George Mason School of Law
Contracts I
Introduction
F.H. Buckley
fbuckley@gmu.edu
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George Mason School of Law
 Makeup…
 Next day:
 Syllabus 2: Economic Gains from Trade
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Some housekeeping
 The exam: Open Code
 Optional upgrade based on classroom
performance
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Williams v. Walker-Thomas Furniture
Co.
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Williams v. Walker-Thomas Furniture
Co.
District of Columbia Court of Appeals
198 A.2d 914 (1964)
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Williams v. Walker-Thomas Furniture
Co.
District of Columbia Circuit Court of Appeals
350 F.2d 445 (1965)
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Walker-Thomas Furniture Store
1074 Seventh St. NW (at L)
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Williams v. Walker-Thomas
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Who was Ora Lee Williams?
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Who was Ora Lee Williams?
 If you had to describe her in one
word, what would that word be?
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Who brought the action?
 What remedy was sought?
 And who won at trial?
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Who brought the action?
 What remedy was sought?
 Who won at the DC Court of Appeals?
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Who brought the action?
 What remedy was sought?
 And who won in the DC Circuit?
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What gave Walker-Thomas a
right of replevin?
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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.
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What gave Walker-Thomas a
right of replevin?
 Conditional Sale:
(Title)
Vendor
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(Possession)
Purchaser
What gave Walker-Thomas a
right of replevin?
 UCC Article 9:
(Security Interest)
Secured Party
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(Possession)
Debtor
Do we have a problem with this?
 Is secured lending a problem?
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Do we have a problem with this?
 Secured lending?
 UCC 9-201. 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
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And if the debtor defaults?
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And if the debtor defaults?
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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
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And if the debtor defaults?
 In Williams v. Walker-Thomas, are we
talking about a surplus or a
deficiency?
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What gave Walker-Thomas a
right of replevin?
 What was the “rather obscure clause”
that permitted Walker-Thomas to
repossess Mrs. Williams’ bed.
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What gave Walker-Thomas a
right of replevin?
 How would you have drafted it?
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What gave Walker-Thomas a
right of replevin?
 Do you think the Walker-Thomas
lawyer was trying to hide the crosscollateral interest?
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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)?
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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)?

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UCC 9-204) After-acquired property (A) … a security
agreement may create or provide for a security interest in
after-acquired collateral.
After-acquired Collateral
Current assets financing
Security Interest
Inventory, Accounts receivable
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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?
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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
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What gave Walker-Thomas a
right of replevin?
 Future advances and line of credit
loans
Collateral
Loan
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Loan
What gave Walker-Thomas a
right of replevin?
 But no longer if consumer goods or
household goods, under the UCC
 And why is that?
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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….
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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?
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Substantive Unconscionability
 Why did Walker-Thomas insert the
clause in the contract?
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Substantive Unconscionability
 Why might Mrs. Williams rationally
have agreed to it?
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Substantive Unconscionability
 How would you expect WalkerThomas to react if the clause is
banned?
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Substantive vs. Procedural
Unconscionability
 What’s the difference?
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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
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Substantive Unconscionability
 Substantive: Ban all consumer crosscollateral clauses
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Procedural Unconscionability
 Is there a problem of procedural
unconscionability in Walker-Thomas?
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Procedural Unconscionability
 Is there a problem of procedural
unconscionability in Walker-Thomas?
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In the DC Circuit: Skelly Wright
Where did he
get the
unconscionability
doctrine from?
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Was there an “absence of
meaningful choice”?
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Why didn’t she shop at
Woodward & Lothrop?
10 blocks from Walker-Thomas
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Or Garfinckel’s?
11 Blocks from Walker-Thomas
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What happened to Walker-Thomas?
1074 Seventh St. NW (at L)
When did it
go dark,
do you think?
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Seventh Street NW, April 5, 1968
What happened the day before?
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An “absence of meaningful
choice”?
 To buy or not to buy?
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An “absence of meaningful
choice”?
 Did it matter that she made the
purchase in her house?
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An “absence of meaningful
choice”?
 Is this how a monopolist would
choose to exercise monopoly power?
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“Gross inequality of bargaining power”
 Is the inequality greater when you
purchase at Macy’s?
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“Gross inequality of bargaining power”
$12.99!!!
I think we can
do better
than that,
don’t you?
“An absence of meaningful choice” unless we can dicker?
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“Gross inequality of bargaining power”
 Are purchases in the inner city
intrinsically suspect?
 Let them shop at Garfinckels…for cake
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Procedural Unconscionability
 Is her poverty relevant?
 What were her financial resources?
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Procedural Unconscionability
 Is her poverty relevant?
 You mean we let poor people enter into
contracts!?!
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Procedural Unconscionability
 Do you want to argue that Mrs.
Williams was a person of diminished
capacity?
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Procedural Unconscionability
 Do you want to argue that Mrs.
Williams was a person of diminished
capacity?
 An “obvious … lack of education”?
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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?
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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?
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Did it matter what was purchased?
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Did it matter what was purchased?
Suppose it had been
a 10-year subscription
to The New Republic?
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Did it matter what was purchased?
“Man does not live
by bread alone…
He also needs
strawberry jam.”
Lionel Trilling
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Should moral sentiments enter
into it?
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Procedural Unconscionability
 Distinguish vices of capacity and vices
of consent
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Procedural Unconscionability
 Did she give her consent to the
clause?
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Procedural Unconscionability
 Did she give her consent to the
clause?
 And just why is that a big deal?
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Procedural Unconscionability
 Did she give her consent to the
clause?
 Should consent be conclusively
presumed if one signs a contract?
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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?
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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?
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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”?
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Procedural Unconscionability
 Did she give her consent to the
clause?
 What about the size of the type? 4 point
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Standard Form Contracts
 Would Skelly Wright enforce any
consumer contract based on a
standard form?
 No “objective manifestation of consent”
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Standard Form Contracts
 Why do vendors employ them?
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The Seven Children
 Do they come into it?
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What remedy was granted?
 What would have happened on
remand?
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You’re Walker-Thomas
 How do you react to the decision?
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UCC 2-302: Does that clarify things?
 § 2-302. 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…
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George Mason School of Law
Contracts I
II. DAY Why Enforce.ppt
F.H. Buckley
fbuckley@gmu.edu
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Alexandria
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The Birchmere
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Eden Center
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Five Guys
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Misha’s Coffee
Patrick at King, Alexandria
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National Arboretum
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Across from the National Gallery
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Behind the Jefferson Memorial
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Arlington Library
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Walker-Thomas Furniture Store
1074 Seventh St. NW (at L)
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