Life Is the Way It Is - Smyth V Pillsbury

Smyth v. Pillsbury

Supreme Court of New York, Special Term, Nassau County

Issues: Can drastically "price gouging" or pricing an item exceptional high above its retail price be used to determine the invalidity of a contract.

Facts: The plaintiffs agreed to buy a 900-dollar freezer from the defendant. Totaling over 1400 dollars after finance charges. All these charges and initial sales price are considerable over the retail price of 300 USD. When the suit was started the plaintiff had already paid 600 USD towards the price of the freezer.

Holding: The difference between the item being so drastically miss-priced. Being the original retail value was only 300 USD and the point of sale price being 900 USD place such a large difference that the court can us it to label the contract is or is not unconscionably

Law:

The court sees UCC Section: 2-302 as applying to the price term of a contract. The purpose of Section: 2-302 is to protect the unequal bargaining power that is often inherent in some contractual agreements.

Reasoning:

It is important to preserve the integrity of agreements and the right of parties to contract freely; however, there is concern for the uneducated and often illiterate individual who is the victim of inequality of the bargaining power. The law is beginning to fight back against those who take advantage of the undereducated without risk of either exposure or interference. The principle of unconscionability is one that attempts to prevent oppression and unfair surprise. It permits a court to accomplish directly what was often accomplished by construction of language, manipulations of fluid rules of contract law, and determinations based upon a presumed public policy. The UCC section on unconscionability was meant to encompass the price term of an agreement. Credit charges alone exceed the value of the freezer. The very limited financial resources of the purchaser, known to the sellers at the time of the sale, are entitled to weight in the balance. There have been numerous other courts that have used gross inadequacy of consideration in deciding a contract is unconscionable.

Judgment:

The amount of the payment of 600 USD is found sufficient compensation.