george mason school of law

George Mason School of Law

Contracts I

Introduction

F.H. Buckley

fbuckley@gmu.edu

Some housekeeping

LAW 102 (003), Thursdays 6:00 – 7:40 pm

First part of a distinct two part series of courses on contract law

Some housekeeping

Contracts I Theoretical Introduction Formation Relational Contracts

Some housekeeping

Contracts II Why we shouldn’t enforce: Fraud etc. What’s in the contract: Terms, Conditions Excuses: Mistake/Frustration Remedies

Some housekeeping

The exam: Open Code

Optional upgrade based on classroom performance

Why I don’t give practice exams

Some housekeeping

The structure of the casebook

On learning with new technology

There’s thing thing called Wikipedia

GMU Library resources J for JSTOR InPrimo

What this does (or should do) to teaching

On absorbing the material

By verbalizing?

Numbers, stories and pictures

The name of a case (case citation)

Williams v. Walker-Thomas Furniture Co.

Williams at 53

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

198 A.2d 914 (1964)

The procedural aspect

Who is suing?

And what remedy is sought? Cf. Maitland on the forms of action

How did it end up here?

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

350 F.2d 445 (1965)

Who was Ora Lee Williams?

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

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

Williams v. Walker-Thomas

What gave Walker-Thomas a right of replevin?

Title to remain in seller until all goods paid for

Conditional Sale:

(Title) (Possession)Vendor Purchaser

UCC Article 9:

(Security Interest) (Possession)Secured Party Debtor

Title to remain in seller until all goods paid for Does it matter that Walker-Thomas filed

approximately 100 writs of replevin a year?

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 the clause?

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

But cf. 9-204(b)(1) A security interest does not attach under a term constituting an after-acquired property clause to consumer goods Why is that?

Quinn on vitiating factors

What is the difference between “a lack of meeting of the minds” and “contracts against public policy,” per Quinn J.

Substantive vs. Procedural Unconscionability

No “meeting of the minds” a matter of procedural unconscionability

But there’s still a question of substantive unconscionability

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 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?

Recall UCC § 9-204(b)(1)

A security interest does not attach under a term constituting an after-acquired property clause to consumer goods

Why did Walker-Thomas insert the clause in the contract? Can you think why Walker-Thomas might

want a right to repossess five year old household junk?

Aquinas on the just price Leff on “Thomist Unconscionability”

When you say you are troubled by a contract, as a matter of public policy, just what have you said?

Procedural Unconscionability and Williams

Don’t enforce if there is no “meeting of the minds”

Procedural Unconscionability

A meeting of the minds? Why might Mrs. Williams rationally have

agreed to the clause?

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

So what kind of unconscionability are we talking about in Walker-Thomas?

In the DC Circuit: Skelly Wright

Where did he get the unconscionability doctrine from?

What do you infer from the subsequent adoption of UCC § 2-302(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, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

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?

An “absence of meaningful choice”?

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

“Gross inequality of bargaining power”

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

OMG!!!

$12.99!!!

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

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

If there is inequality, how would you expect the merchant to exploit his power?

Is her poverty relevant?

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?

Corrective and Distributive Justice

How would you decide the case as a matter of corrective justice? Of distributive justice?

Distributive Justice

How would Aristotle allocate goods as a matter of distributive justice?

Distributive Justice

How would Aristotle allocate goods as a matter of distributive justice?

And what is merit?

Corrective JusticeHow would this apply in contract law?

This kind of injustice being an inequality, the judge tries to equalize it; for in the case also in which one has received and the other has inflicted a wound, or one has slain and the other been slain, the suffering and the action have been unequally distributed; but the judge tries to equalize by means of the penalty, taking away from the gain of the assailant….

These names, both loss and gain, have come from voluntary exchange; for to have more than one's own is called gaining, and to have less than one's original share is called losing, e.g. in buying and selling and in all other matters in which the law has left people free to make their own terms; but when they get neither more nor less but just what belongs to themselves, they say that they have their own and that they neither lose nor gain.

Therefore the just is intermediate between a sort of gain and a sort of loss, viz. those which are involuntary; it consists in having an equal amount before and after the transaction.

Suppose we abandon the idea of zero-sum transactions, and apply the idea of corrective justice to fraud or unconscionability?

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

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 a meeting of the minds 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…

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george mason school of law

right of replevin

writs of replevin

williams bed

debtor defaults

ora lee williams

resale price

secured lending

case case citationwilliams

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