walker-Thomas a right of replevin?
But no longer if consumer goods or household goods, under the UCC And why is that?
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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….
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Substantive Unconscionability
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?
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Substantive Unconscionability
Why did Walker-Thomas insert the clause in the contract?
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Substantive Unconscionability
Why might Mrs. Williams rationally have agreed to it?
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Substantive Unconscionability
How would you expect Walker-Thomas to react if the clause is banned?
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Substantive vs. Procedural Unconscionability
What’s the difference?
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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
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Substantive Unconscionability
Substantive: Ban all consumer cross-collateral clauses
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Procedural Unconscionability
Is there a problem of procedural unconscionability in Walker-Thomas?
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Procedural Unconscionability
Is there a problem of procedural unconscionability in Walker-Thomas?
In the DC Circuit: Skelly Wright
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Where did he get the unconscionability doctrine from?
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Was there an “absence of meaningful choice”?
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Why didn’t she shop at Woodward & Lothrop?10 blocks from Walker-Thomas
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Or Garfinckel’s? 11 Blocks from Walker-Thomas
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What happened to Walker-Thomas? 1074 Seventh St. NW (at L)
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When did it go dark, do you think?
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Seventh Street NW, April 5, 1968What happened the day before?
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An “absence of meaningful choice”?
To buy or not to buy?
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An “absence of meaningful choice”?
Did it matter that she made the purchase in her house?
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An “absence of meaningful choice”?
Is this how a monopolist would choose to exercise monopoly power?
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“Gross inequality of bargaining power”
Is the inequality greater when you purchase at Macy’s?
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“Gross inequality of bargaining power”
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$12.99!!!
I think we can do better than that, don’t you?
“An absence of meaningful choice” unless we can dicker?
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“Gross inequality of bargaining power”
Are purchases in the inner city intrinsically suspect? Let them shop at Garfinckels…for cake
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Procedural Unconscionability
Is her poverty relevant? What were her financial resources?
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Procedural Unconscionability
Is her poverty relevant? You mean we let poor people enter into
contracts!?!
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Procedural Unconscionability
Do you want to argue that Mrs. Williams was a person of diminished capacity?
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Procedural Unconscionability
Do you want to argue that Mrs. Williams was a person of diminished capacity? An “obvious … lack of education”?
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Procedural Unconscionability
Do you think, as an empirical matter, that all people stand on the same footing when it comes to bargaining ability or judgment?
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Procedural Unconscionability
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?
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Did it matter what was purchased?
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Did it matter what was purchased?
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Suppose it had been a 10-year subscription to The New Republic?
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Did it matter what was purchased?
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“Man does not live by bread alone… He also needs strawberry jam.”Lionel Trilling
Should moral sentiments enter into it?
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Procedural Unconscionability
Distinguish vices of capacity and vices of consent
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Procedural Unconscionability
Did she give her consent to the clause?
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Procedural Unconscionability
Did she give her consent to the clause? And just why is that a big deal?
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Procedural Unconscionability
Did she give her consent to the clause? Should consent be conclusively
presumed if one signs a contract?
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Procedural Unconscionability
Did she give her consent to the clause? Should consent be conclusively
presumed if one signs a contract? If not, what’s the point of them?
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Procedural Unconscionability
Did she give her consent to the clause? Should consent be conclusively
presumed if one signs a contract? What if she was seen not to read the
contract?
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Procedural Unconscionability
Did she give her consent to the clause? Should consent be conclusively
presumed if one signs a contract? What about that “rather obscure clause”?
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Procedural Unconscionability
Did she give her consent to the clause? What about the size of the type? 4 point
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Standard Form Contracts
Would Skelly Wright enforce any consumer contract based on a standard form? No “objective manifestation of consent”
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Standard Form Contracts
Why do vendors employ them?
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The Seven Children
Do they come into it?
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What remedy was granted?
What would have happened on remand?
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You’re Walker-Thomas
How do you react to the decision?
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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…
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George Mason School of Law
Contracts I
II. DAY Why Enforce.ppt
F.H. Buckley
fbuckley@gmu.edu
Alexandria
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The Birchmere
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Eden Center
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Five Guys
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Misha’s CoffeePatrick at King, Alexandria
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National Arboretum
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Across from the National Gallery
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Behind the Jefferson Memorial
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Arlington Library
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Walker-Thomas Furniture Store1074 Seventh St. NW (at L)
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