Toker v. Westerman - 113 N.J. Super. 452

Rule:

An unconscionable contract is defined as one such as no man in his senses and not under a delusion would make on the one hand, and as no honest and fair man would accept on the other. To what extent inadequacy of consideration must go to make a contract unconscionable is difficult to state, except in abstract terms, which gives but little practical help. It has been said that there must be an inequality so strong, gross, and manifest that it must be impossible to state it to a man of common sense without producing an exclamation at the inequality of it.

Facts:

On November 7, 1966 Toker’s assignor, People's Foods of New Jersey, sold a refrigerator-freezer to the defendant Westermans under a retail installment contract. The cash price for the unit was $ 899.98. With sales tax, group life insurance and time price differential the total amount was $ 1,229.76, to be paid in 36 monthly installments of $ 34.16 each. The Westermans made payments over a period of time, but resist payment of the balance in the sum of $ 573.89, claiming that the unit was so greatly over-priced as to make the contract unenforceable under N.J.S. 12A:2-302. Toker thus filed the instant action seeking the remaining payments for the unit.

Issue:

Was the price for the refrigerator-freezer unit unconscionable as to make the sales contract unenforceable?

Answer:

Yes.

Conclusion:

In the instant case the court found as shocking, and therefore unconscionable, the sale of goods for approximately 2 1/2 times their reasonable retail value. This was particularly so where, as here, the sale was made by a door-to-door salesman for a dealer who therefore would have less overhead expense than a dealer maintaining a store or showroom. In addition, it appeared that the Westermans during the course of the payments they made to Toker were obliged to seek welfare assistance. A flagrantly excessive purchase price was held to be within the intendment of N.J.S. 12A:2-302 in the case of Toker v. Perl, 103 N.J. Super. 500 (Law Div. 1966). There the same dealer as in the present case sold a refrigerator-freezer to defendant for a purchase price of $ 799.95. The court found that the maximum value of the unit was $ 300 and held the excessive price to be unconscionable. The claim for the balance of the purchase price was therefore held to be unenforceable under the statute. On appeal, the Appellate Division affirmed. However, defendants there charged, and the trial court found, that the dealer had fraudulently procured defendant's signatures to the contract. The affirmance of the Appellate Division was on this ground alone, the court specifically expressing no opinion on the finding of the trial court that the excessive price of the unit also rendered the contract unenforceable. In the instant case the court finds that in receiving a total of $ 655.85 plaintiff and his assignor have received a reasonable sum. The payment of the balance of the purchase price will therefore not be enforced.