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1 George Mason School of Law Contracts I Introduction F.H. Buckley

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1 1 George Mason School of Law Contracts I Introduction F.H. Buckley

2 2

3 3 George Mason School of Law  Makeup…  Next day: Syllabus 2: Economic Gains from Trade

4 4 Some housekeeping  The exam: Open Code  Optional upgrade based on classroom performance 4

5 5 Williams v. Walker-Thomas Furniture Co.

6 6 District of Columbia Court of Appeals 198 A.2d 914 (1964)

7 7 Williams v. Walker-Thomas Furniture Co. District of Columbia Circuit Court of Appeals 350 F.2d 445 (1965)

8 8 Walker-Thomas Furniture Store 1074 Seventh St. NW (at L) 8

9 9 Williams v. Walker-Thomas 9

10 10 Who was Ora Lee Williams? 10

11 11 Who was Ora Lee Williams?  If you had to describe her in one word, what would that word be?

12 12 Who brought the action?  What remedy was sought?  And who won at trial?

13 13 Who brought the action?  What remedy was sought?  Who won at the DC Court of Appeals?

14 14 Who brought the action?  What remedy was sought?  And who won in the DC Circuit?

15 15 What gave Walker-Thomas a right of replevin?

16 16 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.

17 17 What gave Walker-Thomas a right of replevin?  Conditional Sale: (Title)(Possession) Vendor Purchaser

18 18 What gave Walker-Thomas a right of replevin?  UCC Article 9: (Security Interest) (Possession) Secured PartyDebtor

19 19 Do we have a problem with this?  Is secured lending a problem?

20 20 Do we have a problem with this?  Secured lending? UCC 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

21 21 And if the debtor defaults?

22 22 And if the debtor defaults?

23 23 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

24 24 And if the debtor defaults?  In Williams v. Walker-Thomas, are we talking about a surplus or a deficiency?

25 25 What gave Walker-Thomas a right of replevin?  What was the “rather obscure clause” that permitted Walker-Thomas to repossess Mrs. Williams’ bed.

26 26 What gave Walker-Thomas a right of replevin?  How would you have drafted it?

27 27 What gave Walker-Thomas a right of replevin?  Do you think the Walker-Thomas lawyer was trying to hide the cross- collateral interest?

28 28 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)?

29 29 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.

30 After-acquired Collateral Current assets financing Inventory, Accounts receivable 30 Security Interest

31 31 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?

32 32 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

33 33 What gave Walker-Thomas a right of replevin?  Future advances and line of credit loans Collateral Loan

34 34 What gave Walker-Thomas a right of replevin?  But no longer if consumer goods or household goods, under the UCC And why is that?

35 35 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….

36 36 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?

37 37 Substantive Unconscionability  Why did Walker-Thomas insert the clause in the contract?

38 38 Substantive Unconscionability  Why might Mrs. Williams rationally have agreed to it?

39 39 Substantive Unconscionability  How would you expect Walker- Thomas to react if the clause is banned?

40 40 Substantive vs. Procedural Unconscionability  What’s the difference?

41 41 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

42 42 Substantive Unconscionability  Substantive: Ban all consumer cross- collateral clauses

43 43 Procedural Unconscionability  Is there a problem of procedural unconscionability in Walker-Thomas?

44 44 Procedural Unconscionability  Is there a problem of procedural unconscionability in Walker-Thomas?

45 In the DC Circuit: Skelly Wright 45 Where did he get the unconscionability doctrine from?

46 46 Was there an “absence of meaningful choice”?

47 47 Why didn’t she shop at Woodward & Lothrop? 10 blocks from Walker-Thomas

48 48 Or Garfinckel’s? 11 Blocks from Walker-Thomas

49 49 What happened to Walker-Thomas? 1074 Seventh St. NW (at L) 49 When did it go dark, do you think?

50 50 Seventh Street NW, April 5, 1968 What happened the day before?

51 51 An “absence of meaningful choice”?  To buy or not to buy?

52 52 An “absence of meaningful choice”?  Did it matter that she made the purchase in her house?

53 53 An “absence of meaningful choice”?  Is this how a monopolist would choose to exercise monopoly power?

54 54 “Gross inequality of bargaining power”  Is the inequality greater when you purchase at Macy’s?

55 55 “Gross inequality of bargaining power” 55 $12.99!!! I think we can do better than that, don’t you? “An absence of meaningful choice” unless we can dicker?

56 56 “Gross inequality of bargaining power”  Are purchases in the inner city intrinsically suspect? Let them shop at Garfinckels…for cake

57 57 Procedural Unconscionability  Is her poverty relevant? What were her financial resources?

58 58 Procedural Unconscionability  Is her poverty relevant? You mean we let poor people enter into contracts!?!

59 59 Procedural Unconscionability  Do you want to argue that Mrs. Williams was a person of diminished capacity?

60 60 Procedural Unconscionability  Do you want to argue that Mrs. Williams was a person of diminished capacity? An “obvious … lack of education”?

61 61 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?

62 62 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?

63 63 Did it matter what was purchased? 63

64 64 Did it matter what was purchased? 64 Suppose it had been a 10-year subscription to The New Republic?

65 65 Did it matter what was purchased? 65 “Man does not live by bread alone… He also needs strawberry jam.” Lionel Trilling

66 Should moral sentiments enter into it? 66

67 67 Procedural Unconscionability  Distinguish vices of capacity and vices of consent

68 68 Procedural Unconscionability  Did she give her consent to the clause?

69 69 Procedural Unconscionability  Did she give her consent to the clause? And just why is that a big deal?

70 70 Procedural Unconscionability  Did she give her consent to the clause? Should consent be conclusively presumed if one signs a contract?

71 71 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?

72 72 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?

73 73 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”?

74 74 Procedural Unconscionability  Did she give her consent to the clause? What about the size of the type? 4 point

75 75 Standard Form Contracts  Would Skelly Wright enforce any consumer contract based on a standard form? No “objective manifestation of consent” 75

76 76 Standard Form Contracts  Why do vendors employ them? 76

77 77 The Seven Children  Do they come into it? 77

78 78 What remedy was granted?  What would have happened on remand? 78

79 79 You’re Walker-Thomas  How do you react to the decision? 79

80 80 UCC 2-302: Does that clarify things?  § 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… 80

81 81 George Mason School of Law Contracts I II. DAY Why Enforce.ppt F.H. Buckley

82 Alexandria 82

83 The Birchmere 83

84 Eden Center 84

85 Five Guys 85

86 Misha’s Coffee Patrick at King, Alexandria 86

87 National Arboretum 87

88 Across from the National Gallery 88

89 Behind the Jefferson Memorial 89

90 Arlington Library 90

91 91 Walker-Thomas Furniture Store 1074 Seventh St. NW (at L) 91


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