Toker v. Westerman
113 N.J. Super. 452, 274 A.2d 78 (1970)
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Rule of Law:
A contract for the sale of goods can be deemed unconscionable and therefore unenforceable under Uniform Commercial Code § 2-302 if the price is grossly excessive in relation to the item's reasonable retail value.
Facts:
- On November 7, 1966, a door-to-door salesman from People's Foods of New Jersey sold a refrigerator-freezer to William and Lisa Westerman.
- The Westermans signed a retail installment contract agreeing to a total purchase price of $1,229.76, which included a cash price of $899.98 plus tax, insurance, and financing fees.
- The refrigerator-freezer was a basic, 'stripped' model with no special features.
- An expert appliance dealer testified that the reasonable retail price for the unit at the time of sale was between $350 and $400.
- The Westermans made payments on the contract over a period of time, totaling $655.85.
- During the course of making payments, the Westermans were obliged to seek welfare assistance.
Procedural Posture:
- Robert Toker, as the assignee of a retail installment contract, sued William and Lisa Westerman in the Superior Court of New Jersey, District Court, Union County.
- Toker sought to recover the unpaid balance of $573.89 on the contract.
- The Westermans raised the affirmative defense that the contract was unconscionable and therefore unenforceable.
- The case proceeded to a trial where evidence was presented, including expert testimony regarding the value of the refrigerator-freezer.
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Issue:
Is a retail installment contract for the sale of a refrigerator-freezer unconscionable and thus unenforceable under N.J.S. 12A:2-302 where the sale price is approximately two and a half times the item's reasonable retail value?
Opinions:
Majority - McKenzie, J.D.C.
Yes. A retail installment contract is unconscionable and unenforceable where the sale price is grossly excessive. The court found the sale of goods for approximately two and a half times their reasonable retail value to be 'shocking' and therefore unconscionable under N.J.S. 12A:2-302. The court reasoned that while parties should have freedom of contract, this freedom does not permit the enforcement of terms that are so one-sided as to be oppressive. Citing case law from other jurisdictions, the court affirmed that an excessive price alone can render a contract substantively unconscionable. The court also considered the context of the sale, noting it was made by a door-to-door salesman to buyers who later required welfare assistance, further highlighting the inequality of the bargain. Since the defendants had already paid more than the reasonable retail value of the unit, the court refused to enforce the remainder of the contract.
Analysis:
This case is significant for establishing in New Jersey that substantive unconscionability, specifically a grossly excessive price, can be sufficient grounds to render a sales contract unenforceable under UCC § 2-302. It moves beyond the traditional focus on procedural unconscionability (flaws in the bargaining process) and confirms that the fairness of the terms themselves is subject to judicial scrutiny. The decision provides a powerful tool for consumer protection, particularly for vulnerable individuals targeted by predatory pricing schemes. Future courts can look to this case as a clear precedent for invalidating contracts where the price disparity is so great that it 'shocks the conscience.'
