Clifton Jones V. Star Credit Corp., 59 Misc.

Introduction: Contracts are legally enforceable promises. There are two requirements for contract formation: agreement and consideration. An agreement involves a valid offer being made by an offeror to an offeree and said offer being validly accepted by the offeree and communicated to the offeror. The second requirement is consideration, meaning the two parties exchange something of legal value. Contracts serve the purpose of ensuring stability, predictability, and certainty, as well as deterring defection, in business dealings. The objective theory of contract law states that only the language of the contract should be considered in contract interpretation. This theory ignores entirely the intent of the parties. However, contract law is largely

In Clifton Jones, v. Star Credit Corp., 59 Misc.2d 189 (1969), for example, the plaintiffs, welfare recipients, agreed to purchase a freezer on credit from a salesman. Overall the purchase totaled $1,234.80, however, the freezer had a maximum retail value of $300. The court found the aforementioned contract to be unconscionable as the salesman took advantage of the poor, less educated plaintiff. Unconscionability, as a means to end a contract, was created under the Uniform Commercial Code, a statutory law intending to protect vulnerable consumers from predatory contracts. In Jones, the court ordered Star Credit Corp to revise and amend the contract so as to make the payments equivalent to those already made by the plaintiff, approximately $600. The Uniform Commercial Code and the associate use of unconscionability “tells not only the buyer but also the seller to beware. ” Flexibility in contract enforcement stemming from unconscionability has the self-evident benefit of protecting the ‘underdog’ from predatory business practices. Nevertheless, it comes with some risks. The principle of unconscionability undermines the precept that contracts are mutually agreed upon and as such considered fair. The court thus puts its self in a role of determining the fairness of contracts and undermines free market principles. Furthermore, it hampers businesses’

If one party meets the threshold of substantial performance, meaning he completes the most significant aspects of the contract, but fails to fulfil some minor terms, the court will not necessarily enforce the contract exactly as written. Further, the court may not release the non-breaching party from his duties. Rather, the non-breaching party will be granted compensatory damages equivalent to the difference between the fair market value of what was to be performed under the contract and what was actually delivered. In Jacob & Youngs, Incorporated, v. George E. Kent, 230 N.Y. 239, the plaintiff, a construction company, built the defendant’s house mistakenly using a type of pipe that differed from the type specified in the contract. The defendant, upon discovery, refused to make his final payment and the plaintiff is suing for the remaining balance, demanding that the plaintiff make the costly renovations required to replace the pipes. The court ordered the defendant pay the remaining balance, reasoning that “an omission, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be the breach of a condition to be followed by a forfeiture. ” The court determined that the relevant measure of allowance for damages should be the difference in market value, rather than the cost of replacing, as the pipes,