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CORNELL ECON 4040 - Walker/Fiege

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Econ 4040 1st Edition Lecture 15Outline of Last Lecture I. JavinsOutline of Current Lecture II. WalkerIII. FiegeCurrent LectureBrief Fact Summary. Appellee Walker-Thomas Furniture Co., a retailer of furniture, leased items to consumers pursuant to a contract that stated Appellee would retain title of the furniture until the total of the lease payments made equaled the stated value of the piece of furniture, at which time the consumer would own the furniture. Each contract inconspicuously contained a provision stating that if more than one item is purchased the monthly payments shall be applied pro rata among all the items purchased, thereby allowing Appellee to retain title on each piece of furniture longer.Synopsis of Rule of Law. An unreasonable and unconscionable contract, not void for fraud, will be enforced, but the damages will be only what the suing party is equitably entitled to.Facts. Appellee operated a retail furniture store. Appellee permitted consumers to purchase furniture by paying monthly installments. Such purchases were governed by a form contract that provided the value of the item and purported to lease the item for a monthly payment. The contract stated that the appellee would retain title to the furniture until the total of all monthly payments equaled the value of the item. In the event of default, the appellee could repossess the item. The contract also contained an obscure provision that allowed the appellee to apply each monthly payment pro rata to all outstanding leases. The effect of such a provision is to keep a balance due on every item until there was no balance due on any of the items. This gave Appellees the right to repossess all items in the case of a default. Appellants Thorne and Williams both purchased items that were repossessed under a purchase contract.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Issue. Did the lower courts properly reject Appellants’ argument that the contracts are unconscionable and thus unenforceable?Held. No. An unreasonable and unconscionable contract, not void for fraud, will be enforced, but the damages will be only what the suing party is equitably entitled to. Unconscionability means the lack of meaningful choice for one party combined with unreasonably favorable terms for the other party. Since the lower courts did not believe that enforcement of the contracts could be refused no factual findings were made. Therefore, it was not determined whether these contracts were unconscionable.Concurrence. The dissent (which, whether mislabeled or intentionally termed a dissent, is actually a concurrence) merely emphasizes that a cautious approach must be taken to solve the problem of unconscionable contracts in consumer transactions.Discussion. Unconscionable contracts are not void, but rather, the party who benefits from the unconscionable contract is only entitled to the remedies that equity demands.Brief Fact Summary. P sued D for breach of contract and D asserted that because he was not the father of P’s child, his support agreement lacked a valid consideration.Synopsis of Rule of Law. The forbearance from asserting a good faith legal claim constitutes a valid consideration.Facts. Fiege (P) was pregnant. P claimed that Boehm (D) was the child’s father. P gave birth to the child and P claims D acknowledged on many occasions that he is the father. P claims that before the child was born, D promised to pay P’s expenses and make $10/week support payments so long as P would not institute legal proceedings. D paid P $480 but stopped payments when blood tests revealed that he was not the father. D prevailed at a subsequent trial on the charges of bastardy by the state. P then sued to enforce the agreement for support in civil court. The jury found a verdict in favor of P for $2,415.80, the full amount of her claim. D appealed.Issue. Does the forbearance from asserting a good faith legal claim constitute a valid consideration?Held. Yes. Judgment affirmedThe surrender of, or forbearance to assert an invalid claim by one who did not have a good faith and reasonable belief in its possible validity is not a sufficient consideration to support a contract.However, forbearance to sue for a lawful claim or demand is a sufficient consideration for a promise if the party forbearing had a good faith intention to prosecute litigation which is not frivolous, vexatious, orunlawful, and which she believed to be well founded.Here, the court found no proof of fraud or unfairness. P indicated that she made the charge of bastardy against D in good


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