Question

The High-End Electronic Store is located in a poor neighborhood. Sam Shyster is the sales manager at High-End Electronic. He puts a sign in the window reading, "New state of the art LED Television - only $19." Frankie Stein, fourth-grade level education dropout, sees the sign and comes in and wants to buy one. Frankie asks, "Is it really $19?" Sam says, "Yeah, take a look at this contract. See? $19!" What Sam doesn't point out is that it's $19 a month for 10 years, chargeable to a credit card. This is in small print buried toward the bottom of a 10-page contract. Sam tells Frankie to sign and he does, although he has difficulty understanding the contract at all. Decide.

Answer 1

The agreement between high-end electronic store and Frankie Stein is Procedurally unconscionable under section 2-302. An unconscionable contract is when the terms of the contract are extremely one-sided, unreasonable, or shocking. Procedural unconscionability is the fact that the buyer was forced to enter the contract without having a meaningful choice or without fully comprehending the terms. Clauses are hidden away under an adhesion contract or boilerplate i.e. a contract drafted by a party with superior bargaining power like a high-pressure salesperson selling to illiterate consumers in oligopolistic industries where sellers offer unreasonable contracts where no bargaining is possible all indicate lack of assent.

In this case, Frankie lacked adequate education, as he is fourth grade drop out. He reads only the price and agrees to purchase. He asks Sam if the price is accurate and Sam says, “take a look at this contract”. He took advantage of his lack of adequate education and understanding to mislead him regarding terms of the contract. The contract mentions Frankie has to pay $ 19 for 10 months directly chargeable to a credit card. This is not pointed out to Frankie. He is deceived into believing that the Television if for $ 19 only. Also, these terms are written using a small print which is not readable. High-end electronics are deceiving customers by selling the product by misleading the customer in understanding that the product is available for $ 19.00. The use of small print which is not easily readable is a form of deception. These terms will not be legally binding.

The remedy is to either excise the unconscionable clause from the agreement or reform the contract by modifying the offending terms of the contract where an excessively high price is charged. In this case, high-end electronics may not recover the contract price from Frankie Stein.

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